Industrial Relations Commission of New South Wales CITATION: Staff Specialists (State) Award, Re [2006] NSWIRComm 124 PARTIES: Australian Salaried Medical Officers' Federation (New South Wales) Health Administration Corporation FILE NUMBER(S): IRC 3863 of 2004 and 3871 of 2005 CORAM: Wright J President; Boland J; Connor C CATCHWORDS: Award - Wage Fixation - Staff Specialists - Major industrial case - Application for increased salaries and changes to conditions of employment - Application for managerial allowances - Work value - Special case - Award history - Relationship between Staff Specialists and Visiting Medical Officers - Rates for comparable professionals - Workforce shortages - Career Medical Officers - Salaries increased - New managerial allowances awarded - Variations by consent approved - New award made. Health Services Act 1997 LEGISLATION CITED: Industrial Relations Act 1996 Public Hospitals Act 1929 Australian Medical Association, NSW Branch v Minister for Health (No. 3) (1993) 54 IR 139 Crown Employees (Public Sector - Salaries 2004) Award [2005] NSWIRComm 53 Crown Employees (Teachers in School and TAFE and Related Employees) Salaries and Conditions Award, Re (2004) 133 IR 254 Health Employees Pharmacists (State) Award and other Awards (2003) 132 IR 244 Medical Officers – Hospital Specialists (State) Award and other Awards, Re (1990) 33 IR 79 Medical Officers – Hospital Specialists (State) Award, Re [1975] AR (NSW) 78 Medical Officers – Hospital Specialists (State) Award, Re [1966] AR (NSW) 144 CASES CITED: Medical Officers – Hospital Specialists (State) Award, Re [1978] AR (NSW) 321 Medical Officers Hospital Specialists (State) Award, Re [1968] AR (NSW) 469 Medical Officers, Hospital Specialists (State) Award, Re [1972] AR (NSW) 675 Nursing Homes &c., Nurses (State) Award, Re (No 4) (2005) 138 IR 409 Public Hospital Nurses (State) Award, Re (2002) 118 IR 336 Public Hospital Nurses (State) Award, Re (No 1) (2002) 115 IR 183 Public Hospital Nurses (State) Award, Re (No 3) (2002) 121 IR 28 Public Hospital Nurses Award, Re (No. 4) (2003) 131 IR 17 HEARING DATES: 14/09/2005; 15/09/2005; 16/09/2005; 23/09/2005; 26/09/2005; 27/09/2005; 21/11/2005; 25/11/2005; 13/12/2005; 20/12/2005; 31/01/2006; 30/03/2006; 6/04/2006; 13/04/2006 DATE OF JUDGMENT: 04/28/2006 Mr J Nolan of counsel Australian Salaried Medical Officers' Federation (New South Wales) Mr P Somerville LEGAL REPRESENTATIVES: Mr M Kimber, senior counsel with Mr J Smith of counsel Health Administration Corporation Mr A Farley JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES FULL BENCH CORAM: Wright J President Boland J Connor C Friday 28 April 2006 Matter No IRC 3863 of 2004 STAFF SPECIALISTS (STATE) AWARD Application by the Australian Salaried Medical Officers' Federation (New South Wales) for variation re salary increases and other matters Matter No 3871 of 2005 STAFF SPECIALISTS (STATE) AWARD Application by the Health Administration Corporation for variation re salary increases and other matters DECISION OF THE COMMISSION [2006] NSWIRComm 124 Table of Contents THE CLAIMS ASMOF claim HAC claim CLAIMS FOR DETERMINATION AGREED STATEMENTS OF FACT INSPECTIONS STAFF SPECIALISTS BACKGROUND CONSIDERATIONS Award history On-Call/Recall/Special Allowance Movement in salary rates since 1990 Relationship Between Staff Specialists and Visiting Medical Officers (VMOs) Public Hospital Nurses' Cases Approach to determination of issues WORK VALUE ASMOF's case HAC's case ASMOF's reply on work value Consideration regarding work value WORKFORCE SHORTAGES ASMOF's case HAC's case ASMOF's reply on shortages Consideration of workforce shortages RATES FOR COMPARABLE PROFESSIONALS ASMOF's case HAC's case Consideration regarding comparative professionals' rates MANAGERIAL ALLOWANCES Agreed statement ASMOF's case HAC's case Consideration regarding managerial allowances ECONOMIC IMPACT ASMOF's case HAC's case Consideration regarding economic impact AMOUNT OF INCREASE CONSENT CHANGES ORDERS AND DIRECTIONS Annexure A THE CLAIMS ASMOF claim 1 In July 2004, the Australian Salaried Medical Officers' Federation (New South Wales) ("ASMOF" or "the applicant") filed an application to vary the Staff Specialists' (State) Award ("the Award"). The variations sought were extensive and included claims for: an increase in salaries of 26 per cent; substantial increases in managerial allowances; new provisions dealing with safe hours, adverse working conditions allowance, locum provision/vacancies, theatre sessions, area of need, public holidays, public comment, consultation, legal representation, reimbursement of expenses, release from clinical duties, isolated medical practitioners and bargaining agent's fees; the introduction of a new classification of "Principal Specialist"; and, amendments to existing provisions including office, secretarial and administrative support. 2 In February 2005, ASMOF's claim was amended so that the amount of salary increase being sought was 41 per cent. Higher increases were also sought for the managerial allowances, as well as the incorporation in the Award of new clauses, which included training, education and study leave, medical indemnity insurance, special allowance and enhancement to leave conditions. Changes to certain other award provisions were also sought. 3 The Health Administration Corporation ("HAC") had registered its opposition to ASMOF's claims but, nevertheless, agreed to participate in negotiations with the applicant in respect of its claims. Boland J chaired several conferences of the parties during the period between May and September 2005. The conferences produced agreement in a number of areas and modification of ASMOF's claims in other areas. 4 In June 2005, the parties were able to reach agreement on interim salary increases as well as in respect of certain undertakings and understandings as to future claims. The agreement is embodied in a Memorandum of Understanding that was Exhibit 6 in the proceedings. The interim salary increases were as follows: · 3% increase in salaries from the first pay period commencing on or after 1 July 2004; · further 3% increase in salaries from the first full pay period commencing on or after 1 July 2005; · further 3% increase in salaries from the first full pay period commencing on or after 1 July 2006; · further 3% increase in salaries from the first full pay period commencing on or after 1 July 2007, continuing to 30 June 2008. 5 One effect of the Memorandum was that ASMOF's claim for an increase in salaries of 41 per cent was reduced to 29 per cent and it was agreed that any increase arising out of these proceedings should apply from 1 July 2005. ASMOF relies on the Commission's work value and special case principles in pressing its claim for salary increases. 6 The claim in relation to managerial allowances, which was based on work value grounds and/or the allowances principle, was that there should be three levels of allowance as follows: Level 1 $20,000 per annum (currently $5,062 per annum) Level 2 $35,000 per annum (currently $8,860 per annum) Level 3 $50,000 per annum (currently $13,362 per annum) 7 The claim included that the new allowances be payable from 1 July 2005 in accordance with the terms of a new award provision governing the payment of the allowances. Importantly, the parties were able to achieve an agreed statement of facts relating to managerial allowances as well as the terms of an award provision dealing with the conditions under which such allowances were to be paid. It was also agreed that any increase in the allowances should be payable from 1 July 2005. However, there was no agreement as to the quantum of the increases. HAC claim 8 In July 2005 the HAC filed its own application to vary the Award. The application sought to: increase rates of pay; clarify the existing award provisions in relation to hours of work; vary the provisions in relation to managerial allowance; update the performance agreement requirements so that the work of staff specialists were clearly defined and understood; clarify the approval requirements for secondary employment (i.e., outside practice); and, to vary a number of conditions of employment to reflect changes in the health services. As to salaries, it was the HAC's position that there was a proper basis for the Commission to be satisfied that some level of salary increase for all Staff Specialists was warranted based on the change in their work value since 1991 (the agreed datum point for evaluating work value change). However, it was submitted the nature and extent of the other relevant changes that had occurred since 1991 did not support the substantial increase in Staff Specialists' salaries as sought by the applicant. 9 The HAC's claims were joined with ASMOF's claims and became the subject of the discussions earlier referred to that produced agreement on some matters and an understanding between the parties as to the status of other claims. The significant areas of difference between the parties arising from the HAC's claim were hours of work and work location. These were matters to be the subject of ongoing negotiations between the parties whilst ASMOF's claims regarding salaries and managerial allowances were being heard by the Full Bench but without prejudice to ASMOF's position that the HAC's claims were barred because of the no extra claims commitment agreed between the parties and included in the Memorandum of Understanding of June 2005. 10 In respect of the HAC's hours of work claim, it was submitted that the current provisions of the Award were unworkable and that the amendments were necessary "so as to more clearly disclose the obligations of Staff Specialists with respect to the provision of 'normal duties'". As to the work location claim, it was submitted whilst it has been and will continue to be the case that Area Health Services and hospitals would endeavour to reach agreement with their Staff Specialists about required work locations, when that cooperation was not forthcoming or when it was only offered on unreasonable conditions, then the employer ultimately needed the power to direct Staff Specialists to work at those health facilities where the need for their services was greatest. 11 In the result, the parties were unable to agree on the HAC's claims regarding hours of work and work location and on 15 November 2005 the HAC filed an amendment to its earlier application for variation of the Award that included the HAC's proposed award provisions regarding hours of work and work location. The HAC's amended application also helpfully set out all of the matters that had been agreed between the parties. ASMOF stood by its position that the HAC's claims were barred. 12 A summary of the status of the claims of both parties as at 15 November 2005 is set out in Table 1 below. Table 1 Issue Status ASMOF active issues 29% wage increase Not agreed Managerial Allowance – provision Agreed Managerial Allowance – quantum Not agreed Issue Resolution Agreed Salary Sacrifice Agreed Performance Agreement Agreed Part time working arrangements Agreed Outside Practice or Other Business Activities Agreed Post Graduate Fellow Agreed Office, Secretarial and Administrative Support Agreed Specialist Medical Administrator Not agreed No Extra Claims Not agreed Enhance Leave provisions Agreed ASMOF Leave Reserved Release from Clinical Duties Not agreed Workforce Shortage positions Continue to discuss Medical Indemnity Cover Continue to discuss Principal Specialist Continue to discuss HAC Claims – not addressed above Hours Not agreed – discussions continuing Work location Not agreed – discussions continuing Training, Education and Study Leave Not pursuing 13 The proceedings before the Full Bench continued on 21 and 25 November 2005 and the remaining matters in contention were addressed in submissions by the parties, including the hours of work and work location issues. 14 At the conclusion of the scheduled hearings on 25 November 2005, the parties sought the opportunity of attempting to resolve the hours of work and work location issues (and any other outstanding issues apart from salaries and managerial allowances) in conciliation proceedings rather than have the Full Bench proceed to determine those matters. The parties indicated that if they were unable to reach agreement it may become necessary to bring the matters back before the Full Bench and seek a determination. In addition to the outstanding award issues, the HAC was pursuing extra-award changes to arrangements that would provide more flexibility to the employer in deploying emergency physicians at locations falling outside the physicians' routine place(s) of work and this was to be the subject of ongoing negotiations between the parties. The emergency physicians issue was not a matter before the Full Bench. 15 Conciliation proceedings were conducted before Boland J on 13 and 20 December 2005 and 31 January, 30 March and 6 April 2006. On 6 April, the parties advised Boland J that they were on the verge of finalising their agreement and only certain minor matters needed attending to. His Honour was advised that within the next few days the minor outstanding matters were likely to be resolved and the Commission would be advised accordingly. Boland J informed the parties on behalf of the Full Bench that once advice was received that all of the outstanding matters had been resolved by agreement, the Full Bench would reserve its decision on the applications and would issue a decision in due course. 16 On 13 April 2006 the parties advised Boland J in writing that the parties had finalised their agreement on the outstanding issues including work location and hours of work (and the emergency physicians issue) and provided four documents as follows: (1) A draft new Award containing the agreed changes; (2) A marked version of the new Award that identified all of the agreed changes; (3) A summary of key Award changes; (4) The terms of the agreed "Emergency Physician Determination". The four documents have been marked in the proceedings as Exhibits 82, 83, 84 and 85 respectively. Mr McGregor's letter advising of the agreement between the parties has been marked as Exhibit 80 and ASMOF's response as Exhibit 81. CLAIMS FOR DETERMINATION 17 In summary, therefore, the only claims left to be determined by the Full Bench in accordance with the Commission's work value and special case principles are: (1) A claim by ASMOF for an increase in salaries and salary-related allowances of 29 per cent to be payable from 1 July 2005. (2) A claim by ASMOF that the managerial allowances payable to staff specialists who qualify for such allowances under the terms of a new award provision shall be as follows from 1 July 2005: Level 1 $20,000 Level 2 $35,000 Level 3 $50,000 AGREED STATEMENTS OF FACT 18 Both parties engaged in extensive preparation and evidence-gathering in support of their respective claims. The applicant filed 18 witness statements and the HAC 14 such statements. Most of the statements referred to detailed annexures representing reports, studies and other literature relevant to the work of Staff Specialists and changes that have occurred in that work, technology, staffing issues including shortages, health administration, expenditures on health, training and education and government initiatives in the public hospital system. 19 It is a credit to the parties and their common sense approach to this major industrial case that they were able to produce an agreed statement of facts drawn from the various witness statements relevant to work value considerations and other matters. The parties also tendered an agreed statement of facts on workforce issues and, as we have already mentioned, have agreed on facts relevant to a consideration of the managerial allowances claim. These agreements assisted in avoiding the need for either party to call any of the witnesses in relation to the salary and allowance claims, although they did not close the gap between the parties as to what might be an appropriate increase, if any, to salaries and managerial allowances on work value and/or special case grounds. The parties were also able to agree on a schedule of wage movements in the Staff Specialists' Award and comparable awards and also tendered an "Agreed Statement Re Career Medical Officers". 20 The agreed statements will be addressed at the appropriate point in this decision, but it is useful, at this stage, to relate the thrust of those agreements. 21 The "Agreed Statement of Facts Re Work Value" was a 40-page document drawing on material from witness statements. The nature and extent of the agreed facts regarding work value may best be seen from a table that is annexure A to this decision. 22 The agreed statement on managerial allowances: (a) Sets out the agreed criteria for payment of the allowances; (b) Notes there is no agreement as to quantum; (c) Notes the current levels are based on a 1997 negotiated settlement. Thus there was no assessment of the value of the additional responsibilities and no account taken of the change in staff specialist managerial responsibilities between the time that administrative allowances were introduced and 1997. As a result, a staff specialist director of a major multi-specialty multi-facility multi-million dollar business unit is paid a lower amount for his/her managerial responsibilities than the Nurse Unit Manager of a small ward in a small hospital; (d) Compares the rates payable to a staff specialist manager with the rates payable to nurse managers; (e) Refers to a number of witness statements that describe the duties and responsibilities of staff specialists with managerial responsibilities. 23 The agreed statement of facts on workforce shortages: (a) Indicated that in June/July 2005, the Department of Health undertook a census of salaried medical officers which identified 2,617 staff specialists (headcount), including clinical academics. (b) Recorded the parties' agreement that there were significant shortages in the staff specialist workforce in the NSW public health system. This state of affairs was officially acknowledged when, in 16 April 2004, the Premier of NSW held a "Round Table" on the medical workforce. The (then) Premier, the Minister for Health (now Premier) and the Director-General of Health all addressed the Round Table and all identified medical workforce shortages as the most important issue facing the health system. (c) Noted there was a shortage of specialists in Australia generally and, indeed, worldwide. (d) Acknowledged it was undoubtedly the case that the Commonwealth Government's decision in the early to mid 1990s to cut the number of university places for trainee medical practitioners had been one of the principal reasons for the current shortage of medical practitioners. However, this decision would not impact on the specialist workforce for another few years. (e) Noted that other causes of the shortage included: (i) The general or relative unattractiveness of certain medical specialties, especially obstetrics and gynaecology and pathology; (ii) The length and style of the training required to become a specialist (often 6-7 years); (iii) The general decrease in the hours worked by doctors generally as a consequence of, inter alia, the ageing of the medical workforce, the increase in female participation therein and a change in attitude, especially amongst the younger medical practitioners, towards working extremely long hours; (iv) The ongoing trend towards greater specialisation/subspecialisation which then results in a shortage of "generalists". (f) Agreed the shortages were not uniform across specialties or geographic areas and are often difficult to quantify for a number of reasons. (g) Described the "Area of Need" (AON) program and noted that: In July 2005, NSW DOH figures show 205 specialist AON positions within NSW [i.e. approximately 10% of the specialist workforce]. Over half these 205 positions [58%] were, at that date, unfilled The AON positions currently advertised on the NSW Health website (as at 5 September 2005) include a psychiatrist position at the Westmead Children's Hospital and a forensic pathologist position at the Glebe morgue. In the past it would have been most unusual to find an AON position in a major Sydney teaching hospital. There are 33 vacant positions in the Sydney/ Gosford/ Newcastle area, including 17 in Sydney itself. Of the 76 positions advertised, 16 are in psychiatry, 10 are in general medicine, 8 are in anaesthetics, 7 are in emergency medicine, 7 are in geriatrics, 5 are in obstetrics, 5 are in radiology and 3 are in medical oncology. The remainder are one or two positions across a range of specialties. (h) Recorded information from the Australian Medical Workforce Advisory Committee (AMWAC) about the number of vacancies and the issues in the public hospital medical workforce in NSW. This information included: (i) The 2001 AMWAC radiology report estimated that there were 26 public hospital vacancies in NSW and identified uncompetitive remuneration as a factor; (ii) The 2003 AMWAC emergency medicine report estimated that there were 24 to 32 vacancies in NSW in a workforce of about 140; (iii) The 1999 AMWAC psychiatry report indicated that there was no overall shortage but that psychiatrists were leaving the public sector and recorded that were 20.3 public sector vacancies in NSW. It is estimated that this figure has almost quadrupled to 76.1 FTE since 1999. This is in the context of a workforce of about 250; (iv) The 1999 AMWAC intensive care report noted that there were "significant" public hospital vacancies. A more recent review identified a vacancy rate in the NSW public sector workforce of 10% in 2001/02; (v) The 2001 AMWAC anaesthetic report indicated that there was a shortage in the public system but not overall and estimated that there were 42 vacancies (both staff specialist and VMO) in NSW. (i) Noted it was reasonable to assume that the resort to paying substantially higher VMO pay rates to some staff specialists in emergency medicine is another indicator of a shortage of emergency medicine specialists. In recent years there had been a move to pay VMO rates to emergency medicine specialists in some rural base hospitals and some peripheral metropolitan hospitals. In psychiatry, staff specialist employment had also been the norm. To a large extent, this has been because the continuity of care provided by staff specialists has been regarded as preferable to the relative lack of continuity provided by sessional VMO arrangements. The replacement of staff specialist appointments by VMO appointments can therefore be taken as evidence of the difficulty of attracting staff specialists. For example, at Sutherland Hospital and other hospitals in the Illawarra region, staff specialist appointments in psychiatry have been substantially replaced by VMO sessions. 24 The "Agreed Statement Re Career Medical Officers" addressed the history of the Public Hospital (Career Medical Officers) State Award, compared the rates of pay of CMOs and staff specialists between 1991 and 2007 and the reason for the differential, and indicated the parties did not agree on the basis for the comparison between staff specialist and CMO rates. INSPECTIONS 25 Inspections were conducted at St George Hospital, Kogarah and Prince of Wales Hospital, Randwick by the Full Bench on Friday 16 September 2005 and at Hornsby/Ku-ring-gai Hospital, Hornsby on Friday 23 September 2005. The table below summarises the places inspected and the staff of the respective hospitals interviewed during the course of the inspections. The Full Bench found the inspections a most useful exercise in complementing the evidence in the proceedings. HOSPITAL AREA/DEPARTMENT INSPECTED INTERVIEWEE Intensive Care Unit Dr Theresa Jacques, Director St George, Kogarah Professor Mark Brown, Chairman, IMET Dr Derek Glenn, Director Radiology Emergency Dr Sally McCarthy, Director Dr Irene Rotenko, Emergency Physician Prince of Wales, Randwick Geriatric Medicine Professor Gideon Caplan, Director, PACS Dr Mary-Anne O'Donnell, Director Mental Health Acute Unit Emergency Ms Cate Kelly, Director, Medical Services Mr Des McGrath, Human Resources Manager Dr Peter Roberts, Area Director, Emergency Medicine Dr Charles Lawrie, Staff Specialist Dr E Capilan, Acting Director, Emergency Department Hornsby-Ku-ring-gai, Hornsby Ms Kyla Smith, Acting NUM Dr Robin Choong, Senior Medical Practitioner Intensive Care Unit Dr K Urbaniac, Senior Medical Practitioner Dr Declan O'Riordan, Director Dr Kevin Vaughan, Senior Staff Specialist Obstetrics and Gynaecology Psychiatric STAFF SPECIALISTS 26 As ASMOF submitted, the Award covers approximately 2600 staff specialists employed in NSW Health. To be appointed as a staff specialist, a person must be a fully qualified medical practitioner who has practiced medicine for not less than five years and has obtained a Fellowship of a recognised Specialist College, or equivalent qualification. Typically, this means that the person has completed eight or more years of postgraduate training before appointment to a staff specialist position. The Federation submitted that staff specialists: [A]re typically long-serving employees occupying senior positions in the clinical structures of the hospitals, often with administrative responsibilities for clinical departments and services. As such, it often falls to staff specialists to initiate, implement and manage changes to the day-to-day delivery of health services. 27 ASMOF submitted that based on an analysis of its membership database in January 2005, the major salaried specialties as an approximate percentage of the workforce are: Psychiatry 11% Pathology 11% Emergency 9% Anaesthetics 7% Radiology 6% Intensive care 6% Geriatrics 4% Cardiac medicine 4% Surgery 4% Rehabilitation medicine 4% Oncology 4% Obstetrics 2% Neurology 2% Medical administration 2% Drug and alcohol 1% 28 Medical practitioners subject to the Award are employed by the Government of New South Wales in the service of the Crown. The Director General of the Department of Health is authorised to exercise the employer functions on behalf of the Government. 29 The Award also covers Senior Medical Practitioners (Academic), more commonly known as clinical academics. These are specialist medical practitioners who are employed by a university as academics but also hold hospital appointments. In recognition of the services provided to public hospitals, clinical academics are paid as 40 per cent fractional staff specialists in addition to their university salaries. 30 There are also a small number of Postgraduate Fellows covered by the Award, i.e., medical practitioners who have completed their specialist training but have yet to be appointed to a staff specialist position. Clinical academics and postgraduate fellows do not have access to the staff specialist rights of private practice arrangements. 31 In December 2004, ASMOF had "ACTU Connect" undertake a telephone survey of the Federation's membership on its behalf. The response rate was 46 per cent (654 of 1416 members). The major findings of the survey were: · 69% of respondents were full-time employees · 50% were on private practice Level 1, 19% on Level 5 · 41% were paid a managerial allowance · 9% were paid the abnormal hours allowance · 6% were on a 1:1 on call roster (ie. permanently on call) · 15% receive more than 20 after hours calls per week when on call · 23% of full-timers work more than 60 hours per week · 49% do more than 5 hours per week work at home in addition · 90% do not have locum cover when on leave · 57% consider their level of secretarial support to be inadequate · 37% consider their office accommodation to be inadequate · 25% consider their computer/internet facilities to be inadequate · 52% consider funding for journals/textbooks to be inadequate 32 On the question of hours worked per week, the HAC commissioned Deloitte to conduct a survey of staff specialists. Based on 525 returns by full time specialists the report from the survey found, inter alia, as follows: Component of Work Average Hours per week Regular hours worked in the public health system (excluding calls and recall) 46.80 Regular hours worked in the public health system plus time spent with calls and recall 49.07 Total hours worked, including the above plus outside practice 50.73 Note: Total hours on call are not included here; only the time spent in telephone calls and callbacks . 33 Private practice arrangements were described by ASMOF in its submissions as follows: For at least 30 years staff specialists have been permitted to earn additional income from rights of private practice within public hospitals (this is quite separate to any income that might be earned from any private practice external to the public hospital system). Public hospitals benefit directly from staff specialist rights of private practice by way of facility fees, the purchase of equipment from funds generated and a reduction in salary paid by the hospitals. In addition, private patients pay bed fees directly to the hospital. Details of private practice arrangements have varied over the years but the fundamental principles have remained the same. The current arrangements governing private practice are set out in the Private Practice Determination ... These arrangements are not part of the Award. Staff specialists elect on an annual basis the private practice scheme under which they will work (currently known as Levels 1 to 5). When services are provided to chargeable patients, the hospital bills Medicare (and/or the patients) on behalf of the staff specialists. The division of the income received varies according the scheme elected. Under Level 1, 100% of the income is retained by the hospital and the staff specialist receives an allowance of 20% of salary and funding for training and education. Typically, staff specialists who elect Level 1 will generate relatively little or no private patient revenue. Under Levels 2, 3, 4 and 5, the amount of private practice income able to be retained by the staff specialist rises as the income from salary and allowances falls. A Level 5 staff specialist will typically be someone who works in a specialty and a geographical area where private patient revenue is higher. A Level 5 staff specialist costs significantly less to employ than a Level 1 staff specialist because most of the remuneration is funded from private patient fees. The table below describes the potential income under each level as a percentage of salary (including the special allowance). Note that under Levels 2, 3 and 4 the employer provides guaranteed supplementation up to a specified level in circumstances where the private practice revenue is insufficient to reach that level. PRIVATE PRACTICE LEVEL 1 2 3 4 5 SALARY (%) 100 100 100 100 75 ALLOWANCE (%) 20 14 8 N/A N/A DRAWING RIGHTS (%) 0 24 36 50 100 MAXIMUM INCOME (%) 120 138 144 150 175 GUARANTEED SUPPLEMENTATION (%) N/A Up to 11 Up to 17 Up to 25 N/A GUARANTEED SUPPLEMENTATION N/A Up to 7 N/A N/A N/A IF BILLING SUFFICIENT TO ACHIEVE 11% OF SALARY BUT NOT 18% OF SALARY (%) Notes: 1. All figures are expressed as a percentage of Level 4 salary. 2. For the purposes of this table, "salary" means the award salary plus the 17.4% special allowance. The private practice income generated by Level 2-5 staff specialists is paid into hospital accounts known as the "No. 1 account". From this revenue, the hospital retains a percentage (the "monthly infrastructure fee") as payment for the provision of facilities and billing services. The size of this fee ranges from 20% to 90%, depending on specialty and procedure. Subject to the availability of funds, the staff specialist is entitled to be paid the relevant percentage of salary, to be reimbursed for indemnity costs and, in some limited circumstances, to be reimbursed for accounting costs. Any funds remaining at the end of the financial year are transferred to the "No. 2 account" as payment of the "annual infrastructure fee" and used to fund training, education and study leave (TESL), research and special equipment. A small number of staff specialists remain on old private practice schemes under "grandparented" arrangements. The Private Practice Determination also provides for payment of 17.4% of the Award salary as an allowance to all staff specialists. This allowance, known as the 'special allowance', forms part of salary for all purposes. The Determination also contains provisions relating to implementation of the GST, training, education and study leave (TESL), and an allowance for abnormal working hours and recall. BACKGROUND CONSIDERATIONS 34 The parties referred to a number of matters they contended were important background considerations to the claims. Award history 35 Both parties addressed in some detail the history of the Award, although their purpose in doing so was different. It was common ground that the first award for staff specialists was made in 1966: Re Medical Officers – Hospital Specialists (State) Award [1966] AR 144. In 1968, Richards J considered a claim for increased annual leave and a claim for salary increases including a claim for an additional classification of "senior Staff Specialist after five years": Re Medical Officers Hospital Specialists (State) Award [1968] AR (NSW) 469. In 1972 a further work value inquiry was undertaken: Re Medical Officers, Hospital Specialists (State) Award [1972] AR (NSW) 675 and again in 1975: Re Medical Officers – Hospital Specialists (State) Award [1975] AR (NSW) 78. In 1978 staff specialists sought a 20 per cent increase in salaries based on work value change and on the fact that the overtime rate for medical officers had been increased from a time and quarter to time and a half in late 1975: Re Medical Officers – Hospital Specialists' (State) Award [1978] AR 321. In 1990 the Commission approved a consent variation to the Award increasing salaries by 15 per cent: Re Medical Officers – Hospitals' Specialists (State) Award (1990) 33 IR 79. 36 The Commission has not been called upon to review the work value of staff specialists since 1990. All pay increases since then have been included in the Award by consent. There have been three rounds of increases since the 1991 State Wage Case increase: a total of 9 per cent paid under the enterprise agreements; a total of 14 per cent paid under a 1997 central funding agreement; and, a total of 16 per cent paid under a 1999 central Memorandum of Understanding. No work value commitments were made under any of these agreements. Given this, it was agreed the datum point for work value change evaluation in this case is 17 September 1991. 37 In relation to the history of the Award, ASMOF submitted there had been a number of consistent themes in the reviews of the Award by the Commission. One was that the Commission had consistently decided that earnings from rights of private practice should not be taken into account in determining the Award rates. A second consistent theme was that a staff specialist cannot be distinguished from a Visiting Medical Officer (VMO) in terms of either the nature or the value of the work performed by each. 38 Thirdly, it was submitted, there had been a general acceptance that the rates applicable to Senior Registrars were relevant to staff specialists but a fixed relativity had not been established. Fourthly, that in setting rates for staff specialists, the Commission has taken into account that the Award does not contain provisions relating to hours, overtime, or work on weekends and public holidays. The figure of 55 hours per week (on average) has been mentioned on a number of occasions. Fifthly, that the Commission has steadfastly refused to give much weight to inter-State comparisons on the basis that it is too difficult to make valid comparisons. 39 Mr J Nolan of counsel for ASMOF submitted the number of significant changes to the content of the Award since 1966 has been small. For example, the structure of the salary scale was unchanged from the award made in 1966. In 1968 it was noted that Richards J awarded a salary increase but made no other significant changes. In 1972, Cahill J increased the annual leave entitlement from four to five weeks but removed the provision that allowed a day to be added to annual leave when a public holiday was worked. In 1978, Kelleher J awarded a salary increase but made no other significant changes. 40 The applicant noted that in 1985, an on call/recall allowance of 20 per cent of salary was introduced by consent, but not included in the Award (the allowance remains a non-Award allowance although it now forms part of salary for all purposes). In 1987, McCardle C determined that the on call component of this allowance was 6 per cent of salary and the recall component was 14 per cent of salary. In his 1990 decision, Fisher P noted that the introduction of this allowance was contrary to the wage-fixing principles of the time. The allowance was reduced to 17.4 per cent of salary as a consequence of his Honour determining that the 1990 increase of 15 per cent should not be applied to any allowances (this allowance was subsequently replaced by the "special allowance" and there is no reference to on call/recall). No other significant changes were made in the award made by Fisher P. 41 In the 1997 consent Award there were a number of changes one being the introduction of a definition of "normal duties" in Clause 2: "Normal duties" means clinical or other duties and responsibilities undertaken by the Staff Specialist: (i) which fall between the hours of 8:00 am and 6:00 pm Monday to Friday; or, (ii) for 10 sessions per week; or, (iii) for sessions as otherwise agreed; or, (iv) performed according to a Part-Time Agreement. In addition, the Staff Specialist will be available for reasonable on call and recall duties outside of Normal Duties. 42 The applicant submitted that in relation to the definition of "normal duties": Although this definition resembles an hours clause, the Award remains silent on what should happen if a staff specialist undertakes work in addition to normal duties and reasonable on call/recall. However, as part of the same negotiations the Private Practice Determination was amended to make provision in certain circumstances for payment of an allowance of up to 10% of salary for abnormal working hours and recall. 43 The relevance that the HAC attached to the Award history was that an analysis of the factors and considerations said to support the initial Award rates for Staff Specialists and the work features and workplace factors found to support substantial increases in those rates in the following 25 years, revealed that many of the work value change considerations now sought to be relied upon by the applicant have already been taken into account/compensated for. It was submitted that double counting would undoubtedly be involved if the Commission were now to award yet further substantial increases in salaries on the basis of those considerations. 44 Following a careful analysis of the various decisions between 1966 and 1990 in which the work of staff specialists had been considered by the Commission, Mr M Kimber SC for the HAC submitted: The above analysis demonstrates, inter alia , that there is certainly no warrant whatsoever in 2005 for the Commission to award any further increases in the rates paid to Staff Specialists based on: (a) The fact that some Staff Specialists (or more strictly, specialists in some specialities) are routinely required to work into the evening hours and/or at weekends. There is no reliable evidence before the Commission to suggest that this burden has substantially increased since 1991 (let alone for a majority of staffs specialists); (b) The hours worked by Staff Specialists in the system, especially in circumstances where there is no reliable evidence as to the overall hours actually worked by Staff Specialists (let alone evidence of hours worked on public as opposed to private patients) and where the available AMWAC evidence actually advanced by the Applicants (with all its shortcomings) suggests that, if anything, the hours worked by medical practitioners generally and by Staff Specialists in particular have actually decreased in recent years. That is, whilst the Applicant had, in at least one of the earlier cases ... actively asserted that Staff Specialists were working an average of 55 hours per week, there is no evidence before the Commission in this case which support that conclusion; (c) There is no basis for further increasing the "all-up" rate because of any perceived adverse change in the incidence of on-call/recall faced by a significant number of Staff Specialists working in the system; and great care will need to be taken by the Commission when considering the particular alleged work value change factors now sought to be relied upon given the Applicant's earlier reliance on many of those factors in previous cases ... The position is a fortiori in circumstances where Staff Specialists have, over the years, been further compensated for the fundamental features/disabilities of Staff Specialists' work in the system by the awarding of additional annual leave ... and (at least from the early 1990s) by the payment of a fully superable 17.4% allowance on top of the base rates. 45 The HAC tendered an exhibit summarising the various factors that it submitted had already been compensated for by increases granted in one or more of the work value cases between 1966 and 1990, such factors being: · Hours of work, on call, recall weekends · New technology, drugs, techniques and equipment · Increased administration · Ageing/Sicker population · Increasing sub-specialisation · Increase in consumer knowledge · Stress and Strain/Skill/ Responsibilities · Team approach · Staff Training Obligation · Keep medical knowledge up to date. On-Call/Recall/Special Allowance 46 A matter that the HAC considered was important to be taken into account as part of the background to the applicant's claim for salary increases was the 20 per cent allowance granted to staff specialists by consent in 1985 and the conversion of that allowance into a special allowance of 17.4 per cent in 1990. HAC submitted that the on call/recall allowance was initially granted to all Staff Specialists in the system (regardless of whether they had little, if any, on-call/recall obligations) notwithstanding the Staff Specialists' base rates had at all times in the period 1966–1984 included a component for the fact that Staff Specialists (or at least some of them) were required to participate in a range of on-call/recall rosters and yet received no additional/separate compensation for the disability/extra work associated with such rosters. 47 Further, it was submitted whilst it had always been the case that the Commission had declined to take into account the private practice earnings of Staff Specialists when seeking to set base rates for Staff Specialists the generosity of the 17.4 per cent was compounded by the fact that it has been, at all material times, included in the definition of "salary" for the purposes of calculating the further 20 per cent private practice allowance paid to level 1 Staff Specialists and for the purposes of calculating the allowance and drawings entitlements of Staff Specialists on levels 2-5 of the private practice arrangements. 48 Further still, it was submitted, in 1997 when the current Award was made, the allied Determination also introduced the "abnormal working hours and recall provision" that reflected the parties' agreement that some senior medical practitioners "may be required to work in excess of normal duties and reasonable on-call/recall to provide direct patient care and provided that, in certain prescribed circumstances, such senior medical practitioners were then entitled to receive "a payment of up to 5% a rate applicable to a senior medical practitioner under a level 1 arrangement (including the special allowance and the allowance for the assignment of private practice earnings – i.e. the 20%)…" and, in some even more exceptional circumstances, a payment of up to 10% of that same rate. 49 The HAC submitted the historical and current generosity of the compensation awarded to Staff Specialists to provide effective medical cover for the delivery of appropriate medical services in the system 24 hours a day, seven days a week is further demonstrated by the fact that: (a) In the period 1966–1990 the base rates on which the abovementioned allowances have always been calculated rested on the assertion/assumption that Staff Specialists (or at least many Staff Specialists) were working (on average) 55 hours a week and yet the Applicant's own evidence in this (at its best) does not support such a contention in 2005. Indeed, the available evidence suggests that the average hours now worked by Staff Specialists has been steadily falling in recent years and now fits more comfortably in the range of 40-50 hours a week (to the extent that useful generalisations are possible to make). (b) It has been clear, at all material times, since 1966 that there is enormous variation in the on-call/recall and after hours and weekend commitments of Staff Specialists and yet all Staff Specialists have been receiving generous compensation for such commitments/disabilities; (c) Furthermore, whilst it seems that 55 hours worked per week was used by the Commission in setting appropriate base rates (at least in 1974 and 1978) it acknowledged the reality that whilst base rates were being set by reference to 55 hours a week of work at least some unknown proportion of those 55 hours was obviously spent providing medical services to private patients, being work for which they received at least some compensation via the private practice arrangements agreed between the parties over the years. 50 We note that for a Senior Staff Specialist receiving a current salary of $136,709 the special allowance is worth an additional $23,787. Movement in salary rates since 1990 51 The HAC submitted that whilst it was true that the Commission has not been called upon to review the work of Staff Specialists since 1990, in the period between 17 September 1991 and 1 July 2007 this group of professional workers had, nevertheless, received increases totalling 74 per cent when due allowance is made for the impact of compounding. 52 Acknowledging that it was also true that none of the agreements reached between the parties since 1991 was said to compensate for or otherwise take account of work value changes occurring since 1991, the HAC submitted that the Commission would, nevertheless, take into account the extent of those increases when now seeking to determine appropriate rates of pay for Staff Specialists. This was especially so, Mr Kimber contended, in circumstances where the applicant had sought to rely upon changes to work which have occurred in the quest for greater productivity and efficiency, most notably the increase in admissions; reduction in number of beds; reduction in length of stay; increase in day of surgery admission and day only procedures; and the introduction of pre-admission clinics and hospital in the home initiatives, that have already been compensated for by the agreed increases since 2001 because such increases were, inter alia, "paid in recognition of the increased productivity and efficiency". Reference was made to Public Hospital Nurses' Award (No. 4) (2003) 131 IR 17 at [219] – [220] where the Commission said: We are satisfied that the objective of the 2000 MOU was to achieve improvements in productivity and efficiency in return for an increase of 16%. We are also satisfied that the 1996–1999 agreement between the HAC and the Association involved wage increases in consideration of work value factors, particularly in respect of NUMS. As the HAC contended, some of the more significant matters now relied upon by the Association in support of the increase based on changed work value and that as relied upon to justify wage increases under the 1996 – 1999 agreement and are matters representing improvements in productivity; higher numbers of patients per year; increased bed occupancy; shorter length of stay; increased acuity; and decrease in numbers of nurses to do the work. Clearly, if an increase in work value has already been compensated for, a further wage adjustment with respect to the same work value increase would be double counting. Similarly, if improvements in productivity have brought about changes in work which have already been recognised by the payment of wage increases, care must be taken to avoid any double counting by awarding further increases in respect of those changes. 53 The HAC noted that in Public Hospital Nurses' Award (No. 4) at [241] the Full Bench indicated that whilst there had been a significant net addition to the work requirements of nurses over the relevant periods, nevertheless only "a moderate increase was justified" for a number of reasons including the fact that nurses had already received increases for improvements in productivity and efficiency and had in the period under the seven years of consideration received overall compounded increases in the range of 44 to 55.5 per cent. It was submitted that, similarly, the level of and the reasons for the wage salary increases granted to Staff Specialists since 1991 should also have a "moderating influence" in determining the amount of pay increase that should be awarded to this professional group in 2005. Relationship Between Staff Specialists and Visiting Medical Officers (VMOs) 54 The claim for an increase in staff specialists' salaries of 41 per cent was based on a comparison of the base hourly rate for staff specialists and that of VMOs. ASMOF claimed that in terms of education, skill level and experiences, there was no difference between a specialist who is a VMO and a specialist who is a staff specialist; that specialists may be employed as a staff specialist in one area health service and hold a VMO appointment at another. Accordingly, it was submitted, the salaries should be the same. 55 It was submitted by the applicant that there were special case grounds for ensuring that the disparity between staff specialists' salaries and those paid to VMOs did not become too great: Recognising that public hospital salaries will never be able to match private sector remuneration levels, individual staff specialists make a judgement that the above factors compensate for a lower level of remuneration. However, where these factors are compromised or absent and/or where the disparity in remuneration becomes too great, the judgement will be that staff specialist employment is not sufficiently attractive. The point at which these individual judgements will impact on the ability of public hospitals to attract staff specialists will vary according to specialty. It has, for example, always been difficult to attract proceduralists such as orthopaedic surgeons and obstetricians to staff specialist positions because of the vastly superior level of remuneration available in the private sector. The need to offer VMO appointments instead of staff specialist appointments in a particular speciality is a sure sign that staff specialist remuneration and conditions are or are becoming uncompetitive. The gap between VMO/private sector and staff specialist remuneration has increased since 1991 and the non-financial factors that have made staff specialist employment attractive have been substantially eroded. The introduction of the GST has added immense complexity to staff specialists' rights of private practice and forced them to become small business operators with all the consequent complexities, eg. ABNs, GST registration, Business Activity Statements, etc. The Department of Health Circular that describes the GST arrangements for staff specialists runs to 136 pages. These additional complexities have removed one of the key advantages of being a staff specialist, ie. freedom from the difficulties associated with running a business. The ability to undertake research and allocate sufficient time to teaching has been squeezed by the significant increase in workload over the course of the 1990s. The under-resourcing of the health system has persuaded many staff specialists to leave the public hospital system for the lower stress levels and higher remuneration of the private sector. The establishment of major private hospitals co-located with virtually all the major Sydney teaching hospitals has offered alternative workplaces with levels of equipment and resources similar to, if not better than, the public system. Public Hospital Nurses' Cases 56 In Re Public Hospital Nurses (State) Award (No 3) (2002) 121 IR 28 the Commission considered a claim by the Nurses' Association for increases under the special case principle based on a nursing shortage and other factors. The key findings of the Full Bench included the following: 47 The evidence is clear: there is a shortage of nurses in New South Wales. The figures show that the number of registered nurses' positions being actively recruited (PARs) almost doubled between 1996/97 and 2001/02. In May 2002 there were nearly 2000 nursing positions being actively recruited. … 89 As to the first proposition, namely, wage rates should not be set on the basis of labour or skill shortages, we emphasise that we are not proposing to increase rates of pay for nurses simply on the basis that there is currently a shortage of nurses. The evidence was that the shortage is causing a strain on the public hospital system in New South Wales; that the shortage is a serious problem that needs to be addressed as a matter of priority both in respect of the short and the long term; that nurses are coming under increasing stress because of the shortage, with an effect on the value of their work; and, critically, that nurses' wages are below the level of all other comparable health professionals and this is contributing to the nursing shortage. … 91 When considering an application for wage increases on the basis that a special case exists and where it is claimed that there is a shortage of labour, the Commission is entitled to look at all of the circumstances in order to determine whether a special case is made out. The circumstances will include the important consideration of the public interest. In our opinion, the disadvantaged position of nurses and the difficulties being experienced in the public hospital system because of the nursing shortage are powerful public interest considerations. … 107 Nonetheless, in circumstances of a nursing shortage where nurses' wages are levels lower than they historically have been compared to all other comparable health professionals, we consider a wage increase at this time that redresses this situation in significant measure will have a positive effect on nurses' decisions about whether they stay in their chosen profession. If we were not to address this issue there is no doubt that it would be, and would be seen by nurses to be, a negative signal and lack of appreciation which could have the effect of exacerbating the nursing shortage and the mounting problems facing the public health system. … 122 … Against the background of the need to attract and retain nursing staff in order to relieve the strain on the public hospital system, it is in the public interest to lift nurses' wages. … 124 … It also means that when we come to assess fully the question of change in work value it should be understood that the six per cent wage increase here awarded is, in part, in recognition of work value changes. 57 In Public Hospital Nurses (No 3) the Commission granted nurses the six per cent wage increase from 1 January 2003. ASMOF contended that the shortage of staff specialists was even more acute than that found to have been the case in relation to nurses and salary increases were similarly justified for staff specialists. We will deal with this issue in more detail later in our judgment. 58 In Public Hospital Nurses (No 4) the Commission granted nurses a further 3.5 per cent from 1 January 2004 on work value grounds. In reaching its conclusions the Full Bench stated: Conclusions in respect of work value claim 237 … Most of the changes relied upon by the Association, with the notable exception of the effects of the higher levels of acuity and dependency do not, taken in isolation, constitute a significant net addition to work requirements for registered nurses generally. 238 … Whilst it is the case that the other changes we have identified do not, of themselves, constitute a significant net addition to work requirements we consider it is appropriate to ask whether these other changes, in combination, meet the test under the work value principle. That is, whilst the requirement to keep pace with the introduction of new technology does not, of itself, constitute a significant net addition to work requirements for nurses is a different answer arrived at when one also has regard such other matters as: the ageing population; additional duties that it is claimed nurses are now required to perform such as nurses performing functions previously performed by doctors; discharge planning; implementing child protection legislation; greater accountability; mentoring and preceptorship of less experienced nurses; increased paperwork and meetings; undertaking mandatory and other training; and, having a greater role in policy development and protocols in the context of the overall change that the Association contended has occurred in the public hospital system? 239 We have come to the conclusion that the answer is in the affirmative. We accept the Association's submission that when one has regard to the combination of all the factors that have been canvassed in this judgment the conclusion must be that there has a occurred a significant change in the role of nurses within the public hospital system. As it was submitted for the Association, the public hospital system provides a different service in a different way to the one which it provided in 1996 and this is exemplified by the emphasis on confining the patients' stay in hospital to the most acute phase and providing for all other phases, including high acuity phases, to be managed in the home or other facilities in the community. This phenomenon has had its own impact on nurses' work through increased levels of acuity and dependency but at the same time the other demands on nurses that we have identified continue to grow. 59 ASMOF relied on the proposition that the conditions under which the work of staff specialists is performed in the public hospital system and the demands on staff specialists have so altered and combined in such a way, as to materially alter the role and function of staff specialists in the public hospital system. The applicant stressed that the datum point for the consideration of the changes for staff specialists was five years earlier than that which applied to nurses. 60 It should be added in relation to nurses' wages that in May 2005 the parties accepted a recommendation of the Commission (Boland J) to increase wages by a further 14 per cent in four instalments from January 2005 expiring on June 2008 (3 per cent - 1 January 2005; 3 per cent - 1 July 2005; 4 per cent 1 July 2006; 4 per cent - 1 July 2007). The making of the recommendation was influenced by the public sector salaries agreement wherein it was agreed there would be salary increases of four percent occurring over three periods commencing respectively 1 July 2004, 1 July 2005 and 1 July 2006. There was also a collateral agreement between the parties arising out of a memorandum of understanding that will result in the making of a second consent award providing a further four per cent salary increase operative from 1 July 2007: Crown Employees (Public Sector - Salaries 2004) Award [2005] NSWIRComm 53. The making of the memorandum of understanding between ASMOF and HAC referred to earlier and which delivered a 12 per cent increase to staff specialists, was no doubt also influenced by the wider public sector settlement. 61 The HAC also referred to the Public Hospital Nurses' Cases. Senior counsel submitted that the following findings in Public Hospital Nurses (No 4) apply with equal force in this case especially when considered by reference to the Agreed Statement of Facts. That is, on the basis of the findings in Public Hospital Nurses (No 4) the HAC accepted that there were proper foundations upon which the Commission could conclude that there have been changes since 1991 that constitute a significant net addition to the work requirements of Staff Specialists such as to warrant some further increase to their salary rates: [42] The evidence regarding the bed base, the increase in bed occupancy, the increase in case flow and the decrease in average stay suggests that the public hospital system has been undergoing a change in the way it operates and, indeed, we consider this as the case. Importantly, patients are not kept in hospital as long as they once were – there is a faster turnover of patients and we consider that a shorter length of stay means that the focus of the nurses' work has changed from managing patients across a continuum of care from relative wellness through the acute episode and then back again to relative wellness, to the management of acute episodes and the preparation of a person for handover still at a relatively acute stage but to the care of another member of the nursing team … For many nurses they are experiencing more stress and greater workload. ... [44]…Whilst faster turnover of patients increases the workload of nurses, regard must be had to countervailing factors such as, for example, the creation of speciality units such as stroke units and specialist geriatric units, which allow the heavy "patients" … to be moved to specialist wards; much improved drugs, technology and surgical techniques; and new preadmission procedures including advanced discharge planning. ... [58]…There has been an increase in acuity over the period since 1996. As Professor Dwyer said in his evidence …nurses are asked to look after sicker patients, more technically complex patients; often patients whose families have more emotional demands than ever before… [59] That there has been an increase in acuity of patients does not, of itself, automatically translate to a significant net addition to work requirements such as to justify a wage increase. This is so for a number of reasons. An increase in the acuity levels, for instance is not a new phenomenon. Such increases have been identified in past in work value inquiries. [60] Moreover, the fact that nurses are required to deal with greater levels of acuity in patients cannot be viewed in isolation from other changes that have occurred in the public hospital system that affect the level and intensity of nursing work. The HAC identified these changes as including: changes in treating techniques including new drugs and surgical techniques; improved technology …the effect of networking health services between hospitals (which concentrates resources on areas of greatest acuity)… ... [66] Whilst we consider that dealing with increased acuity and dependency levels is an intrinsic aspect of the nursing profession it does not automatically follow that these changes in acuity or dependency will never constitute the basis for wage increases on work value grounds … [67] The evidence in this case was unambiguously that the nature of the work and the skill required in dealing with higher levels of acuity has changed for nursing staff. Notwithstanding that it is to be expected in the profession of nursing, that nurses will be required to deal with changing levels of acuity, in this case we have discerned a system wide change involving a significant shift in the way the public hospital system provides care and services and the role of nurses within. It is this fundamental change that distinguishes the effects of higher levels of acuity on the work of nurses from what might be regarded as the norm or as evolutionary change. [68] It is our assessment that these changes constitute a significant net addition to work requirements. In coming to this conclusion we have been mindful of the factors referred to by the HAC that may be said to counterbalance the effects of higher levels of acuity on nurses' work. These factors have caused us to regard the changes as having less impact than otherwise might have been the case. ... [239]…As it was submitted for the Association, the public hospital system provides a different service in a different way to the one which it provided prior to 1996 and this is exemplified by the emphasis on confining the patient's stay in hospital to the most acute phase and providing for all other phases, including, high acuity phases, to be managed in the home or other facilities in the community. This phenomenon has had its own impact on nurses' work through increased levels of acuity and dependency… 62 Despite the acceptance by the HAC there had been changes since 1991 that constituted a significant net addition to the work requirements of staff specialists, it was submitted that only modest increases based on work value change grounds could be justified. This was so, it was submitted, because of the requirements set out in Public Hospital Nurses (No 4), namely: (a) The Applicant needs to demonstrate that there have been changes in the nature of work, skill and responsibility required or in the conditions under which work is performed to such an extent that the changes constitute a significant net addition to work requirements so as to warrant the creation of new classification or upgrading to a higher classification. That is, it is a "strict test" (at [16]); (b) There must be no likelihood of wage leap-frogging either within the internal award structure or against external classifications to which that structure is related (at [16]); (c) There should be no double counting. That is, changes that were or should have been taken into account in any previous work value adjustments are not to be included in any work evaluation under this principle (at [17]); (d) The above requirements impose "a significant burden on an Applicant" particularly because of the abovementioned "strict test" (at [18]); (e) Changes in work by themselves may not justify an increase in wages. Some changes bring about a net reduction in work requirements. Others merely reflect the evolving nature of the particular occupation where skills or responsibilities are lost and new ones gained without producing a net addition to work requirements (at [18]); (f) In many occupations, particularly professional occupations, change, and the requirement to cope with it by coming to terms with new methods and technology, is an inherent and accepted characteristic of the employment and rarely will this evolutionary process attract extraordinary wage increases under the work value principle. That is, changes, "even spectacular changes" may not necessarily satisfy the work value principle (at [18]); (g) It is to be understood that new techniques and procedures bring with them their own advantages; for every new technological advance there is likely to be somewhere an inferior technology in part or in whole abandoned. Superior technologies give superior results and tend to free practitioners from laborious, uncertain and stress practice. Changes, subject to habitation, do not necessarily make things more difficult or more demanding. But equally, they may remove problems, decrease anxieties and uncertainties as well as be more rewarding and more productive (at [18]); (h) Changes to work which have occurred in the quest for greater productivity and efficiency may have already been compensated for by wage increases paid in recognition of the increased productivity and efficiency or by increases granted from earlier work value changes (at [19]); (i) The Commission, when determining whether the tests under the work value principle have been met, "must carefully sift through the material that has been placed before it and separate out all those changes which have occurred in the nature of the work, skill and responsibility of employees or in the environment in which the employees work and which have not previously been the subject of compensation" (at [20]); (j) An objective assessment then has to be made as to whether the changes that have occurred amount to such a significant net addition to work requirements as to warrant the creation of a new classification or upgrading to a higher classification (at [20]); (k) Reliance on the work value principle for general wage movements across all classifications in an award is not justified. The purpose of this principle is directed towards specific work changes in specific areas. It was not intended that generalised across the board wage increases should be based on this principle. Accordingly, if an Applicant seeks wage increase for all classifications under an award the Applicant carries the onus of demonstrating work value changes in respect of each classification. It is not sufficient to contend, for example, that there have been changes in technology over the relevant period that have impacted on the work value of employees generally. It must be demonstrated how that impact has led to a significant net addition to the work requirements of each award classification in respect of which the increase is sought" (at [21]-[22]). That is, unless there is evidence of across the board impact of established changes, then there is a need for a "balancing" or "averaging" approach: [241(6)]; (l) Whilst it is expected that an Applicant would present "best case" evidence in support of its claims, ultimately however, an Applicant must show the relief it claims should have general application and that the problem it seeks to remedy is not confined to the witness giving evidence or is not merely an aberration. The Commission will need to judge whether the evidence, considered as a whole, is sufficiently representative to support the granting of a claim that will have general application: see Re Public Hospital Nurses' (State) Award (No 1) (2002) 115 IR 183 at [15]–[16]. 63 The HAC was correct in identifying the foregoing tests as being applicable to whether the requirements of the work value principle have been met and it is these tests we propose to apply in this case. Approach to determination of issues 64 We will come to each of the relevant issues for determination in more detail shortly but in prosecuting its claim, ASMOF adapted the approach of the Commission in the Statement by the Full Bench in Re Public Hospital Nurses (State) Award (2002) 118 IR 336 issued on Monday, 21 October 2002 where the Commission posed a number of questions. Leaving aside the issues specific to the Nurses' matter, ASMOF proposed the issues to be addressed in this matter were follows: (a) Whether the claimed wage increases are justifiable on the ground of changes in the work value of staff specialists; (b) Whether there is a staff specialist shortage and, if so, whether the shortage provides the grounds for wage increases on the basis that a special case exists for granting such increases; (c) Whether the rates of pay for staff specialists have declined relative to rates for comparable professional employees, and, if so, whether a special case exists for adjusting salary rates; (d) Whether the claim for new/increased managerial allowances is justifiable on work value and/or special case grounds; (e) The impact of the claim in the context of the Commission's duty to have regard to the state of the economy of New South Wales and the likely effect of its decision on that economy (the "economic impact" issue). 65 We consider these are the relevant questions for determination in this case. WORK VALUE ASMOF's case 66 We identified in [64] above, five issues for determination. The first of these is whether the claimed wage increases are justifiable on the ground of changes in the work value of staff specialists. ASMOF stressed the importance of the agreed statement that it said reflected substantial concessions by the HAC that significant work value changes have occurred. These significant work value changes, it was submitted, justified substantial increases. ASMOF contended the position of the HAC on the wage increases in the light of the concessions made rendered it impossible for the HAC to oppose any wage increase less than that obtained by nurses. ASMOF emphasised, however, that quite apart from the substantial work value and special case factors identified in the evidence, the period in respect of which work value/special case changes must be assessed is five years longer than the period considered in the Nurses' cases. 67 In support of its work value claim, ASMOF contended that the evidence regarding changes in key aspects of the work of staff specialists, included but was not limited to: · A change from "consultant-led" to "consultant-based" care. · Increase in the age and acuity of patients. · Introduction of new and complex interventional techniques, especially in cardiology and radiology. · Introduction of new surgical techniques. · Expansion of medical knowledge and the consequent requirement to develop new skills, eg., the Human Genome Project. · Introduction of new technology, especially in medical imaging. · Changes in end-of-life decision-making, patient/community expectations and the medico-legal environment. · Increase in admissions (especially acute admissions) and reduction in the number of beds. · Reduction in length of stay, increase in day-of-surgery-admission and day-only procedures. · Introduction of pre-admission clinics and hospital-in-the-home initiatives. · Increase in access block and consequent pressure to discharge patients. · Strategies to address access block, including EMUs [Emergency Medicine Units], REATS [Rapid Emergency Assessment Teams] and ASETs [Aged Care Services Emergency Teams]. · Move from inpatient to outpatient models of care and the "privatisation" of outpatients. · Structural changes including "area-isation", networking and the introduction of the business unit model. · Impact of co-located private hospitals. · Increase in managerial responsibilities. · Lack of adequate resources; failure to fill vacant positions in a timely manner. · Decreasing opportunities for research and teaching. · Increasing sub-specialisation and the disappearance of "generalists". · Introduction of multi-disciplinary clinics and teams. · Increasing "casualisation" of the nursing and junior medical workforce (and the consequent increase in the need for supervision and counselling of junior medical officers). · Increases in non-clinical requirements without additional resources: eg. written protocols; hospital/laboratory accreditation; occupational health and safety; clinical quality activities; and, adverse incident management. · Increases in regulation of the profession, including new requirements to undertake continuing medical education. 68 The applicant submitted that in the context of a labour shortage, the HAC and the wider community relied on the existing employees to maintain the system by taking on additional tasks, developing new skills and working under considerable pressure to fill the void created by the labour shortage, and by providing at all times a prompt, uninterrupted, high quality service, notwithstanding that fact that they may have inadequate human (and physical) resources to do so. 69 It was contended that when the Full Bench has regard to the combination of all the factors identified above, the conclusion must be that there has occurred a significant change in the role of staff specialists. As it was found to be the case in Public Hospital Nurses' (No 4), the public hospital system provides a different service in a different way to the one which it provided at the datum point and this is exemplified by the emphasis on confining the patients' stay in hospital to the most acute phase and providing for all other phases, including high acuity phases, to be managed in the home or other facilities in the community. 70 ASMOF submitted that higher levels of acuity were a significant factor that placed additional, and unanticipated, demands upon the staff specialist workforce. It required more complex investigations of patients and a style of patient management which until recently was not a regular feature of medical practice. It was put that a stark example of this fact is to be found in the mental health area. Mental health patients who now find their way into mental health facilities, were, as a group, significantly more seriously mentally ill because of a range of factors including modern habits of drug abuse. Another significant change was the impact upon the health system of the general degradation of the mental health system. It was submitted this has had an immediate impact not just upon mental health specialists but also upon emergency departments. 71 Supervision of junior staff, many of whom it was said were relatively poorly trained overseas trained doctors, placed an added demand upon staff specialists. It was submitted that whereas once staff specialists could expect a collegial and steadily more valuable contribution from their junior colleagues in training, now staff specialists spend time 'carrying' those colleagues and additional time supervising and counselling them. 72 ASMOF contended that staff specialists were the drivers of productivity changes in the system because it was their initiatives in clinical care systems and techniques that have led to the massive reduction of hospital stays. These initiatives range across the specialities. The applicant referred to a number of examples that included the community based care described by Associate Professor Gideon Caplan at Prince of Wales Hospital, the 'EMUs' (Emergency Medicine Units) established in emergency departments, the Aged Care Services Emergency Teams, the digitisation of radiology services, the development and promulgation of detailed specialist protocols and the impact of all these upon the massive number of procedures and medical services now able to be performed on patients as outpatients thus reducing dramatically the number of inpatients. 73 The applicant contested the HAC's assertions that many of the changes relied upon by ASMOF to justify an increase in salaries were merely evolutionary changes that the medical profession would take in its stride. Mr Nolan for ASMOF submitted: The range and scope of work value changes identified are so extensive and so significant in their impact that they cannot be swept under the rubric of merely evolutionary changes in the work of staff specialists. Skills or responsibilities have been added to in significant ways. The responsibilities and burdens of the work have been magnified in a manner which is a world away from those changes usually associated with 'run of the mill' work value factors. The new techniques and procedures described in the evidence may bring advantages, but these advantages are, in the main, advantages which accrue to the system and are not advantages in the sense that they make the work of staff specialists in any way easier. They may be intellectually more challenging but it would be folly to suggest that the demands of the procedures, including laparoscopic procedures and the kinds of procedures identified, for example, which have become a feature of the work of cardiologists and radiologists, could be described as freeing the practitioners involved in them from 'laborious, uncertain or stressful' work. To the contrary, the demands in the present environment must magnify those factors - however intellectually satisfying the work might be - because of the great demands for skill and precision now demanded of staff specialists. The point is made good by reference to the evidence from Dr. Glenn and the inspections of radiology at St. George Hospital. Notwithstanding the massive increases in the numbers of images thanks to modern technology, the task presented for the radiologist is not an easier or less stressful one, but more demanding. It requires greater and more sophisticated skills because of the more exacting requirement to assess and evaluate the diagnostic picture now able to be presented thanks to modern technology. That is not to forget the separate and distinct new demand for radiology interventional services as a significant work value factor. 74 The Federation submitted that the changes identified in 1990 before Fisher P were dwarfed in their magnitude and significance when compared with the changes identified in the present case; none of the factors listed in the agreed statement of facts then placed before the Commission approached the scope, range, intensity and impact upon the work environment of the factors contained in the evidence in the present case. 75 On the question of leap-frogging, ASMOF submitted that there was no likelihood or even possibility of any wage leap-frogging so far as any other group is concerned. It was contended the staff specialist position was sui generis and that the Award had never been relied upon by any other employees for wage increases. On a pragmatic level, it was submitted, the other health awards have all been the subject of agreed settlements for closed periods or otherwise have been dealt with by the Commission in special cases. 76 ASMOF also denied the prospect of double counting, submitting the changes identified in this case had never previously been examined by the Commission and nor had they been taken into account in any consent pay adjustment. It is incontrovertible, it was submitted, that the work of staff specialists had not been considered since the datum point and that intervening wage settlements have been in the nature of cost of living or general wage settlements which have paid no regard to the kinds of work value factors identified in this case. HAC's case 77 As we have explained, the HAC approached the work value question not on the basis of outright opposition but rather on the realistic basis of accepting that change had in fact occurred since the datum point but to the extent that it justified only modest increases in salary for staff specialists. 78 The HAC's approach in responding to the factors identified by ASMOF as amounting to a significant net addition to work requirements for staff specialists was to take each of the factors and by reference to the evidence and agreed facts, analyse their merit. Change from "consultant led" to "consultant based care" 79 It was submitted that whilst the applicant has put on witness statements from 13 major specialty areas, only the emergency physicians and the cardiologists make reference to this change. Further, that given the absence of any evidence from specialists in district and country hospitals with respect to this matter, there is a proper basis for inferring that "consultant based" care has always been a feature of rural and district staff specialists' work (i.e., they have always been "hands on"). In any event, it was submitted, being called on to do more of the work formerly done by more junior staff members does not result in an increase in the work value of staff specialists: see Public Hospital Nurses Case (No. 4) at [110]-[112]. Increase in the age of patients 80 The HAC submitted that the evidence did not support a conclusion that the ageing of the patient population had resulted in a significant net addition to the work requirements for all or even a significant proportion of staff specialists. This is especially so in circumstances where the ageing of the population is more appropriately addressed in the context of any consideration of general changes in the acuity of patients. It was submitted that the Commission should reach the same conclusion with respect to this matter as it did in the Public Hospital Nurses' Case (No. 4) at [78] namely, that: We accept the Association's contention that the patient population is ageing. We also accept that this has had a significant impact on the work of sections of the nursing workforce. However, we are not persuaded that the change in the age of the patient population since 1996 has had the effect of impacting to the requisite degree on the work value of nurses generally in public hospitals. Whilst it must be acknowledged that the treatment and care of the elderly has improved in the public hospital system this does not, of itself, translate into a significant net addition to work requirements for all nurses. Increase in the acuity of patients 81 The HAC accepted that the findings in Public Hospital Nurses' Case (No. 4) with respect to acuity applied with equal force in the context of the work of staff specialists. However, it was submitted the Commission would also make due allowance for the substantial initiatives that have already been taken and will continue to be taken by the HAC to better manage the impact of such changes in acuity, on the work of staff specialists. Introduction of new and complex interventional techniques, especially in cardiology and radiology and the introduction of new surgical techniques 82 The HAC submitted many of these changes were evolutionary and/or made the staff specialists' work easier in many respects. The significant technological changes that have occurred in the areas of radiology and pathology and the impact of those changes on staff specialists generally could only be regarded as a positive impact. That is, it has made their lives and their work much easier (quicker, safer and otherwise more efficient). Moreover, it was submitted, a consideration of the earlier work value cases revealed that staff specialists had already been compensated for many of these changes. Expansion of medical knowledge and the consequent requirement to develop new skills; Introduction of new technology, especially in medical imaging 83 The HAC contended the evidence with respect to these matters was overwhelmingly found in the context of new procedures and techniques as dealt with under the previous heading and relied on what was submitted there. Changes in end-of-life decision-making, patient/community expectations and the medico-legal environment 84 It was submitted the evidence here was very general in nature and could not satisfy the strict test required by the work value change principle, especially in circumstances where: (a) Dealing with patient/ community expectations is a basic feature of the work of all staff specialists; (b) Of the 13 specialty areas represented in the evidence, only three of those specialities made any reference to "end of life decision making and patient/community expectation" and so, to the extent that there has been any change in these parameters, it could not be said to be significant or far reaching so as to support an across the board increase in salary rates for staff specialists; (c) The available evidence does not suggest any dramatic change in any of the suggested parameters; (d) The Commission has already compensated Staff Specialists for changes in consumer knowledge/expectation; (e) The asserted changes in the medico-legal environment is not made good by reference to any hard evidence (e.g., a significant increase in the number of suits filed against staff specialists) and fails to pay any regard to the significant recent changes limiting the rights of injured patients (and other people) as affected by the Civil Liability Act 2002, That is, these recent legislative changes have undoubtedly significantly lowered the exposure of staff specialists to allegations of professional negligence; (f) In any event, the applicant itself sees staff specialists' legal "exposure" to be appropriately managed by employer-funded professional insurance (being a matter currently under discussion between the parties). Increase in admissions (especially acute admissions); reduction in the number of beds and in the length of stay; and the increase in day of surgery admission and day only procedures 85 The HAC accepted that the Commission's findings in Public Hospital Nurses' Case (No. 4) with respect to these matters, applied with equal force in this case: See Public Hospital Nurses' Case (No. 4) at [42], [44], [58], [59], [60], [6], [67], [68] and [239]. However, it was submitted the Commission would need to make due allowance for the numerous initiatives taken by HAC in the period since the Nurses' Case was decided that have lessened, and will increasingly lessen, the adverse impact of these changes on the work and working conditions of Staff Specialists. The initiatives were referred to in the agreed facts and we consider it is appropriate to identify the more significant of them, which included [references to witness statements and to other evidence from which agreed facts were drawn is not included]: 9 Preliminary Department of Health data indicates that approximately 800 beds have opened since June 2004. 10 On average 60% of all overnight patients admitted to an inpatient bed do so via the Emergency Department. New South Wales Health's expenditure on programs such as same day surgery and outpatients, which reduce the need for admission to overnight beds, has increased significantly. Expenditure on early intervention programs such as primary and community based services and population health programs has also increased. ... 14 Department of Health Access Block data shows that for the period June 2004 to June 2005 access block improved in most major hospitals as a result of the implementation of a range of strategies including opening new beds and clinical redesign projects. [Table not reproduced] 15 This data as at July 2005, average access block for NSW was 29% and only one hospital in the state was above 50% and only eight hospitals were above 40%. ... 32 Another initiative is the fast tracking of treatment for patients with semi-urgent illness or injury by teams of senior emergency staff. These are referred to as "Rapid Emergency Assessment Teams" (REATs). The major hospitals across Sydney, the Central Coast and Newcastle with high activity levels and poor waiting time performance were targeted for the initiative. These teams assess patients and commence treatment prior to the usual full assessment. This intervention also improves waiting time performance. REATs are also considered a success. 33 Clinical Initiatives Nurses (CINs) are trained and qualified to commence emergency treatment more quickly and without the direct supervision of a doctor. 34 Aged Care Services Emergency Teams (ASETs) are intended to improve the care of older people who attend Emergency Departments. These multidisciplinary teams are working with Emergency Department staff in improving early identification and management of older people with complex care needs. Such early evaluation minimises the requirement for such older persons to remain in hospital, prevents readmissions once they are discharged and minimises their loss of function and mobility. ... 43 The NSW Government has created eight new specialist training networks for physicians across NSW. In 2005, 297 basic physician trainees were appointed, an increase of 28 compared to 2004. ... 47 New South Wales Health has identified a range of measures that it intends to adopt in 2004-05 to address a number of concerns with the operation of the public hospital system. Those measures include: (a) implementation of the 2004 sustainable access strategy; (b) establishment of a workforce steering committee to further develop, implement and monitor the workforce action plan; (c) working closely with the Australian Government and the Division of General Practice to establish after hours general practice clinics based in, or on the grounds of, public hospitals; (d) improvements in bed management practices through business process reengineering of patient flow problems. This is currently occurring in nine metropolitan hospitals (known as the "access block improvement program"); (e) implementing transitional care beds and programs to better meet the need of aged care patients and to reduce the number of acute care beds they currently occupy; and (f) improvements and establishment of better linkages to and between information systems within hospitals, the ambulance service and the Department, including reporting on a range of diverse key performance measures. ... 49 In the year ending 30 June 2003, New South Wales Health spent $8.9 billion on public health care, an increase in real terms since 1996-97. Health now accounts for 25% of all Government expenditure ahead of education (24%), public order and safety (10%) and transport (9%). 50 Since April 2004 the Department of Health has announced that it will open an additional 973 beds. The 563 additional permanent beds or bed equivalent will comprise 148 acute care beds, 316 transitional care or rehabilitation beds for aged patients and 99 new mental health beds. The Department will also open another 410 beds to meet winter demand. 51 New South Wales Health is implementing a range of strategies to improve access, which focus on improving new solutions for the better care of the elderly. These include additional acute and transitional care beds as well as community based or home care. In June 2004 the New South Wales Government allocated an additional $57 million to the health budget to provide over 560 permanent new beds. This will lead to an increase in bed availability, particularly in metropolitan hospitals. ... 53 The Commonwealth Government has primary responsibility for the funding of aged care places and as part of the 2004-05 Budget the Government announced a $2 billion (aged care) package. An estimated 27,900 new aged care places will be allocated over the next three years, including 13,030 in 2004. Given that reducing the length of time patients occupy a hospital bed means that more beds are available for new patients, the opening of more aged care places should reduce the size of the "access block" problem. 54 The Commonwealth Government announced in its 2004-05 Budget a cost-shared national transitional care program which should yield New South Wales 600 to 700 transitional aged care facility and community based places over the next three yeas. The Transition Care places will be allocated on a state wide basis to provide more appropriate care for older people. ... 66 A number of initiatives have been introduced to address access block including the development of Emergency Medicine Units (EMUs) that have been established in 12 hospitals with high access block. This has led to the development of a new role for emergency physicians, who previously generally focused only on the first few hours of a patients care (similarly so, the development of Rapid Emergency Assessment Teams (REATs) have been introduced to speed up treatment for patients with semi-urgent illness or injury and whilst this improves access for higher acuity patients it also intensifies work for emergency medics and specialists) ... 138 In the 2005/06 Budget, the Government increased funding for mental health services by $71m to $854m. The increases include $22m for the expansion of the Psychiatric Emergency Care Centre program and new community based activities, opening new mental health beds including 15 psychiatric intensive care beds at Hornsby Hospital and 16 acute beds at Dubbo Base Hospital. $8m has been allocated to expand the Housing Accommodation Support Initiative. Nearly $2m has been allocated for workforce development programmes including support for mental health nursing development. ... 151 ... Undergraduate and postgraduate funding has been provided to support the mental health nursing working group and also to all New South Wales colleges and universities providing nursing education in order to develop a range of mental health education modules. ... 154 The government has taken a number of initiatives to improve the provision of mental health services in the State. The final report by the Select Committee on Mental Health gives a snapshot of quality clinical programs and other initiatives in mental health that occurred in 2002: ... Amongst these initiatives were: 300 additional beds and places for supported accommodation released throughout 2002 and into early 2003; the Centre for Mental Health in collaboration with the Office of Chief Nursing Officer allocated approximately $5.35 million of Commonwealth funds to implement a range of mental health nursing education strategies to build and market career paths in mental health nursing with nursing recruitment through this process; the provision of training posts for general practitioners in rural psychiatry with a curriculum being developed by the Institute of Psychiatry in the RANZCP. 169 The range of services and therefore the workload of the intensive care specialists has also increased as medical science and technology has continued to develop. For instance: ... (b) The introduction of extensive computerization to St George Hospitals ICU and other ICUs such that the St George ICU is now paperless with all record keeping done through computer terminals at the end of each bed. This technology has labour saving aspects, particularly for the nursing staff, and has improved the accuracy and completeness of documentation substantially. However, its introduction did involve major effort on the part of the intensive care specialist as well as other staff as well as additional work involved in the scrutinizing and analysis of the various data produced by the computer system. ... Increase in access block and consequent pressure to discharge patients 86 HAC submitted that this particular difficulty, which impacts on the staff specialists and other health care professionals working in the emergency departments of public hospitals, could not be relied upon to support an overall increase in the rates of pay for staff specialists because overwhelmingly it was an emergency department problem. Only two of the specialties mentioned "access block", namely the emergency physicians and the psychiatrists. 87 It was submitted the applicant did not ask for any "targeted"/separate increase in pay for emergency physicians and, accordingly, to the extent that the Commission was satisfied that there had been a significant net addition to work requirements of some staff specialists (most notably in the emergency department) then this particular change would need to be ignored as not sufficiently representative of work value change amongst staff specialists, or alternatively, an "averaging" approach will need to be adopted. 88 Thirdly, it was contended the Commission would need to pay regard to the fact that a number of initiatives are in place to address "access block" and the evidence before the Commission reveals that those initiatives have already been shown to be effective. Strategies to address access block including EMUs, REATs and ASETs 89 The HAC submitted that the evidence in relation to these matters did not satisfy the net addition to work requirements strict test as, if anything, these initiatives had only served to alleviate problems otherwise being faced by staff specialists, especially in the emergency departments of the public hospitals in the system. That is, these initiatives involve the reorganisation and redeployment of resources in a manner adding to productivity and efficiency with benefit flowing to all the stakeholders including some of the staff specialists. Move from inpatient to outpatient models of care and the privatisation of outpatients 90 The HAC submitted the change from an inpatient to an outpatient model reflected a reorganisation of work but these changes had not resulted in significant net additions to the work requirements of staff specialists. This was the case even if the Commission was satisfied that such reorganisation had resulted in some increase in the workload of the few speciality areas affected by this change. The position is a fortiori given that most staff specialists work on inpatients. 91 Similarly so, HAC submitted that the "privatisation" of outpatient clinics has not given rise to any significant net addition to the work requirements of the few specialty groups affected by this change and this is especially the case insofar as it was asserted that there is some additional "medico-legal" risk associated with this change. Structural changes including area-isation, networking and the introduction of the business unit model 92 It was submitted for the HAC that the area-isation/networking evidence did not establish a significant net addition to the work requirements of any staff specialists. At best, it reflected that some staff specialists are now (or will be in the future) required to work at more than one hospital within the Area where they are usually employed. 93 Insofar as it could be contended that the multiple workplaces development constituted a change in the conditions under which staff specialists work, it was submitted that this was one of the matters advanced by HAC in its counterclaim in proposed new clause 14 "Work Location". This is a matter that is the subject of active discussion between the parties being discussions directed around, inter alia, the terms and conditions (and possible allowances) that will be associated with any such changes in work locations. 94 With respect to the development of business unit models in particular, this development only has application to the specialities of pathology and radiology and, hence, would not support a conclusion of a general, across the board significant net addition to work requirements. Impact of co-located private hospitals 95 It was submitted this did not provide foundation for suggesting that there has been a significant net addition to the work requirements of staff specialists generally or even a significant proportion thereof. Increase in managerial responsibilities 96 The HAC submitted that the increase in managerial responsibilities was to be appropriately dealt with by the payment of separate allowances to those staff specialists with such increased responsibilities. Accordingly, it would be a double count if the change in this particular area was also factored into the Commission's consideration of any work value change increase. Senior counsel submitted the position was a fortiori in circumstances where, even at the present time, (i.e. before the new management allowance criteria are put into effect) there are only 224 staff specialists receiving the level 1 allowance; 120 receiving the level 2 allowance; and 56 receiving the level 3 allowance. That is, a total of 400 staff specialists at an overall total of approximately 2500 staff specialists in the system. It would be inappropriate to increase the salary rates of all staff specialists on the basis of the managerial responsibilities assumed by less than 20 per cent of those staff specialists. Lack of adequate resources; failure to fill vacant positions in a timely manner 97 There was only extremely limited and inadequate evidence with respect to this matter that was advanced in support of a discrete award variation claim that is not being pursued by the applicant. Decrease in opportunities for research and teaching 98 These matters were the subject of a separate award variation claim by the applicant that has now been put on the "leave reserved" list by agreement between the parties. Increasing subspecialisation and the disappearance of "generalists" 99 It was submitted that to the extent the Commission was satisfied that such changes have resulted in significant net additions to the work requirements of emergency physicians, geriatricians, intensivists and neurologists (being the only four speciality groups that mentioned these matters) the evidence did not meet the strict test given that the applicant did not seek targeted increases for these particular specialities and, it was submitted, it was not sufficiently representative even to warrant being considered as part of any "averaging" approach. 100 In any event, the HAC did not concede that an increase in sub-specialisation results in a significant net addition to the work requirements of those sub-specialists themselves. Whilst they do, by definition, know more about their particular sub-specialty field, as time runs they know less about a greater range of matters and in that sense their work value decreases. Therefore, it was submitted that the net result might be that there is no relevant change as a consequence of sub-specialisation. Introduction of multiple disciplinary clinics and teams 101 It was submitted that the introduction of multiple disciplinary clinics and teams did not satisfy the strict test for a significant net increase to work requirements because: (a) Such developments are far from new; that is, this factor has already been compensated for in previous cases. (b) They do not constitute relevant changes in that they constitute a reorganisation of the way in which existing workload is undertaken and, if anything, the evidence demonstrates a healthier sharing of the "load", if not the ultimate responsibility for decision making (which has always rested with the specialist). (c) The mere fact that specialists may now have to consult with a range of other professionals and consider their opinions rather than simple (sic) orders that other people are required to follow does not satisfy the "strict test". (d) To the extent that the increased use of multiple disciplinary clinics and teams results in additional workload for some staff specialists, this change is neither significant enough nor far reaching enough to support a wage increase for all staff specialists. In this regard, it is to be noted that only five of the 13 specialities represented by the evidence made any reference to these developments (and those 13 specialities only represent 70 per cent of the overall number of staff specialists in the system). Increases in non-clinical requirements without additional resources: e.g., written protocol; hospital/laboratory accreditation; occupational health and safety; clinical quality activities; and adverse incident management 102 The HAC submitted that these matters, even when taken together, do not satisfy the strict test of a substantial net addition to work requirements of staff specialists or even a significant proportion of staff specialists in the system. This was because: (a) Any consideration of the evidence demonstrates that the asserted additional burden or responsibilities associated with these matters is certainly not across the board and to a very large extent is confined to the specialities of intensive care and pathology. (b) The asserted changes are, by their nature, changes in workload rather than in work value and when the evidence is considered closely it does not demonstrate even an extensive/substantial change in workload (that can, in some exceptional circumstances, reflect a change in work value). (c) These matters are, by their nature, part and parcel of the role of the professional such that changes that occur in such aspects of employment do not reflect any change in the work value of staff specialists, in any event. 103 It was further submitted that the same matters, and/or matters of a very similar nature, were subject to close consideration by the Commission in Public Hospital Nurses' (No. 4) and none of them were regarded as meeting the "strict test": see [86]–[94], [119]-[124] and [129]-[130]. Increases in regulation of the profession, including new requirements to undertake continuing medical education 104 This matter does not appear to have been pursued by the applicant in the context of its work value case, as there does not appear to be any evidence with respect to it. Increasing casualisation of the nursing and junior medical workforce (and the consequent increase in the need for supervision and counselling of Junior Medical Officers) 105 In relation to this matter the HAC submitted the applicant has broadened the case that it seeks to run in this area, in that it seeks to rely upon shortages not only in the staff specialists' classifications, but also in the RMO/Registrar and nursing classifications and asserted that such shortages have either added to the work value of staff specialists or at least had an adverse impact on the conditions under which staff specialists performed their work in the system. Further, that the staff shortage issues raised by the applicant were only appropriately dealt with in the context of the work value change claim. That is, such shortages (especially in the staff specialist classifications themselves) did not provide a proper foundation for a separate or additional "special case" increase in staff specialists' salary rates (a matter dealt with later in this decision). 106 Counsel for the HAC submitted that on the basis of the evidence, when properly considered in conjunction with the agreed facts as to workforce shortages: (a) The shortages with respect to staff specialists, nurses, junior medical and other staff could not be regarded as uniform or across the board as there were significant differences hospital to hospital, Area to Area, specialty to specialty and geographical area to geographical area. (b) That it is not possible, to reach any reliable conclusions as to the extent or impact of such shortages on a specialty to specialty, hospital to hospital, Area to Area, etc., basis but that it is possible to conclude that the shortages are having less impact in the major teaching hospitals and other major metropolitan hospitals of Sydney (and Newcastle) where the bulk of the staff specialists in the system work (namely, approximately 60 per cent) than is the case in the other hospitals within the system (with 40 per cent of staff specialists work). (c) In such circumstances, the balancing/averaging approach will need to be applied by the Commission if any salary increase is to be awarded by reference to the impact of shortage because, otherwise, there is a real prospect that a significant proportion of staff specialists who have not been adversely affected by the shortage will receive a windfall gain. (d) Caution needs to be shown in the awarding of salary increases based on labour "shortages" because there is a real likelihood that the shortages will be addressed by other initiatives and yet there is absolute certainty that salary increases granted on the basis of any such shortages will not then be surrendered. (e) Many specialities seemingly are not affected or at least not greatly affected by the current shortage of staff specialists and/or the shortage of other categories of staff, given that many of the applicant's witnesses did not give evidence of any such adverse impact and given that there is no evidence before the Commission from the other specialities/specialists that make up the other 20 per cent of the staff specialist workforce. That is, there is a prospect of a windfall gain with respect to this substantial proportion of the staff specialist workforce as well in circumstances where there is no evidence whatsoever of any adverse impact on them of the relevant "shortages". (f) That whatever the impact of the "shortage" may have been on staff specialists (or some of them), such impact has not manifested itself either by clear and consistent evidence from the applicant's witnesses that they have had to compensate or allow for the impact of the shortage by working longer hours and/or taking on greater on-call/re-call commitments. 107 As to the use of overseas trained doctors, HAC submitted as follows: (a) Even allowing for the extra information provided to the Commission on the inspections, the evidence still did not support a conclusion that there has been a generalised adverse impact on staff specialists as a consequence of the system's utilisation of overseas trained doctors. If there was an across the board problem for staff specialists associated with the use of overseas trained doctors, then the Commission could expect that this would have been referred to in the evidence of the specialists other than the emergency physicians and the obstetricians, yet this did not occur. (b) The evidence suggests that there may well be (at the highest) 100 overseas-trained doctors holding staff specialists AON positions (on a temporary basis) in New South Wales (i.e. approximately 0.5% of the staff specialists workforce) . (c) There does not appear to be any evidence that overseas trained specialists place any undue or extra burden on other staff specialists in the system, with the applicant's complaint (and its evidence) being directed to the extra workload and burden associated with the supervision and assessment of RMO and Registrars, whether they be trained overseas or otherwise. 108 As to the evidence of the increased workload and burden on staff specialists with respect to the supervision and assessment to what is asserted to be a lower standard of a junior medical staff that evidence, it was submitted, was both limited and of an extremely general nature. 109 In respect of the issue of supervision and assessment, the HAC submitted that the Commission would reach the same conclusion in this case as it reached in Public Hospital Nurses' Case (No. 4) namely, that these responsibilities have always been part of the role and not sufficiently widespread and significant so as to satisfy the strict test. 110 As to the asserted impact on staff specialists of the shortage and casualisation of nurses and the use of locums, the HAC submitted that the evidence was both limited and general and confined to a description of the current facts rather than demonstrating relevant significant change in the responsibilities of Staff Specialists. HAC's conclusions regarding work value 111 Counsel for the HAC submitted that overall, the Commission would conclude, as it did in Public Hospital Nurses' (No. 4) at [237] that: In relation to each of the individual factors identified by the Association as contributing to an increase in the value of nurses…most of the changes relied upon by the Association, with the notable exception of the effects of higher levels of acuity and dependency do not, taken in isolation, constitute a significant net addition to the work requirements for registered nurses generally. 112 However, it was submitted, unlike the further conclusion reached by the Commission in Public Hospital Nurses' (No. 4), namely, that when the individual changes identified in that case were considered "in combination", they did meet the "strict test" under the work value principle, in this case even when all of the above factors (other than acuity and the impact of shortage) are taken together they do not satisfy the said "strict test" such as to support the conclusion that all staff specialists should be entitled to salary increases based on significant changes in the value of their work since 1991: see Public Hospital Nurses' (No. 4) at [32]-[37] and [240] generally. 113 If, contrary to the HAC's submission, the Commission concluded that when all the factors sought to be relied upon by the applicant are considered together that they do satisfy the strict test under the work value change principle, HAC submitted that the salary increases warranted by the combined impact of those factors would not be substantial. This was a fortiori in circumstances where significant "moderating factors" identified by the Commission in Public Hospital Nurses' (No. 4) at [241](1)-(3) and (6) applied with equal force here. ASMOF's reply on work value 114 As to the submission by the HAC that MOU commitments made some years ago should be taken into account in cutting back what would otherwise be a justified substantial work value increase, ASMOF contended that this submission should be rejected. It was submitted the MOU commitments were irrelevant to work value and it could not be suggested that there was any "sign off" of any work value issues as a result of signing the MOU. The MOU was really more concerned with the delivery of public service wide productivity benefits. 115 The applicant submitted the suggestion by the HAC that some of the matters examined in the ASMOF evidence failed to establish relevant work value changes was also rejected. For example, it was submitted, it was not satisfactory to characterise the 'end of life' decision-making that was described by Dr Choong of Hornsby Hospital ICU as only taking place later in the patient's life. As Dr. Choong stated, very significant cultural and community changes as well as the changes in patient profile have affected this area of medicine profoundly. 116 Likewise, it was submitted, ASMOF's evidence about 'consultant based' work was not contradicted. This evidence was not simply a "workload" issue and should not be simplistically characterised as such. In this connection there was the evidence of Professors Dwyer and Boyer, who were not called to be cross-examined. The point made by both Professor Dwyer and Associate Professor Boyer was that by necessity the staff specialist has become much more directly involved in the management of patients instead of being "consulted" by junior medical staff. 117 Similarly, it was submitted, the issue of the supervision of medical students and overseas trained doctors was a matter referred to, not just in passing, but also by a substantial number of witnesses. In particular, this was referred to by a significant number of witnesses who were interviewed in the course of inspections, especially Dr Sally McCarthy of the Prince of Wales Emergency Department. ASMOF contended this was a significant workforce issue relevant to the conditions under which work is performed, as well as one that had a significant impact upon the work at a day-to-day level of staff specialists and could not be dismissed in the perfunctory way that the HAC had endeavoured to do so. 118 The applicant repudiated the suggestion by the HAC that ASMOF's inspections were directed towards the "hard end" of the health system. It submitted that at Hornsby, one of the HAC's inspections, the Full Bench saw for itself that in the Emergency Department and Psychiatry Department especially, the same atmosphere of crisis prevailed as at the large teaching hospitals. In the other departments at Hornsby it was submitted the experiences were broadly similar to those that were the subject of the witness evidence and those that were the subject of inspections at the major teaching hospitals. Consideration regarding work value 119 The thorough and extensive analysis by the parties of the matters that are relevant to our consideration regarding work value was most helpful. After assessing the evidence and submissions of the parties we have arrived at the conclusion that since the datum point of 1991 there has been a significant net addition to the work requirements of staff specialists such as to warrant a wage increase across the board beyond the 12 per cent that was agreed to by the parties and incorporated in the Memorandum of Agreement in June 2005. 120 We have not come to this conclusion lightly. As Mr Kimber correctly pointed out, the test to be applied in applications for increases based on changes in work value is a strict one; the changes in the nature of work, skill and responsibility required or in the conditions under which work is performed, must be to such an extent that the changes constitute a significant net addition to work requirements so as to warrant the creation of new classification or upgrading to a higher classification. We are satisfied in this case the test has been met. 121 In coming to this conclusion, we have been careful to have regard for, and give proper weight to, the respondent's submissions regarding: (1) The substantial initiatives that have already been taken and will continue to be taken by the HAC to better manage the impact of changes in: acuity; increase in admissions (especially acute admissions); reduction in the number of beds and in the length of stay; and, the increase in day of surgery admission and day only procedures on the work of staff specialists. (2) The introduction of many new and complex interventional techniques, which it was submitted were evolutionary and/or made the staff specialists' work easier in many respects. (3) A number of the changes relied upon by ASMOF as representing increases in work value had previously been compensated for in earlier cases. (4) A number of the changes relied upon by ASMOF (e.g., increase in access block, increasing sub-specialisation) were limited to one or two specialities and did not justify across the board increases. (5) A number of the changes relied upon by ASMOF reflected a reorganisation of work (e.g., introduction of multiple disciplinary clinics and teams) and had not resulted in significant net additions to the work requirements of staff specialists. (6) Not all specialties have been affected to the same extent and even if the Full Bench were minded to increase salaries on work value grounds the Commission would adopt an averaging approach. 122 The foregoing considerations must have a moderating effect on the size of any salary increase we might ultimately award. Nonetheless, on the basis of the evidence in these proceedings we are moved to say that we regard staff specialists as an impressive group of individuals - dedicated and hardworking - and without whose commitment the public hospital system could not function effectively, if at all. As Professor Dwyer observed in his evidence: Staff specialists have played a key role in both the initiation and implementation of policy changes in the delivery of health services since 1991. As noted above, there have been a number of significant changes to the delivery of health services, all of which have at their core the aim of reducing or eliminating the number of days spent in hospital (and therefore the cost of treatment). These initiatives (same-day procedures, day-of-surgery admission, increases in outpatient services) have largely been implemented by staff specialists. As senior employees of the public system, often with positions as heads of units or departments, it is staff specialists who are responsible for implementing the changes in the delivery of services and designing the protocols that will make them work. While it is my view that these changes have not justified the closure of beds that has occurred, it is clear that the pressure on the system would be even greater than it currently is had they not occurred. 123 The work of staff specialists has changed significantly in the past 15 years. The Full Bench in Public Hospital Nurses (No. 4) observed at [239]: [T]he public hospital system provides a different service in a different way to the one which it provided prior to 1996 and this is exemplified by the emphasis on confining the patients' stay in hospital to the most acute phase and providing for all other phases, including high acuity phases, to be managed in the home or other facilities in the community. This phenomenon has had its own impact on nurses' work through increased levels of acuity and dependency but at the same time the other demands on nurses that we have identified have continued to grow. 124 This change in the public hospital system has also impacted on the work of staff specialists as the HAC, properly and fairly, conceded. As ASMOF submitted the higher levels of acuity amongst patients required more complex investigations of patients and a style of patient management which until recently was not a regular feature of medical practice. ASMOF referred to the example of mental health. It is fair to say that we were disturbed by what we heard and saw regarding the lack of resources being applied to the care of the seriously mentally ill and the heavy burden this was placing not only on psychiatrists but others, including emergency physicians and geriatricians, as they sought to cope with the increasing numbers of mentally ill patients, a high proportion of whom had been affected by drug and alcohol abuse. As Dr Louise Newman stated in her evidence: It cannot be stated strongly enough that staff specialist psychiatrists in NSW are working in a mental health system that is in crisis. This has a significant impact on morale, working conditions, ongoing education, research activities and teaching. ... [P]ressure on beds means that it is not possible to keep patients in hospital long enough to ensure that the illness has stabilised and it is not possible to provide psychological therapies. The lack of rehabilitation and supported accommodation means that people with a mental illness are regularly readmitted into acute care. After discharge, community case management programs are so under-resourced that case managers may have carriage of between 50-60 clients. This effectively means that patients get no treatment or management to speak of and often need to be readmitted. ... [T]here are simply not enough resources to meet the demand for treatment for people with mental illnesses, whether that treatment is community-based or hospital-based. It is now common for a psychiatrist admitting an acutely-ill mental health patient to find that there are no beds available anywhere in the State, much less within any reasonable distance of the patient's family or support network. It is not uncommon for patients to be accommodated on mattresses on the floor. Alternatively, they may remain in the Emergency Department for up to six days, in a heavily sedated state because Emergency Departments are not equipped to manage acutely psychotic patients. ... At the same time that resources have diminished, the number of people with mental illnesses and the severity of those illnesses have been increasing. This is part of a world-wide trend of increasingly-severe psychotic presentations in young people, including "para-suicidal" presentations such as self-harming. This trend is poorly-understood but may relate in part to increasing drug use, particularly amphetamine-type drugs that are more likely to lead to violent behaviour than drugs such as heroin. Ironically, the "heroin-drought" of recent years has led to an increase in violent and psychotic behaviour as drug users have substituted amphetamines for heroin. ... [T]he acuity of mental illness is increasing anyway. In New South Wales, therefore, the resource issues have combined with world-wide trends to magnify the increase in the acuity of patients in the public system. Public sector psychiatrists, whether in the community or in the hospital setting, are therefore dealing with a much greater number of extremely difficult patients than previously, including a greater number of dangerous and violent patients. My experienced colleagues who work in acute wards consistently report that they are now discharging patients with a level of illness that ten years ago would have been cause for admission. This is solely because of the lack of beds. A considerable amount of time is now spent searching for beds and assessing and reassessing inpatients to determine who is well enough to be discharged or sent home on leave. While every attempt is made to maintain clinical standards, there are many public sector psychiatrists who believe they are being forced into decisions to discharge patients who are not well enough to be discharged, simply because there is an even sicker patient waiting to be admitted. 125 Dr Roger Gurr is a qualified specialist psychiatrist with more than twenty years' experience as a staff specialist and Sector Director with the Blacktown/Mt Druitt Mental Health Service. He currently works in the Liverpool Fairfield Mental Health Service for four days a week as a VMO. In his statement of evidence Dr Gurr said: I resigned from my staff specialist position in mid 2001 for a number of reasons, including the lack of resources and the lack of recognition by management and the Government of the need to respond to the crisis in the mental health system. I am aware of a number of my colleagues who have resigned from positions as Clinical Directors for similar reasons ie. it is too difficult to manage a service with the level of resources that are provided. As a result there are a number of mental health services that do not have Clinical Directors. ... Those requiring admission have been more disturbed, more violent and increasingly difficult to manage, causing acute admission wards to be less pleasant places to work due to the aggression and rapid churning of patients to make room for those waiting. Staff spend more time processing admissions and discharges or dealing with challenging behaviours and thus have less time for making a rapport and for psychotherapeutic interactions with patients and families. The use of illicit drugs has increased the risks and reduced our ability to predict outcomes, making staff feel vulnerable to increased community expectations and legal accountability. These factors have affected recruitment and retention of medical and nursing staff. Consequently the inpatient services are going through crises of numbers and skill-mix. 126 We consider that the work value of psychiatrists and those other specialists working with the mentally ill has increased quite significantly since 1991. We also consider that we should single out emergency physicians, geriatricians, intensivists and radiologists for particular mention. Putting aside the impact of shortages on the work of these specialties, their work has increased in complexity. Associate Professor Skowronski was employed as a senior staff specialist in the Intensive Care Unit (ICU) at St George Hospital. In his evidence he stated: Up to 20% of ICU patients at any given time are young male road accident victims. A substantial further proportion comprises postoperative patients requiring life support or intensive monitoring due to the extent or complexity of their surgery. However, as recently as the early 1990s, the community did not generally expect that an elderly patient with a chronic disease (or diseases) would be treated by means of complex surgery and/or intensive care. Now, patients well in excess of 80 years of age, and occasionally even in their 90s are routinely offered heart bypass or other complex surgical procedures. Such patients will inevitably require post-operative care in the ICU, and this is often more prolonged and more complex than for younger patients. Moreover, where previously it was understood that elderly patients with acute, life-threatening illnesses, should not be offered prolonged or complex life-support in ICU, it is now demanded as a fundamental right, reinforced by the threat of court action. ... These pressures affect other wards in the hospital as well as the ICU. Patients with high dependency levels are moved out to other wards from the ICU sooner than they were in the past. This increases the general level of acuity in other wards and has two significant flow-on effects: (a) the need for staff specialists in other wards to have increased knowledge and skills to deal with these more acute patients; and, (b) an increasing need for intensive care specialists to provide advice and services outside of the ICU. ... Although difficult to quantify, there is general agreement that, as part of the trends identified above, there is much more involvement by intensive care specialists in end-of-life discussion and decision-making than in the past. These discussions are extremely time-consuming, stressful, and occasionally adversarial. Although the overall mortality of ICU patients is only around 20%, numerically more patients die in ICU than any other area of the hospital. ... Our ICU is now paperless, with all record keeping done through computer terminals at the end of each bed. This technology has labour-saving aspects, particularly for the nursing staff, and has improved the accuracy and completeness of our documentation substantially. However, its introduction, configuration and optimisation required a major effort on the part of the intensive care specialists as well as other staff. All case note entries are now typed rather than written, the system demands a range of data validations, and produces a range of statistical reports that need to be scrutinised, analysed and acted upon. As with the introduction of computer technology in other areas of human endeavour, computers may do things better, but not necessarily easier. 127 The South Western Sydney Area Health Service currently employs Dr Susan Ieraci as the Area Director in Emergency Medicine. This role involves clinical work as an emergency medicine specialist as well as policy, planning and coordination work for the Emergency Departments within South Western Sydney. In her statement Dr Ieraci deposed: The trends noted in the AMWAC and Auditor-General's Reports (increases in the age and acuity of patients; increases in the number of mental health patients and patients with substance abuse problems) have combined to ensure that patients presenting to Emergency Departments are more complex and difficult to treat than was the case in the early 1990s. For specialists, this means complex negotiations with families, carers and community practitioners, as well as difficult complex assessments of extremely disabled and often uncommunicative sick patients. The increase in the number and complexity of mental health patients is a major issue. The NSW Centre for Mental Health State-wide data shows an increase in the number and proportion of mental health patients presenting to emergency departments. There has been a trend over the last decade to "mainstream" mental health patients via the Emergency Department, as opposed to the previous policy of Mental Health Units conducting their own intake service for newly presenting patients. This change has not been matched by sufficient additional training or resources. The management of acutely ill mental health patients within Emergency Departments places a very significant additional burden on specialists and on the physical resources of the departments. Unstable Mental Health patients often require a combination of physical security and seclusion with close observation – a very difficult balance to achieve. The practical effect of these issues is that Emergency Departments are often full of acutely ill mental health patients in inappropriate accommodation and/or restrained in inappropriate ways, eg. with sedatives. My experience is consistent with the change in the role of emergency physicians noted by AMWAC. As the number of Emergency Medicine specialists has increased, the role has changed from consultant-led care to consultant-based care, although it is still the case that there is a variation in the models of care provided between hospitals. In metropolitan tertiary referral hospitals where there is a wide range of sub-specialist services available on site, the Emergency Department will manage and provide comprehensive initial care for all emergencies, including major trauma. Some outer metropolitan hospitals have Emergency Departments that provide a full range of services, with the exception of major trauma which will generally be transferred to a tertiary referral hospital. Other outer metropolitan hospitals provide a more limited service. Base hospitals in rural areas tend to fall between tertiary referral hospitals and outer metropolitan hospitals. As noted by AMWAC, one of the major factors affecting the nature of the role of the staff specialist in Emergency Medicine in recent years has been bed access block. Where access block results in an Emergency Department being so overloaded that it cannot accept any additional patients other than those with life-threatening conditions the hospital will notify the Ambulance Service that it is moving to "Code Red" status for a specified number of hours. The implications of access block for Emergency Medicine staff specialists are many. Perhaps the most obvious is the increase in workload. Many patients now spend several days in the Emergency Department, perhaps even their entire inpatient stay. This means that the Emergency Medicine specialists have to care for all newly arriving patients as well as a large backlog of patients. Not only is this a greater patient load, but it also presents an overloaded working environment, with dissatisfied and sometimes aggressive patients, crowded treatment spaces, lack of privacy and a generally unsatisfactory working environment. The nature of the working environment, with its constant load of patients, means that there are fewer "down-times", or opportunities for senior staff to benefit from periods of less intensity, to prepare themselves for the next stressful event or case. Perhaps more significant than the increase in workload and stress is the change in the nature of the role of the Emergency Medicine specialist that has arisen as the result of the increase in access block. In 1991, few patients who required admission waited more than a few hours for an inpatient bed. The role of an Emergency Medicine specialist at that time included assessment and stabilisation of the patient, and a relatively brief process to decide whether the patient needed inpatient admission. With much less pressure on beds, the pressure to discharge the patient was less. As noted in the Auditor-General's Report, "the role of Emergency Departments has expanded beyond reducing the risk of premature death and disability for people suffering from injury or acute illness to include more detailed assessment, care planning and initiation of ongoing care." (page 12 of SI4) There is now great pressure to perform complex investigations during the Emergency Department stay, to consult multiple teams, allied health professionals and community practitioners, with the aim of discharging the patient from the Emergency Department. The additional complexity of this work is not well reflected in activity data, which does not distinguish a discharged patient who presented with a simple problem (eg. minor injury) from a discharged patient who required complex assessment and problem-solving prior to discharge. An example of a complex case might include an elderly patient, who lives alone, presenting on a Friday afternoon because of a history of recurrent falls at home. In the past, this patient would have been admitted to have their physical investigations and discharge planning carried out. In 2005, their care in the Emergency Department would include a very detailed assessment by history and physical examination, a series of blood tests and perhaps multiple X-rays to exclude an acute illness or injury that might need inpatient care. If this is excluded, there is pressure to return the patient home that day. To do this safely requires complex consultation and planning, involving discussion with the patient's family, neighbours, GP and treating specialist, and assessment by social workers, a physiotherapist and an occupational therapist (perhaps including a home visit). The emergency specialist must orchestrate all these discussions and assessments and assimilate all this information in order to bring about a safe and timely discharge (generally trying to achieve discharge within working hours, while the other services are still available). ... In addition to the issues that have arisen because of access block, there are a number of other issues that have impacted on the nature of the work of Emergency Medicine specialists. One of these is increasing medical subspecialisation. In 1991, there were fewer medical and surgical subspecialty teams, with a greater representation of general medicine and general surgery. General medicine and surgery disappeared from NSW teaching hospitals in the early to mid 1990s. The process of referral of a patient in the Emergency Department requiring admission was simpler when there were general physicians and surgeons. In 2005, it is common to negotiate with at least two or three inpatient teams in order to find a team that will accept inpatient care. This means that, beyond the requirement to stabilise and establish the requirement for inpatient admission, the emergency physician now needs to make detailed definitive diagnoses, and exclude a range of possible conditions, so that the patient may be cared for by an inpatient team with a narrow, subspecialty focus. A further important factor that has affected the work of Emergency Medicine specialists is the change in the nature of junior medical staff, especially in outer metropolitan hospitals. The number of overseas trained doctors requiring supervision in public hospitals has increased dramatically. Many are very unfamiliar with Australian hospital medical practice, both theoretically and functionally. This presents a high supervisory load for the staff specialists, both during clinical time and also in formal assessment processes as supervisors. Where written assessments for junior medical staff were previously required at the end of their attachment, they are now required twice per term, with increasing requirements for counselling and support of the staff member. There is evidence that the number of poorly performing junior doctors has risen, adding to the load for supervision and counselling by Emergency Physicians. Because the Emergency Department term is seen as well-supervised and a good educational experience, poorly performing junior staff may be preferentially allocated there for remediation. The last decade has also seen a number of complex treatments become routine in Emergency Department care. These include the use of thrombolytic agents, CPAP and BiPAP (types of non-invasive ventilation), frequent interpretation of CT scans, invasive monitoring and many others. For example, CPAP and BiPAP frequently now replace the need for ventilators and Intensive Care admission for very sick heart or lung failure patients. This means that these patients are stabilised for long periods in the emergency department until ready for ward care, rather than being transferred to ICU early in their care. 128 Dr Gideon Caplan is employed as a senior staff specialist in the Department of Geriatric Medicine at the Prince of Wales Hospital. He stated in his evidence: The major change in the work of geriatricians since the early 1990s is the dramatic increase in the acuity of the patients. This increase is the result of a number of contributing factors, some of which relate to a change in the patients and others of which relate to changes in the way that services are provided. ... A second contributing factor to increased acuity, related to changes in the patients, is the ageing of the population. Age in itself is not a factor; rather, age is associated with a number of diseases, eg. the proportion of people aged 80 or more with dementia is approximately 40%. The average age of patients is higher than it was 10 years ago. The number of co-morbidities therefore tends to be greater. Geriatricians are responsible for the management of these co-morbidities, eg. chest pain, hypertension, diabetes. Generally, to ensure consistent treatment, it is considered better for these conditions to be managed by the geriatrician rather than each condition being referred to a different sub-specialist. In this way, geriatricians are gradually evolving into "hospitalists", as are cardiologists and intensivists. On the other hand, other specialists (the so-called "single organ" doctors) are becoming outpatient specialists. Therefore, the change over the course of the 1990s has been from a specialty focused largely on non-acute care to one now largely responsible for the management of acute in-hospital patients with multiple co-morbidities. A related trend is for geriatricians to also see patients who would not normally be classified as "elderly". This trend arises from geriatricians developing expertise in managing patients with multiple co-morbidities and therefore having such patients referred to them even if they are not strictly geriatric patients. 129 Dr Derek Glenn is the Director of the Department of Radiology at St George Hospital. After referring to a range of changes affecting the work of radiologists (general radiology, computerised tomography (CT), ultrasound and magnetic resonance imaging (MRI), Dr Glenn stated in his evidence: The consequences for radiologists of these changes in the nature of the work are many. Perhaps the most obvious is that radiologists have developed new skills. This is reflected in the introduction into the training program of logbook requirements where trainees must be able to demonstrate that they have satisfactorily completed a certain number of interventional procedures. Another consequence is that as the quality of the information provided by medical imaging has improved the demand for radiology services from other departments of the hospital has increased. For example, there is an increasing reliance by the hospital on interventional radiology for the management of surgical complications such as abscesses arising from surgery. There is also an increasing reliance on imaging as the basis for making triage decisions. The direct result of this is that the radiology department is now staffed (at junior doctor level) 24 hours a day, seven days a week so that these services can be provided. From a staff specialist point of view, this means that there is increased out of hours consultation with junior doctors and an increased amount of call-back for interventional work. This increase in interventional work has taken place at the same time as an increase in the number of images being reviewed, which in itself is a result of the improvements in technology. By increasing the number of images available for review, the technology has made it necessary for radiologists to view a greater number of images per day. In 1991 the College identified 12,000 cases per annum per radiologist as being a feasible workload. At St George, the per annum workload per radiologist is now in the order of 15,000 to 18,000, ie. an increase of up to 50%. Taken together with the increase in interventional work, this reflects a substantial increase in the workload of radiologists. In 1991 the majority of images were viewed on film. Now, viewing is workstation-based on PACS (Picture Archiving Communication System). Presentation of the images on a PACS introduces another new set of skills for the Radiologists to learn, as electronic review allows electronic manipulation of the images, with resultant increase in time taken to consider a case, and increased availability of relevant previous exams, with improved standard of diagnoses, but again at increased time cost to the Radiologists. These costs are partially off-set by the increased speed of accessing the images in a properly designed electronic environment, where the time taken to pull images out of a packet, hang them on a viewbox, and then at the end of the reading, pull them down and put them back, in order, in correct orientation, in the packet is replaced by the PACS and its automatic hanging protocols. 130 It is undoubtedly the case that whilst all specialties have been affected by change over the past 15 years, the effect of changes to the work of staff specialists will vary from specialty to specialty and the nature and impact of the changes will vary according to whether the specialist is employed in a rural or regional hospital or a major city teaching hospital. This requires us to take an averaging approach in measuring what is the significant net addition to work requirements and how that is to be translated into the appropriate salary increase for those employed under the award. 131 We are also aware of the need to avoid any double counting in arriving at an appropriate increase for staff specialists by taking into account increases in the managerial allowances dealt with later in this decision. WORKFORCE SHORTAGES 132 The second issue we identified for determination in these proceedings was whether there is a staff specialist shortage and, if so, whether the shortage provides the grounds for wage increases on the basis that a special case exists for granting such increases. ASMOF's case 133 The applicant submitted that Area Health Services were competing for medical specialists in a labour market where there is a general shortage; where there are shortages in almost all specialist groups; and, even where there is not an overall shortage, the public system is unable to attract sufficient staff. The extent of the shortages varies between specialties and between hospitals. 134 ASMOF referred to the respondent's strategies to address what it described as an "undeniable shortage" of staff specialists and submitted that: None of the initiatives described has yet produced a single staff specialist appointment. None is likely to in the near future. In the meantime, staff specialists bear the considerable burden of these shortages on a day to day basis – as the inspections, in particular, amply demonstrated. 135 The strategies referred to by ASMOF were summarised in the statement of Deborah Hyland, Director, Workforce Development and Leadership with the NSW Department of Health. Ms Hyland stated: In summary, the major achievements in 2004 are: · The Workforce Development and Leadership Branch in the NSW Department of Health established. · AusHealth International represented NSW public health system at BMJ Careers Fair in November 2004 with over 300 potential doctors registering interest to work in NSW. · 195 extra childcare places for staff established in 2004/05. · Three new medical schools created in NSW leading to an increase of up to 250 new under-graduate medical places. · Reviews undertaken of specialist training arrangements for emergency medicine, psychiatry and surgery. · Appointment of Directors of Workforce in each of the eight new Area Health Services. · Surgical Services Taskforce established with surgical services workforce sub-committees. · 54 general practitioner proceduralists upskilled. 136 ASMOF submitted, "even a cursory analysis of Ms Hyland's statement reveals that little if anything is being done by the HAC to address shortages in the staff specialist workforce." 137 Reference was made to the Agreed Statement of Facts on Workforce Shortages and to the Action Plan developed by the Premier's Medical Workforce Round Table which was to "Develop a package of support measures for general practitioners and specialists, including social, infrastructure, financial and family, to enhance recruitment and retention in areas of workforce shortage." The Round Table, it was noted, was held in April 2004 but there is no evidence that any such package of support measures for staff specialists had been developed or even considered. 138 One of the tests propounded for work value is the conditions under which work is performed. ASMOF submitted the conditions under which the work of staff specialists is performed have become increasingly oppressive, as the staff shortages have had their impact upon public hospitals. It was submitted that there could be no doubt that as shortages become more acute the impact upon those who remain worsens. Further, that the inspections demonstrated beyond any doubt that the direct impact upon staff specialists was severe and enduring. ASMOF observed that the demanding nature of the supervision requirements relating to the large number of overseas trained doctors and locums was mentioned repeatedly during the inspections. 139 It was submitted for ASMOF: The indirect impact is that the pressures inevitably mean that time ordinarily allocated to non clinical duties, including teaching and research, has been steadily eroded at the further cost of morale and retention and recruitment. To the extent that these features of staff specialist employment hold out attractions to trainees – potential trainees can now only see career opportunities as a staff specialist diminished. In the context of opportunities in private practice, engagement as a Visiting Medical Officer and both national and international markets for medical specialists, this will have a devastating effect on the staff specialist workforce. 140 ASMOF contended the main points to be drawn from the agreed facts regarding shortages were as follows: · The NSW Government has identified medical workforce shortages as one of the most important issues facing the health system. · Around 10% of staff specialist positions have been declared "Area of Need", meaning that the Australian labour market has been extensively tested and there are no suitable applicants, or no suitable applicants willing to take the position. · The actual number of vacancies must be significantly greater than 10% given that not all vacancies are declared Area of Need. · Area of Need and other available information suggests that the shortages are across the board, but greatest in psychiatry, anaesthetics, emergency medicine, geriatrics, obstetrics and radiology. Together, these specialties make up almost 40% of the staff specialist workforce. However, the AMWAC material also indicates that in some cases (eg. psychiatry, anaesthetics, radiology) there are no overall shortages but there are significant shortages in the public system. · In the worst affected of these specialties, eg. psychiatry and emergency medicine, vacancy rates appear to be in the order of 20% to 30% of the workforce. · The vacancy rate in the trainee specialist workforce indicates that the shortages are not short-term. · The substitution of staff specialist appointments with VMO appointments and the existence of vacancies (even Area of Need vacancies) in major Sydney teaching hospitals is further evidence of shortages. 141 ASMOF noted that information on the overall vacancy rate for staff specialists' positions was not available but the parties agreed that the actual number of vacancies must be significantly greater than 10 per cent given that not all vacancies are declared Area of Need. By way of contrast, it was submitted, the evidence in the Nurses' case indicated that there were approximately 2,000 positions being actively recruited in May 2002 out of a workforce of approximately 35,000 (see [47] and [120] of Public Hospital Nurses (No. 3)). This suggested a vacancy rate in the nursing workforce at that stage of just under 6 per cent. It was accepted in that case, by both the Department of Health and the Commission, that this was a serious problem. The evidence for staff specialists, it was submitted, suggests that the problem is almost twice as bad, on numbers alone. 142 ASMOF disputed suggestions by the HAC that the Colleges were significant impediments to solving workplace shortages. It was submitted the Colleges had overwhelmingly contributed to measures to address workforce shortages. Moreover, it was submitted in this regard the HAC's contention was inconsistent with information that Colleges have been unable to establish the required number of training positions because NSW Health has refused to fund the positions. For example, since 2003 AMWAC has been pressing for the creation of an additional 100 pathology training positions across Australia each year for five years in order to address the shortfall of pathologists. An additional 28 positions have been provided but not one of those 28 has been provided by NSW, according to ASMOF. 143 The applicant addressed the question of whether wage increases would make a contribution to correcting workforce shortages. It was submitted that if the Commission were to accept what the HAC appeared to be putting, namely, that the Commission cannot hope to match the levels of private sector remuneration in some specialties and, therefore, pay increases would be futile, this would be a recipe for lower and lower levels of morale, a downward spiral in the profession and an inevitable, increasing, exodus from staff specialist ranks. 144 ASMOF argued that the strategy of replacing staff specialists with VMOs was not the answer to the shortage crisis. The applicant noted the parties agreed that to resort to paying substantially higher VMO pay rates to some staff specialists for example, in emergency medicine, was another indicator of a shortage of specialists. It was further noted that in recent years there has been a move to pay VMO rates to emergency medicine specialists in some rural base hospitals and some peripheral metropolitan hospitals. Unlike most VMOs, staff specialists performed a wide range of non-clinical duties that were necessary to support a contemporary, public health system. Where a staff specialist position was replaced by VMO sessions there might not be any loss of clinical services. However, it was contended it was certainly the case that the non-clinical services would be lost. 145 Reference was made to the information that was provided during the inspections at St George and Prince of Wales Hospitals about the non-clinical work undertaken by staff specialists. The witness statements also made extensive reference to the contribution of staff specialists in non-clinical areas including quality and safety; the co-ordination of multi-disciplinary clinics; undergraduate teaching; writing software for databases; written protocols; and, quality assurance and risk management. This work, it was submitted, was not undertaken by VMOs (unless it is explicitly identified as part of their contracted hours). It was a matter of public interest, ASMOF contended, that staff specialists be employed to undertake this work. HAC's case 146 The respondent submitted that the applicant had failed to substantiate a "special case" foundation for salary increases based on the shortage of staff specialists for the following reasons: (a) The Commission has emphasised in both the Nurses' Cases and in the Teachers' Case that the Commission does not award salary increases for shortages per se and has emphasised that any applicant seeking to rely on shortages to support wage increases would need to demonstrate, by appropriate evidence, that the shortages have had a serious and sustained adverse impact on the workforce seeking the wage increases such that their work value has increased and/or that the public interest dictated that pay increases should be awarded as one of the tools to address such shortages. (b) Unlike the situation prevailing in Public Hospital Nurses' (No 3): (i) The applicant was unable to produce any, or at least any probative, evidence to suggest that an increase in salary levels of staff specialists will serve to alleviate the shortage of staff specialists in the system; (ii) The respondent's analysis of the earlier staff specialist cases generally does not establish the existence of any other health professional group that could be regarded as a "traditional"/"historical" comparator used for the purpose of setting staff specialists' rates from time to time and, accordingly, the applicant has not been able to establish that staff specialists have "fallen behind" that other group let alone establish that any such deterioration in "relativities" has in fact contributed to/ "exacerbated" the shortage of staff specialists in the system. (iii) The applicant has not been able to establish that there is currently an untapped "pool" of staff specialists available to work in the public hospital system who would be "attracted" back into the system if staff specialists' salary rates were substantially increased. Indeed, the applicant actively asserts that the public hospital system simply "cannot compete" with the private hospital system in terms of income levels capable of being earned by specialists in private practice/private hospital practice; and (iv) The applicant has been unable to produce any, or at least any reliable, evidence that staff specialists have been leaving the public hospital system in significant numbers as a consequence of "relatively low rates of pay" such as to provide the foundation for an argument that if the pay rates were substantially increased the system would have a better staff specialist "retention" record. (c) The above position is a fortiori given the evidence that: (i) Whilst there are a number of causes for the shortage of doctors and specialists, it is undoubtedly the case (and actively conceded by the applicant) that the Commonwealth Government's decision in the early 1990s to cut the number of university places for trainee medical practitioners has been one of the principal reasons for the current shortage of medical practitioners and, in turn, staff specialists; (ii) Another important cause of the present staff specialist shortage has been the behaviour of the various Colleges by engaging in what are, in effect, restrictive trade practices designed to control the number of persons seeking to become specialists; resist changes to the boundaries between specialists and other health professionals (i.e. protecting their "patch"); and to control the re-entry/re-accreditation obligations of persons seeking to come back into the medical workforce; (iii) The growth in private hospitals fuelled, inter alia , by the Commonwealth Government's subsidy of private health insurance that has provided greater opportunities for specialists to conduct lucrative private practices especially in the private hospitals; (iv) A reluctance by staff specialists to take appointments, especially in rural and regional hospitals where there is a lack of adequate "support" as a consequence of a shortage of nurses and/or junior medical officers and registrars; (v) The very recent views expressed by the Australian Government's Productivity Commission, which highlight the fact that Australia generally needs to find "new ways to meet core health workforce objectives" and it is clear that the "new ways" currently under consideration do not involve paying more money to the existing medical workforce. (d) Whilst the evidence does establish that the shortage of staff specialists has contributed to increased workload for staff specialists (or at least for some staff specialists), especially via the extra supervision requirements associated with the use of overseas trained doctors and locum staff specialists, this evidence does not support a separate "special case" increase in the salary rates of staff specialists. This is more properly to be taken into account in the Commission's consideration of the applicant's work value change case given the general acceptance of the proposition that an increase in workload can, at least in certain exceptional circumstances, demonstrate a relevant change in work value or in the conditions under which any workforce group is called upon to perform. 147 Contrary to the applicant's submission, the HAC contended that in conjunction with other government departments and agencies and numerous professional bodies, they developed and implemented an array of initiatives designed to address the "medical workforce" shortages generally and the shortage of staff specialists, in particular. It was submitted that unchallenged and uncontradicted evidence demonstrated that much has already been achieved and suggested that many of the causes of the existing Staff Specialist shortage can and will be addressed in the short to medium term. 148 The respondent submitted that the New South Wales Government's revenue would be "better spent" on workforce planning initiatives rather than on paying for "special case" increases to staff specialists: See Public Hospital Nurses' (No. 4) at [196], [204]-[211] and especially [327](1) – (3). 149 HAC submitted that the approach and conclusions reached by the Commission in Re Crown Employees (Teachers in School and TAFE and Related Employees) Salaries and Conditions Award (2004) 133 IR 254 at [73]-[78] applied here with equal force such that there should be no special case increase for staff specialists based on "shortage". In that case the Commission said: 73 We do not consider the evidence supports the contention that there is currently a general shortage of teachers to the extent that such a shortage could support a special case for across the board salary increases in order to attract and retain teachers. By no means could it be said that shortages of teachers exist of the nature found to have been the case in Re Public Hospital Nurses (State) Award (No. 3) (2002) 121 IR 28 or Health Employees Pharmacists (State) Award . The evidence reveals there are shortages of teachers, but these are limited to certain subjects such as mathematics, science, technology and applied studies, and certain geographic areas or locations in the State. There was no suggestion by any party that salary increases should be targeted at the specific areas of shortage. Further, an across the board salary increase on the basis of certain areas of shortage, be that subject or geographically based, is simply not justifiable on the evidence before us. We agree with respondents that what is required to address the current problem is for resources to be directed to the development and implementation of targeted initiatives designed to attract and retain teachers in government schools in NSW … rather than a general wage increase. 74 It is apparent from the Federation's submissions that an issue of significant concern was a future serious shortage of teachers. The Federation submitted this would be brought about by very sharp increases in the demand for teachers in the next decade as a result of increased rates of retirements. The Federation submitted that an integral part of any effective strategy to address the future shortage of teachers in NSW by retaining current teachers and recruiting the future generation of teachers was to significantly increase salaries. 75 The evidence would suggest that aged based retirements over the next decade are likely to generate an Australia-Wide shortage of teachers. However, to a significant degree, the prospect of a shortage remains in the realm of speculation and very much depends on whether policy initiatives by governments to avoid such a shortage are, firstly, implemented and, secondly, are effective. 76 Whilst we understand the Federation's concern about the prospect of teacher shortages, a concern that the community should share, it is not appropriate for the Commission to award salary increases based on speculation. An existing shortage of labour is not, or itself, a sufficient basis for increasing salaries; that a shortage may occur in the future provides even less justification. 77 In relation to labour shortages, whether they be current or future, we note what the Full Bench said in Health Employees Pharmacists (State) Award at [54] and [55]: 54 Accordingly, we are, of the view that the shortage of labour is a significant factor in finding that a special case exists, the reasons for which are primarily twofold. Firstly, as discussed earlier, the shortage of labour is connected to changes in work value. There is little doubt that a shortage of labour in the relevant streams has resulted in changes in the way work is now performed, such that it has resulted in changes in the nature of the work (that is, the requisite skills and responsibilities) and in the value of that work. 55 Secondly, given that this matter is concerned with significant shortages in a number of occupational streams in the public health sector, it is plainly a matter of considerable public interest. In this context, the fact that there is a labour shortage, and the magnitude of that shortage in some areas (such as pharmacy), is sufficient to make out a special case in this matter. 78 We do not consider that the factors that influenced the Full Bench in Health Employees Pharmacists (State) Award are present in this case. Accordingly, we decline to award and salary increases on that basis of claimed current and future shortages of teachers even if that consideration provided an appropriate basis for wage fixation. ASMOF's reply on shortages 150 ASMOF referred to what it regarded as the HAC's attempt to suggest that the medical colleges were responsible for the shortages. On the contrary, it was submitted, the evidence from the colleges established that many positions, which are approved training positions by the colleges, remain unfilled. Particular reference was made to the "dire" position in respect of pathologists. ASMOF noted that the medical profession had expressed a strong view that the States have failed to provide sufficient funds to support the necessary positions. 151 As to the shortages created by the contraction of medical school places in Australian universities some years ago, ASMOF asserted that it needed to be emphasised these shortages are yet to have an impact on the specialist workforce. This was because of the long lead times involved in the training and graduating of medical specialists. If anything, it was submitted, the indications were that shortages of staff specialists would become more acute in the short term as the impact of past shortages in medical school places works its way through the system. The shortages arising in consequence of the earlier decision to reduce the number of medical school places would continue to be felt for at least a decade, the applicant submitted. 152 The applicant rejected the submissions by the HAC that it had produced insufficient, or no recruitment/retention evidence such as was called in the Nurses' and Teachers' cases. It was submitted the ASMOF witness statements broadly dealt with attraction and retention issues. In particular, there was substantial evidence about the use of VMO rates to attract specialists to work at other hospitals and the attractiveness of VMO rates which had led to the departure from the public health system of many staff specialists. The Agreed Statement of Facts acknowledged the substitution of staff specialist positions by VMOs, a measure that the Health Department had been forced to adopt by reason of the severe shortage of staff specialists. 153 ASMOF submitted the inspections powerfully underscored the general picture of shortages. Mr Nolan submitted: No more stark example was provided than was the position described at Hornsby Hospital Psychiatry Department. It had become almost impossible to recruit staff specialists in psychiatry. In this connection it is wrong simply to concentrate as the HAC has, upon the position with respect to emergency medicine and psychiatry. It is a broader more widespread pattern of shortages and the attached recent advertisements for "VMO/staff specialist" positions bear this out ... Positions advertised in this way include obstetrics, rehabilitation medicine and anaesthetics, as well as emergency medicine and psychiatry. These advertisements are not limited to rural hospitals but include Gosford Hospital and the Newcastle region. Mental health services prefer to appoint staff specialists because of the continuity issues that are particularly important in mental health. However, the recruitment difficulties in the public sector have become so severe that Sydney hospitals such as Nepean and Sutherland have given up advertising for staff specialists and instead are offering VMO positions. Central Coast has offered a guaranteed private practice Level 4 staff package in an attempt to recruit a staff specialist. In emergency medicine, Fairfield Hospital is offering VMO appointments in an attempt to attract specialists and Mt Druitt is offering the option of staff specialist or VMO rates. The AMWAC reports also confirm that the public sector is uncompetitive and afflicted by general shortages. Its conclusions suggest that the public sector-specific shortages can only be addressed adequately by substantial wage increases for staff specialists. The extensive evidence on the varieties of expedients used, including variations to normal duties to keep key specialists in the public system, is further testament to the need for substantial pay increases. Note that the evidence of leakage from the public system to VMO positions is widespread, and in particular note the evidence of Drs Newman and Gurr in this connection. 154 The applicant submitted that it may be accepted the HAC had endeavoured to implement more systematic workforce planning to address workforce shortage strategies. However, a substantial period of time had now elapsed since the workforce planning directorate was established, yet despite this, the HAC was unable to point to a single instance where a financial incentive or other suitable package had been tailored to attract staff specialists to any particular position. 155 It was contended that the HAC summary of initiatives in this regard exposed the real shortfall between the expressed intention of the Department and the actual achievements of the Department. It was also to be noted, ASMOF said, that the workforce planning directorate had been unable to provide any meaningful statistical material which could throw light on precise patterns of workforce shortage amongst staff specialists and the incidence of the employment of staff specialists on VMO arrangements in order to fill vacancies. The applicant submitted that since this issue was raised squarely in the ASMOF materials that were filed in February 2005, it was extraordinary that no response had been forthcoming from the workforce-planning directorate. 156 Counsel for the applicant submitted: [T]here can be no doubt that a substantial pay increase will contribute substantially to the retention of staff specialists within the public system. There is no doubt about the fact that while the attraction of VMO rates has been powerful, many staff specialists wish to remain in the public system and will do so if an appropriate package, including a proper and increased remuneration, is awarded to them. The Agreed Statement of Facts sets the position out starkly and the HAC cannot now be permitted to slide away from its agreement regarding staff shortages in the Statement. Consideration of workforce shortages 157 There was no disagreement between the parties that a "significant" shortage of staff specialists presently exists in the New South Wales public health system. Further, as it was noted in the agreed statement of facts on workforce shortages: It is generally accepted that recruitment of medical specialists to rural hospitals is always likely to be difficult, regardless of workforce supply and recruitment incentives. At the other end of the scale, recruitment to major metropolitan teaching hospitals should, in most circumstances, be relatively easy because of the status attached to a specialist appointment in such a hospital. It follows that where there are difficulties in recruiting to major metropolitan teaching hospitals there are major labour supply problems. This appears to be the situation with, in particular, psychiatry, emergency medicine, and geriatrics but also in some other specialties. 158 The agreed statement of facts also contained the following conclusions: (a) The NSW Government has identified medical workforce shortages as one of the most important issue facing the health system. (b) Around 10% of staff specialist positions have been declared "Area of Need", meaning that the Australian labour market has been extensively tested and there are no suitable applicants, or no suitable applicants willing to take the position. (c) The actual number of vacancies must be significantly greater than 10% given that not all vacancies are declared Area of Need. 159 Whilst the HAC was not prepared to agree that there was a crisis in the public health system because of the shortage of staff specialists, it seems to us, based on the evidence and inspections, there in fact is a crisis in some specialties. In emergency medicine, geriatrics, pathology and psychiatry the burden of shortages is almost overwhelming staff specialists in the public hospital system. 160 We refer, for instance, to the evidence of Dr Ieraci: The vacancy level within the emergency medicine specialist workforce in NSW is obviously a concern. As noted above, in South Western Sydney Area Health Service there are currently 14 vacancies in an establishment of 22. I am aware that there is a serious shortage of emergency physicians in other area health services. I am not aware of any steps that have been taken by NSW Health to address this shortage. In fact, on the contrary, the Department of Health has often raised questions about the working arrangements of emergency physicians that have been agreed at a local level, with the implication that such arrangements would be withdrawn. There is anecdotal evidence that some rural base hospitals are paying emergency physicians at Visiting Medical Officer (VMO) hourly rates in order to attract specialists. Even in Sydney, some of the district hospitals are offering VMO rates. In other Sydney hospitals, emergency physicians are guaranteed Level 4 remuneration levels even though it is highly unlikely that sufficient private practice income will be generated to meet such levels. A Level 4 senior staff specialist is able to earn up to $226,925 (including private practice), compared to the Level 1 maximum of $181,540. 161 Dr Graham in her statement referred to the serious shortage of psychiatrists: The Report [of the Australian Medical Workforce Advisory Committee (AMWAC)] notes that psychiatry is a large specialty, representing 12.2% of all medical specialists. One of the major findings of the Report is a serious shortage of psychiatrists in the public sector. The proportion of the workforce employed in the public sector has dropped over the last two decades from approximately 50% to 38%. This appears to be a result of increasing dissatisfaction with the working conditions in the public sector. A survey of psychiatrists undertaken by AMWAC and the RANZCP identifies dissatisfaction with remuneration and conditions as one of the major reasons given for leaving the public sector, especially among younger psychiatrists. The Report identifies 20.3 vacancies in public sector psychiatry in NSW and eight Area of Need positions in July 1999. This situation has become substantially worse in the five years since the Report. I understand from NSW Health sources that the number of vacancies has now almost quadrupled to 76.1 FTE. I am personally aware of a number of experienced and respected staff specialist psychiatrists who have resigned in recent months after years of failing to persuade management that more resources are desperately needed. I am extremely concerned that such resignations and the number of vacancies reflect an increasing tendency amongst psychiatrists to abandon the public sector because of the inability of NSW Health to recognise and address the crisis in mental health services. 162 Dr Caplan in his evidence observed: AMWAC predicted that there will be an increase in the requirement for geriatricians, reflecting the steady growth in the aged population. However, it also noted other factors creating a demand for geriatricians: - the continuing pressure to shorten acute care hospital lengths of stay and the desire of older people to avoid long term residential care and maintain some kind of independent life at home for as long as possible. To the best of my knowledge, the AMWAC has not updated its report since 1997. Anecdotal evidence suggests that the demand for geriatricians is steadily increasing and the number of public hospital vacancies is growing. In my department, one out of five positions are vacant. I estimate that in NSW there are now 39 vacancies. 163 Dr Gurr in his statement referred to the shortages of psychiatrists: I believe that a key issue in making public sector psychiatry more tolerable is the need to address the shortage of staff in mental health, both nursing and medical. In terms of staff specialists, this will not occur unless there is a significant reduction in the gap between public sector remuneration and the level of income available in the private sector. Of course, the other key factor is that that acutely-ill, often violent and aggressive patients are not generally found in private sector work. The private sector, therefore, has both higher remuneration and easier work. However, I believe that there are a large number of psychiatrists who would prefer to work in the public sector because of their commitment to the patients if the working conditions were more tolerable. At the moment the system is in a downward spiral – specialists are leaving because the working conditions are intolerable, which makes the work more difficult for those who remain. It is a matter of great concern that this is also flowing through to trainee psychiatrists. Their training exposes them to very unattractive working conditions, making it less likely that they will seek public hospital appointments when they qualify. The number of vacancies in the trainee workforce in turn makes the work of the specialists more difficult. 164 In relation to pathologists, in its official newsletter published in September 2005 The Royal College of Pathologists of Australia considered the profession was in crisis. It stated: Since 2003, the Australian Medical Workforce Advisory Committee (AMWAC) has been urging the creation of an additional 100 training positions each year for five years in order to address the current shortfall of pathologists. Yet to date funding for only an extra 28 have been provided from State Territory and Federal Governments. The newsletter noted that the New South Wales Government had not committed to any additional training places. 165 We would add that a particular feature of the inspections was the consistent concern expressed by specialists regarding the problems they faced as a consequence of shortages. 166 Whilst acknowledging the existence of a shortage of staff specialists, the thrust of the HAC's opposition to any salary increases on the grounds of shortages was that: (a) The Commission does not award salary increases for shortages per se and has emphasised that any applicant seeking to rely on shortages to support wage increases would need to demonstrate, by appropriate evidence, that the shortages have had a serious and sustained adverse impact on the workforce seeking the wage increases such that their work value has increased and/or that the public interest dictated that pay increases should be awarded as one of the tools to address such shortages. (b) The applicant was unable to produce any, or at least any probative, evidence to suggest that an increase in salary levels of staff specialists will serve to alleviate the shortage of staff specialists in the system. (c) The New South Wales Government's revenue would be "better spent" on workforce planning initiatives rather than on paying for "special case" increases to staff specialists. 167 We have not been convinced that the crisis of shortages in emergency medicine, pathology, geriatrics and psychiatry exists in all the other specialties, although we acknowledge the evidence of shortages in those other areas. However, assessing the issue of shortages across the board the conclusion is irresistible that in respect of staff specialists covered by the Award there exists a shortage; the shortage is more serious and significant than that found to have been the case in the 2004 Teachers case; and, is of the same order found to have existed in Public Hospital Nurses (No. 3) and Health Employees Pharmacists (State) Award and other Awards (2003) 132 IR 244. 168 We consider, however, that a shortage of staff specialists is not, on its own, sufficient reason to award a salary increase. If the fact is that there is no public interest to be served by granting a salary increase based on shortages, or the shortages have not contributed to an increase in work value, or that a salary increase will not also address an imbalance in comparative pay rates as was the case in Public Hospital Nurses (No 3), or will do nothing to improve the shortage, or the Commission is convinced that there are better alternatives to addressing the shortage than salary increases, then the basis for granting a salary increase would be unconvincing. 169 There is no doubt the relevant authorities are taking a commendable range of initiatives to address the shortage of staff specialists and these have been set out earlier in the decision. The Full Bench must be careful not to detract from these initiatives by granting salary increases that would divert resources away from the initiatives that are in place or are planned. 170 Further, there is no pool of staff specialists who have left the profession for family and other reasons (as there was in Public Hospital Nurses (No 3)) and who might be attracted back into the public hospital system on the basis of improved salary rates. Nor will a salary increase provide an instant solution for the mistakes of the past where, for instance, the Commonwealth Government's decision in the early 1990s to cut the number of university places for trainee medical practitioners is one of the principal reasons for the current shortage of medical practitioners and, in turn, staff specialists. 171 We consider, nevertheless, that there are grounds for increasing salaries on the basis of a shortage of staff specialists. In our opinion, the shortages have had a significant effect on the conditions under which staff specialists work thus affecting their work value, including, in particular, the need to supervise more closely overseas trained doctors and other health professionals that to some extent have been used to fill the gap caused by the shortage and the increased workload and stress caused by having too few specialists. Moreover, we consider there is force in ASMOF's submission that: The indirect impact is that the pressures inevitably mean that time ordinarily allocated to non clinical duties, including teaching and research, has been steadily eroded at the further cost of morale and retention and recruitment. To the extent that these features of staff specialist employment hold out attractions to trainees – potential trainees can now only see career opportunities as a staff specialist diminished. 172 We also consider that an increase based on shortages will have a positive retention effect. The evidence suggests that for many specialists the option of becoming a VMO can become attractive, especially given the pressures brought about by staff specialist shortages. There will be those staff specialist who will opt to become a VMO regardless of any salary increase because that style of practice suits them. However, other specialists find the work in the public health system rewarding and will stay there if they perceive it is worthwhile. At the present time they are concerned their salary rates are too low given the value of their work and they are under considerable pressure in a number of specialties because of shortages. A rejection of their case for salary increases based on the shortages would have a negative effect on their perceptions as to the value of working in the public hospital system and at this time of severe shortages in a number of the specialties it is clearly not in the public interest to erode the confidence of specialists in that system. RATES FOR COMPARABLE PROFESSIONALS 173 The third issue for determination is whether the rates of pay for staff specialists have declined relative to rates for comparable professional employees, and, if so, whether a special case exists for adjusting salary rates. ASMOF's case 174 On 25 March 1993 Hungerford J, acting as an arbitrator appointed pursuant to s 29L(1) of the Public Hospitals Act 1929, issued his Reasons for Determination as to the terms and conditions for the performance of work by VMOs under sessional contracts in providing medical services to public patients in the public hospital system. In the course of his Determination Hungerford J considered the relationship between the VMO hourly rate and the staff specialist hourly rate. His Honour decided that the best comparison was between a Scheme D (i.e., half-time) staff specialist and a VMO, thereby excluding private practice earnings for both groups of professionals. 175 Hungerford J calculated the hourly rate for a senior Scheme D staff specialist as $71.41 (including the special allowance and based on 14 weeks' leave/38 working weeks per year and 19 hours per week) and determined that the base hourly rate for a senior specialist VMO should be $72.00 (a loading of 36.83 per cent was then applied to this base rate to determine the ordinary hourly rate). 176 On appeal, the Full Bench increased the base hourly rate for a senior specialist VMO to $84.00 per hour and amended the loading to 40 per cent (12 weeks' leave/40 working weeks) but did not revisit his Honour's comparison with staff specialists. ASMOF submitted that whereas the Full Bench quashed Hungerford J's decision, it did not repudiate the calculations which he made and, in particular, the comparison with staff specialists' rates. 177 ASMOF accepted the validity of the comparison between a Scheme D staff specialist and a VMO but contended that there were two errors in Hungerford J's analysis. The first was that he compared the staff specialist base rate including the component for on call/recall with the VMO base rate excluding the component for on call/recall. The second was that his Honour based his calculations on a 38-hour week. It was submitted that given that staff specialists do not receive ADOs, this is clearly not correct. ASMOF submitted that although there is no hours' clause in the Award and it is probably at the lower end of the actual hours worked, it would be better to use a 40-hour week. An additional minor point was that the Full Bench varied the VMO loading on the basis of a working year of forty weeks. On this basis it was submitted the forty-week year should also be used in the calculation rather than the 38-week year used by Hungerford J. 178 Using these assumptions, ASMOF calculated the difference between the base rate for a staff specialist and the base rate for a VMO in 2005. The base award rate for a senior staff specialist, excluding the on call/recall component, is currently $128,861 per annum. Based on 40 working weeks and a 40-hour week, this is an hourly rate of $80.54. A 40 per cent loading increases this rate to $112.76. The current hourly rate for a senior specialist VMO (excluding the background practice cost component and remuneration for on call/call back) is $159.05. ASMOF relied on this calculation to show that the VMO rate is 41 per cent higher than the staff specialist rate. On this basis ASMOF claimed an increase of 41 per cent to achieve parity between the two classifications. 179 ASMOF submitted that the fact VMOs and staff specialists have equivalent skills and experience and should be valued equally, has not been disputed at any point in the history of the employment of staff specialists since the first Award was made in 1966. It was submitted that: There is no strict and accepted comparator as was accepted in the nurses' case where a relationship was acknowledged between nurse's rates and those for physiotherapists. However, the absence of a hard and fast historical nexus is not to the point. It is useful to compare staff specialists rates with other rates such as CMOs. In particular, however, the rates for VMOs are a valid and proper basis for comparison because of the identical nature of the work and qualifications and the readily available means by which the VMO rate may be "unpacked" to produce a proper reliable basis for comparison. 180 In the context of comparisons, ASMOF also made reference to senior registrars, nurses and career medical officers. ASMOF acknowledged there is no formal relativity between staff specialists and registrars, although Kelleher J noted in 1975 that the senior registrar rate was "of some significance". Fisher P in 1990 compared staff specialist and senior registrar rates using 1978 as a datum point. His Honour concluded that the 15 per cent increase that he awarded would put staff specialists ahead of senior registrars but, given that the increase was a consent position, he noted that the rates represented the assessment by the employer of the appropriate salary levels. 181 ASMOF submitted that if 1991 were taken as a datum point for comparison between staff specialists and senior registrars, by July 2007 the senior registrar rate would have moved ahead of the staff specialists by approximately 10 per cent. 182 It was also submitted that whilst there had been no comparison made with nurses' rates in previous cases, rates for nurses have increased significantly more than rates for staff specialists since 1991. In addition, it was submitted, new senior classifications have been introduced into the Nurses' Award resulting in a significant narrowing of the difference in pay between the two professions. 183 The parties were able to reach an agreed statement in respect of the award history for Career Medical Officers (CMOs) and movements in their rates of pay. It was agreed that between 1991 and 2007 CMOs would receive an effective pay increase of 73.5 per cent whereas staff specialists would receive 53.5 per cent. It was further agreed that: The 20% difference in overall increases received between 1991 and 2007 by staff specialists and CMOs can be traced to three causes: (i) the 2005 restructuring (10%); (ii) the general increases over the course of the 1990s awarded to PSA groups being 6% more than the general increases being awarded to staff specialists; and, (iii) a difference of 4% in the current MOUs. The current MOU for CMOs providing for increases of 16%, compared to the current MOU for staff specialists providing for increases of 12%. The staff specialists MOU allows the claim currently in the Commission to proceed and does not extinguish any work value or special case considerations. Therefore the 20% difference relates to a 10% pay rise difference and funding equivalent to a 10% pay rise used for restructuring of the CMO salary scale. 184 ASMOF submitted that CMOs were an appropriate comparator, being (apart from VMOs) the next closest medical practitioner classification to staff specialists in terms of responsibilities and seniority. There has not been a previous comparison between staff specialists and CMOs because the CMO Award was not created until around the same time as the most recent staff specialist arbitration case (the CMO Award was made on 19 October 1989). 185 Whilst the agreed statement on CMO indicated a 20 per cent differential between CMO increases and those applying to staff specialists, ASMOF conceded that the claim for increases in managerial allowances might need to be considered in any comparison with CMOs. If the allowance claim were granted, the cost was estimated by ASMOF to be an amount equivalent to a 2.5 per cent pay increase for staff specialists (assuming little or no change to the number of specialists receiving the managerial allowances). If this cost factor were taken into account, the necessary adjustment to the staff specialist rate would be, according to ASMOF, 17.5 per cent. HAC's case 186 The HAC contended ASMOF's comparison between staff specialists and VMOs was neither adequate nor appropriate as it failed to take into account significant differences between the medical practices of VMOs and of staff specialists and of the terms and conditions under which those two groups provide their services to the system. In this respect reference was made to the evidence of Mr Farley, as follows: (a) VMOs are engaged on a contract basis for a set period of time with a contract lasting no more than five years whilst Staff Specialists are usually engaged on an ongoing basis i.e. they are permanent employees; (b) Staff Specialists are entitled to a rate of paid leave including annual leave (five weeks per annum), sick leave (10 days per annum), training, education and study leave (25 days per annum), maternity leave, paternity leave, personal leave and long service leave whereas VMOs do not have access to any paid leave; (c) Staff Specialists have access to funding (to a maximum of approximately $23,000 per annum) to cover travel and associated costs of training, education and study activities, whereas VMOs are required to fund such activities for themselves; (d) VMOs usually operate a private practice and hence must maintain an office, employ staff, purchase stores and equipment, purchase appropriate insurances such as public liability, workers' compensation, medical indemnity, business insurance, contents insurance etc. for their private practice premises. Staff Specialists, on the other hand, have all of these costs covered by the employer although it must be acknowledged that Staff Specialists on private practice levels 2-5 do have a facility fee deducted by their employer to cover administrative costs and a majority of that group (i.e. the level 2-5 Staff Specialists) are also required to pay for their own medical indemnity costs (although these costs can be met from their private practice drawings). 187 Additionally, it was submitted, staff specialists, unlike VMOs, had the benefit of the unfair dismissal provisions of the Industrial Relations Act and also had their superannuation loaded by the on-call/recall/special allowance of 17.4 per cent, whereas VMOs did not have this benefit, as they did not get that allowance. 188 Mr Kimber referred to comments by the Commission in the past about the significant differences that existed between staff specialists and VMOs: see, in particular, Re Medical Officers – Hospital Specialists (State) Award [1966] AR (NSW) 144 at 163 and 166-167. The HAC submitted the applicant had, over many years, accepted that the differences referred to by the Commission between staff specialists and VMOs prevented any useful comparison to be made between the two groups in the context of fixing appropriate base salary rates because this was the first occasion upon which the applicant had sought to rely on such a comparison. 189 In relation to the Determination of Hungerford J, the HAC submitted that a proper reading of the decision did not support the conclusion that his Honour arrived at the base hourly rate for a senior specialist VMO (namely $72.00) because the hourly rate for a senior scheme D staff Specialist was $71.41 at that time. It was submitted that whilst the Full Bench acknowledged VMOs and staff specialists generally performed the same work and are of equal capacity and standing as their VMO counterparts and, at least in the context of its ruling as to superannuation, referred to the fact that VMOs "perform work interchangeable with staff specialists" and being "work which would otherwise, given a different system, be performed by staff specialists", it did not set the sessional VMOs' base rates by reference to any comparison to the base rates paid to staff specialists. 190 Furthermore, it was submitted, the applicant paid no regard to the fact that the Determination of Hungerford J was the subject to an appeal to the Full Commission (see Australian Medical Association, NSW Branch v Minister for Health (No. 3) (1993) 54 IR 139) that resulted in higher rates of pay than that set by his Honour and determined those rates by reference to the Full Commission's own "assessment in contemporary terms without particular reliance upon the history of the development of sessional rates …" It was contended the Full Bench also made it clear that the ultimate level of those rates depended in large part on the nature and extent of the structural changes that were ultimately agreed upon between the parties and the "value" of those changes to the system. 191 It was also submitted that the mathematical exercise now advanced by the applicant was flawed as it failed to make due allowance for the substantial amounts of paid leave received by staff specialists but not by VMOs. 192 We should refer here to ASMOF's Reply where it strongly defended its reliance on Hungerford J's comparison of staff specialists and VMOs. It was submitted his Honour's 'unpacking' of the VMO rate took into account background practice costs and leave issues, etc. Hungerford J determined that the base hourly rate for a senior specialist should be $72.00 and then applied a loading of 36.83 per cent for all forms of leave, to give an hourly rate of $98.50. His Honour also determined that an hourly rate of $9.00 (for non-surgeons) or $15.00 (for surgeons) should be paid for background practice costs. 193 Likewise, it was submitted, it was erroneous to say that there was no direct comparison of the relevant rates by Hungerford J. His Honour concluded that the most relevant senior staff specialist hourly rate was $71.41. There could be no possibility that this figure was not directly related to the $72.00 rate for senior specialist VMOs determined by Hungerford J. It was submitted nothing that the Full Bench did on appeal, gainsaid the basis of that exercise. What the Full Bench did, in effect, was to make a pragmatic decision to adjust the base hourly rate (from $72.00 to $84.00) in the light of a result that flowed from Hungerford J's decision that, it was submitted, was industrially unpalatable to all parties concerned. 194 The applicant contended that the Full Bench accepted the basis of Hungerford J's approach, including the amounts that formed part of the loaded rate, taking into account leave, leave loading and other conditions factors. It was to be noted, ASMOF submitted, that the Full Bench increased the loading for long service leave from one week to two weeks so that the total loading was increased from the 36.83 per cent set by Hungerford J, to 40 per cent. The Full Bench also increased the background practice cost component from $9/$15 to $15/$25 per hour. 195 ASMOF contended that the establishment of a comparison between the staff specialist rate and the VMO rate according to the Determination of Hungerford J had the additional attraction of precluding any logical argument for a flow-on to the VMO rate. Mr Nolan for ASMOF submitted that it was, in effect, an exercise in catch-up for staff specialists and would logically preclude any suggestion of flow-on resulting in further VMO increases. 196 Returning to the HAC's case on comparable professional rates, Mr Kimber referred to ASMOF's comparison with the rates of pay of RMOs and Registrars as providing a foundation for a "special case" increase in the staff specialists' salary rates. HAC submitted that the applicant has not made out a special case on this ground for the following reasons (emphasis in original): (a) The Applicant, quite properly, conceded that there never has been a fixed relativity between RMO/Registrar rates and Staff Specialists' rates. The above analysis of the earlier Staff Specialists' decisions confirms this fact: ... It seems that the closest the Commission ever came to relying on Registrar rates in fixing Staff Specialists' rates was in the 1975 decision wherein the Commission noted that the Senior Registrar rate of $15,850.00, that had been fixed by agreement between the parties , was of "some significance in determining the commencement point for the scale of salaries for Staff Specialists" ... (b) The Applicant has called no evidence as to the range of duties and responsibilities of RMOs and Registrars, or more pertinently, evidence as to the differences between those classifications and the Staff Specialist classifications. Nor has it called any evidence that throws light on how the RMO/Registrar rates were initially fixed. (c) A comparison of the RMO and Registrar rates with the Staff Specialist rates in the period between 1991 and the present time, ... reveals that there is currently a 6.4% difference between the rate paid to a Senior Registrar and the rate paid to a first year Staff Specialist (with the latter rate being the higher of the two) and there is no evidence to suggest that that relativity is inappropriate. Nor is there evidence to suggest that the 15.2% differential that existed between the same two rates as at September 1991 was a differential deliberately set following a detailed comparison of the two classifications. That is, there is no evidence to suggest that the 1991 relativity should to be restored. Indeed, given the limited material that is before the Commission as to the role of Senior Registrars (for instance), it is not surprising that there should only be a small difference between the salary rates paid to that classification and the salary rate paid to first year Staff Specialists. (d) There is also the substantial difficulty in making such a comparison that is created by the fact that the rates paid to Staff Specialists have always been "all up" rates of pay that make due allowance for the fact that Staff Specialists traditionally work more than 40 hours per week, regularly work in the evening hours and at weekends and do not receive separate payments for overtime or for on-call/recall responsibilities. This special feature of Staff Specialist rates (which does not apply to RMO/Registrar rates) has been referred to regularly by the Commission in the earlier Staff Specialist decisions ... (e) In other words, Kelleher J was correct in the 1975 decision when His Honour said that, "to attempt to quantify the monetary amounts which should be included in the salaries to compensate for these factors is quite impracticable": ... Accordingly, it is in turn quite impracticable to now try to distil the true base rate component/portion of the all up rate paid to Staff Specialists so as to then enable a true like with like comparison with the base rates paid to RMOs and Registrars. That is, the difficulty will still remain in seeking to make a true like with like comparison even after the on-call/recall/special allowance of 17.4% is taken out of the base rates of Staff Specialists. 197 The respondent made further submissions regarding the relevance of VMO rates after undertaking further research as to the history of the Determination by Hungerford J. 198 In these further submissions the respondent noted ASMOF's "special case" insofar as it rested upon a comparison with VMOs rates, involved two central propositions, namely: (a) VMOs and Staff Specialists have the same qualifications and perform the same work and therefore should have the same base rates of pay; and (b) VMO base rates have been set (over the years or at least since 1993) on the basis of the rates paid to Staff Specialists. 199 The HAC submitted, however, that the applicant had not answered its submission that involved the following propositions: (a) Assume, as the applicant would have it, that Hungerford J did set the base rate for a Senior Specialist VMO at $72.00 by reference to the Senior Staff Specialist rate of $71.42; (b) Given this assumption, can it be suggested that the Full Bench in the appeal from the Hungerford J Determination took that 'Senior Staff Specialist based' VMO rate and then simply "built upon it" by reference to structural efficiency type factors? (c) If this was the approach adopted by the Full Bench then it followed that it deliberately set a significant differential between Staff Specialist and VMO base rates; OR (as submitted by the respondent); (d) The Full Bench was unable to adopt/endorse the approach adopted by Hungerford J because it did not reflect "industrial reality" and hence the Full Bench had to make its "own assessment" as to appropriate increases to the existing VMO rates by reference to work value change and structural efficiency factors of relevance since 1985 and to the fresh evidence that was before the Commission in the appeal; (e) That is, the Full Bench then awarded increases of 10-12% to VMOs but such increases were not based at all on any comparison with rates paid to Staff Specialists. 200 The findings of the Full Bench that, the HAC submitted, rendered untenable the applicant's submission that the Full Bench, in effect, simply "built upon" rates established by Hungerford J in the first instance Determination, were as follows: The effect of the 1985 adjustment provision is unsupportable in industrial terms. The VMOs have had the benefit of a provision which we cannot support; nor do we think Macken J could have intended that effect. It follows necessarily that, as Hungerford J found, the rates require a discount by the inflated amount. We propose therefore to make our assessment in contemporary terms without particular reliance upon the history of the development of sessional rates but having made the discount to which we have just referred. In our view, this requires a reduction in the hourly rate of $14.00 in the case of the Senior Specialist, with a proportional effect on the other classification rates. This approach then requires us to consider the application of the increases, against which there is no appeal, in relation to work value changes occurring since the last work value assessment… The course we have followed diverges dramatically from that urged from the Minister and from the three exercises advanced by the AMA. The AMA's exercises were never designed as precise answers to its claim. Rather, they were designed to assist the Arbitrator in the process of assessment. ... We are in a position different to that in which Hungerford J found himself in assessing new rates. The agreement between the parties arrived at subsequent to His Honour's decision is a matter we consider of importance in making a final assessment of the sessional rates to be applicable. The parties took a judgment which introduced significant and far reaching changes and sat down to settle between them how the changes involved in the judgment should be introduced. They have agreed to submit the residual difference between them as to rates to the appeal process. In the context of the application of the judgment of the Full Commission the parties will operate in a new form of contractual relationship which involves a substantially different culture. The VMOs have accepted that in the provision of medical services they will now be subjected to administrative and budgetary restraints. These changes are of enormous financial value to the administration. We accept the reasons for decision went forward on the basis that these matters would occur but in a context where the sessional rates were to be reduced substantially, their necessary co-operation to implement those procedures was not to be forthcoming. We think the application of the framework established by Hungerford J now becoming a reality (as the fresh and undisputed evidence called in these proceedings indicated) is a feature which should be brought into account in the assessment of rates. 201 The respondent submitted that the further evidence that was before the Full Bench (and not before Hungerford J) demonstrated why the Full Bench regarded it as appropriate for it to make its "own assessment" as to appropriate rates for VMOs going forward. Consistent with this approach, it was submitted, there was nothing to be found in the Full Bench decision that supported the applicant's contention that the rates set for VMOs in 1993 were based upon Staff Specialists' rates of pay. 202 In any event, it was submitted, it was simply incorrect even to suggest that Hungerford J set the VMO base rates at the levels that he did because his Honour was of the view that VMO base rates should be the equivalent of Staff Specialists' rates. Mr Kimber submitted there was nothing in Hungerford J's extensive "Reasons for Determination" that supported this submission by the applicant. Indeed, it was submitted, Hungerford J took into account a significant number of factors when assessing base rates for VMOs and, whilst that list of factors included reference to a "comparison with Staff Specialists' rates", the HAC submitted that on any proper reading of his Honour's consideration of all of the listed factors that, at best, it could only be said that Hungerford J "had regard to" the rates paid to Staff Specialists and that on no account could it be said that his Honour set VMO rates on the basis of the then prevailing Staff Specialists' rates. 203 As to ASMOF's reliance on a comparison of staff specialist and CMO rates, the respondent submitted there was no valid comparison available. The main aspects of the HAC's opposition to the use of CMO rates for comparison purposes are as follows: (a) Apart from the absence of any proper evidentiary material before the Commission in these proceedings that would enable a proper comparison of the work of CMOs with that of Staff Specialists (at any particular level), it was also significant that there was no evidence to suggest that the CMO rates when originally established in the Determination in 1987 or in the first Award in 1989 were ever set on the basis of any agreed or determined relativity with the rates paid to Staff Specialists. Indeed, the Applicant's own submissions to the Commission in the 2005 CMO Award Application matter actively asserted that the CMO rates were originally set by reference to the rates found in the Public Hospitals (Medical Officers) Award. (b) It was incorrect for the Applicant to suggest that the CMO Award was not created until around the same time as the most recent Staff Specialist arbitration case, namely, the decision of Fisher P in March 1990 because it was clear from paragraphs 1 and 6 of the Agreed Statement of Facts re Career Medical Officers and attachments A and B thereto that the CMO classifications/rates were first established in 1987 by Determination and that the Award made on 19 October 1989 "reflected that Determination to a very large extent". (c) In such circumstances, the respondent submitted that if the applicant had thought that a comparison between CMOs and Staff Specialists was an appropriate comparison then such a contention would have been advanced before Fisher P. However, any perusal of that judgment demonstrates the comparison then sought to be relied upon was with the rates paid to Senior Registrars under the Medical Officers' Award (being a comparison that was ultimately rejected by the Commission as not supportive of the applicant's case). (d) The respondent submitted that it was not an appropriate and legitimate approach for the applicant to simply point to the "relativities" between CMO rates and Staff Specialists' rates as at 1991 as a factual matter, i.e. by simply pointing to the percentage difference between those rates at the time and then to suggest that at the very least that this "relativity" should be maintained between those two classifications in 2005. The approach is illegitimate for the following reasons: (i) As indicated above there is no suggestion that the CMO rates were ever set by reference to Staff Specialist rates and there was certainly no agreement as to relativity that is discernible from the materials now before the Commission; (ii) The materials found in the Agreed Statement as to Career Medical Officers and in the Applicant's submissions in the 2005 Career Medical Officer Award case demonstrate that whatever the position may have been in 1991, that there have been substantial changes impacting upon the work levels, responsibilities and training of CMOs since that time which on any view would warrant a revisitation of even "established" relativities. (e) In this latter regard, the following submissions made by ASMOF in the 2005 Career Medical Officer Award case take on particular significance in the present context, namely: (i) The role of CMOs has changed markedly since 1989 and yet there has been no formal recognition of that change; (ii) A new classification structure was warranted in view of the changed circumstances and that under that new scale the rates of pay for senior career medical officers were to be aligned with those payable to level 1 Staff Specialists in the Staff Specialists' (State) Award; (iii) Progression to Senior Career Medical Officer would be determined by a grading committee applying criteria set out in the new part A of the Award; (iv) The role of the CMO is a diverse one and some CMOs have been working in that classification for well over 16 years and have developed considerable expertise in their areas of practice; (v) CMOs now provide a broad range of medical services to both the public and private health systems and many CMOs continue to be required to work in relative isolation and without direct supervision … Staff Specialists and VMOs not infrequently seek specific knowledge or clinical opinion from the CMOs with specialised expertise; (vi) Many CMOs are the most senior and experienced doctors within their area in which they work and, as a consequence, are expected to fulfil leadership roles; (vii) CMOs are frequently the most senior doctors on duty in many hospitals. For example, CMOs are often in charge of many regional hospitals and their emergency departments, especially after hours during evenings, nights, weekends and public holidays; (viii) Many CMOs have acquired significant expertise in one or more areas of medicine and have been regarded as generalists capable of filling the emerging sub-specialty of inpatient physicians that are more commonly known as hospitalists; (ix) Many VMOs are dependent upon CMOs to provide onsite senior assessments in their absence; (x) Some CMOs fill responsible positions such as directors of clinical training, where they supervise the delivery of ongoing clinical education to other medical staff, particularly in regional and small metropolitan hospitals; (xi) "The evidence to be led by the Applicant would show that a substantial number of CMOs have extensive experience, skill and expertise with many possessing the skill and expertise equivalent to or beyond that of junior Staff Specialists. The Applicant proposed a new grade of senior CMO recognised the value of this role"; (xii) The rates of pay for senior career medical officer align with those payable to level 1 Staff Specialists in the Staff Specialists' (State) Award; (xiii) "The Applicant will show that the Award provides an unnavigable ceiling for some CMOs despite their leadership roles". (f) The HAC submitted all of the above factors, when taken together, provided a proper explanation as to why it was now the case that the salary scale for CMOs overlap with the salary scale for Staff Specialists. (g) The difficulty (if not impossibility) of the comparison sought to be relied upon by the applicant was only further emphasised by the fact that "ASMOF concedes that the claim for increases in managerial allowances may need to be considered in any comparison with CMOs". That is, the applicant acknowledged that there were some confounding variables that make a strict comparison very difficult. Another such variable is the fact that Staff Specialists receive TESL of 25 days per year and yet CMOs only receive 7 days study leave as is the possibility that the Commission may make penalty rates available to Staff Specialists. (h) All the above factors demonstrate that Staff Specialists should be treated by the Commission as sui generis as correctly asserted by the applicant in its submissions. Consideration regarding comparative professionals' rates 204 For the reasons articulated by the HAC, we do not accept there has ever been a work value based relationship between staff specialists on the one hand and VMOs and/or CMOs on the other that would allow us, with any confidence, to fix salaries for staff specialists on the basis of such a comparison. Accordingly, we do not propose to establish any such relationship arising out of these proceedings. Whilst vague comparisons have been drawn between these groups of medical practitioners in the past, they fall well short of establishing a formal work value relationship - or parity - that we could rely on in 2006 in setting the salaries for staff specialists. Moreover, despite the mass of material that has been presented in this case, there is insufficient for us to draw any reliable conclusions regarding comparative work value of staff specialists to that of CMOs and VMOs and even if there were such material, we would require a much more probing analysis of the reasons for the differentials in salary scales than that we have received. 205 That is not said in any way to be critical of the parties; an exercise involving a comparison of the work of these medical practitioners would be massive and the means may not justify the end. But we are in no position on the evidence to find, for instance, that the work of a CMO and/or VMO is the same as a staff specialist and the salaries should be the same, especially when there are significant differences, no doubt for good reason, in the way the respective salaries are structured to suit the particular needs of the professional calling. 206 That said, we also do not propose to ignore entirely, movements in the salaries paid to VMOs and CMOs. In Nursing Homes &c., Nurses' (State) Award, Re (No 4) (2005) 138 IR 409 the issue of parity between nurses in public hospitals and nurses in nursing homes arose for consideration. At [66]-[70] the Full Bench stated: 66 Putting aside for the present the comparative value of the work of nursing staff in the two sectors, we are not satisfied that, on special case grounds, we should restore parity by re-establishing a wages nexus so that whenever there is an increase in rates of pay for nursing staff in public hospitals it would automatically flow to the relevant classifications in the Award under consideration. Now that the nexus no longer exists we consider the Award should continue to stand alone. 67 We accept that nursing homes are involved in providing more acute levels of care than was the case 15 years ago and there has been some convergence of the nature of nursing work in nursing homes with that performed in the public hospital system. However, we do not consider that is a reason for restoring parity. In our opinion, the nursing home environment and the factors that create that environment are different to that of public hospitals and, in the context of wage fixation, give rise to different considerations. The terms and conditions of employment in the awards covering nursing staff in the two sectors should be determined not primarily by reference of one to the other but by applying the relevant legal and industrial principles to the facts and circumstances of the sector under consideration at the time. 68 That is not to say that the rates of pay for nursing staff in public hospitals is not a relevant consideration in determining rates in the aged care sector. There has been, and we consider there continues to be, a strong relationship between the work value of nurses in the two sectors and RNs are able to move relatively easily between the two sectors. It would be unfair and inconsistent with the requirements of s 10 of the Industrial Relations Act to provide fair and reasonable conditions of employment for employees to allow too big a gap to develop between the award rates of pay for nurses in the two sectors because of the strong work value correlation. 69 Further, if award rates of pay become too much out of kilter it will distort the nursing labour market by disadvantaging one sector against the other in their competition for what continues to be a relatively scarce resource, namely, nurses. The employers recognise this and many favour the parity principle but they face the limitations imposed by the Commonwealth's funding arrangements - a paramount consideration for them given that the Commonwealth substantially funds the sector. It may be noted that Ms Macri, Executive Director of the Australian Nursing Homes and Extended Care Association, described the sector, as "a franchise of the Commonwealth". 70 Whilst we do not propose to restore parity we do propose to increase rates of pay for nurses in the RAC sector beyond the interim increases already granted. In doing so, we are acknowledging the longstanding nexus that has previously existed and although the nexus no longer applies a significant wages gap emerging for the reasons expressed above should be avoided. At the same time, sufficient flexibility and scope to set wages in the Award according to the peculiar circumstances of the aged care industry without the overbearing influence of a formal nexus should be provided. 207 Whilst we have declined to accept any formal nexus between staff specialists and CMOs/VMOs for the purpose of wage fixing, it is a matter of common sense based on the material we have received, that the work of staff specialists and, at least, VMOs is very similar. It is the conditions under which the work is performed, the structure of remuneration and particular demands of the two callings that are dissimilar. 208 The evidence in the proceedings is that staff specialists are critical for the operation of the public health system. Without them we daresay the system would be at risk of collapse. It would not be in the public interest, in our opinion, to allow the salaries of staff specialists to languish to such an extent that the calling of staff specialist became unattractive because earnings as a VMO were so superior. 209 In fixing salary levels for staff specialists we have had regard to movements in the rates applicable to CMOs and VMOs. MANAGERIAL ALLOWANCES 210 The fourth matter for determination is whether the claim for new/increased managerial allowances is justifiable on work value and/or special case grounds. Agreed statement 211 Whilst there was no agreement between the parties as to the amount of increase in the managerial allowances there was agreement on the criteria for payment of the allowances. These agreed criteria are: (a) It is an expectation that a certain level of management responsibility is an essential part of the duties of a salaried Staff Specialist. (b) In addition to the salaries prescribed by this Award, a salaried Staff Specialist required by the Employer to undertake additional responsibilities specifically associated with the management of a unit, department or service shall be paid an additional allowance as set out in Schedule 1 to this Award. (c) To be eligible for consideration of payment of this allowance, the additional management responsibilities will include direct line responsibility for a unit, department or service and involvement in a number of, but not necessarily all, of the following: (i) cost centre management including budget preparation and management of allocated budget; (ii) participation in planning and policy development; (iii) responsibility for the co-ordination of research, training or teaching programs; (iv) membership and participation in senior executive management teams. (d) The Managerial Allowance at the Level 1 rate is payable to Staff Specialists who satisfy the criteria in (c) and who are specifically required by the Employer to undertake these additional managerial responsibilities. It is expected that a staff specialist receiving a Level 1 allowance will as a minimum perform human resource management responsibilities which include the direct supervision of staff, allocation of duties, approval of staff rosters, implementation of the provisions of Clause 12 Performance Agreements, monitoring of hours worked and other performance management matters. It is also expected that a staff specialist receiving a Level 1 allowance will be responsible for ensuring that quality improvement and clinical governance activities are implemented. (e) The Managerial Allowance at the Level 2 rate is payable to those Staff Specialists satisfying the criteria in (c) and (d) who, in the assessment of the Employer, have significant additional managerial responsibility involving multiple units, services or departments, eg. Divisional responsibility. (f) The Managerial Allowance at the Level 3 rate is payable to those Staff Specialists who, in addition to satisfying the criteria in (e), have a level of managerial responsibility deemed by the Employer to require an allowance at the Level 3 rate, eg. Area-wide responsibility. It is recognised that managerial responsibilities at this level may not involve the duties at a Department or unit level outlined in (d). (g) The Managerial Allowances are not cumulative and are only payable for the period in which the Staff Specialist has been allocated the additional managerial responsibilities by the employer. (h) Managerial allowances may be withdrawn with one month's notice by the employer if the employer determines that it no longer requires the staff specialist to undertake the relevant managerial responsibilities. This subclause does not apply to staff specialists who have been appointed to a position where the managerial duties for which the allowance is paid are an intrinsic part of the substantive position. (i) The Managerial Allowances shall be paid during paid absences on approved leave, on termination of employment (on the basis of pro rata the annual amount for each week of paid leave) and for superannuation and voluntary redundancy purposes. (j) The employer may direct a staff specialist, as a condition of receiving the managerial allowance, to attend training intended to support and improve management skills and competencies. 212 It was further agreed that: The current levels [of managerial allowance] are based on a 1997 negotiated settlement. Thus there was no assessment of the value of the additional responsibilities and no account taken of the change in staff specialist managerial responsibilities between the time that administrative allowances were introduced and 1997. As a result, a staff specialist director of a major multi-specialty multi-facility multi-million dollar business unit is paid a lower amount for his/her managerial responsibilities than the Nurse Unit Manager of a small ward in a small hospital. 213 The parties agreed that certain grades of nurse manager could be approximately equated to the three levels of staff specialist managerial allowances, as follows: Staff specialist manager Nurse manager Level 1: Director of a hospital department Grades 2 – 4: manages a hospital function or service (more complex hospital attracts higher grade) Current rate: $19,483 - $28,583 Current rate: $5062 ASMOF claim: $20,000 Level 2: Director of a division Grades 5 – 7: manages nursing operations in a major clinical division Current rate: $33,149 - $45,296 Current rate: $8860 ASMOF claim: $35,000 Level 3: Area director of a service Grade 9: Area Director of Nursing Services in a rural health service Current rate: $13,362 Current rate: $60,470 ASMOF claim: $50,000 Note: the current Nurse Manager rate is taken to be the difference between the top of the RN scale and the Nurse Manager thereafter rate. 214 The agreed facts also extracted from the statements of six witnesses material relevant to the issue of managerial allowances. The six witnesses were: · Leslie Burnett of Northern Sydney Central Coast Area Health Service · Derek Glenn of South Eastern Sydney/Illawarra Area Health Service · Gideon Caplan of South Eastern Sydney/Illawarra Area Health Service · James Colebatch of South Eastern Sydney/Illawarra Area Health Service · Therese McGee of Sydney West Area Health Service · John Dwyer, formerly of South Eastern Sydney Area Health Service 215 The import of the statements may be stated succinctly by reference to what Professor Dwyer said in his statement, namely, "there has been very significant change in the level of managerial responsibilities undertaken by staff specialists in managerial positions". For example, Dr McGee stated: The requirements imposed on a staff specialist manager by NSW Health have grown enormously in recent years, particularly in the areas of risk management and quality and safety. Written protocols are developed for every clinical procedure undertaken within a department of a hospital. In obstetrics at Westmead Hospital there are more than 100 procedures. Each protocol needs to be updated every two to three years. A single protocol will typically take 30-40 hours to complete and up to 10 need to be completed in a 12 month period. No resources have been provided by the hospital or the Department of Health to assist with these requirements and as a result staff specialist managers often work on the weekends to complete this work. Similarly, the workload associated with adverse incidents has increased enormously, with a requirement for each incident to be thoroughly investigated and avoidable factors identified. While the value of this requirement is not disputed, there have been no increased resources to assist with the increased workload. ASMOF's case 216 ASMOF relied substantially on the statement of agreed facts in respect of managerial allowances but added it was notable that all of the HAC's witnesses who referred to the managerial allowance issue - Dr Christley, Professor Picone and Mr Clout - agreed that substantial increases are appropriate, albeit on certain conditions. 217 In its Reply, ASMOF submitted Nurse Unit Managers (NUMs) receive salaries that are 25.4 per cent (NUM1), 31.4 per cent (NUM2) and 34.9 per cent (NUM3) above the top of the Registered Nurse scale. It was submitted that if these same percentages were to be applied to the top of the staff specialist scale (currently $136,709, excluding allowances), the three levels of managerial allowance would be $34,724, $42,927 and $47,711. ASMOF noted that NUM responsibilities, unlike the criteria for the staff specialist managerial allowances, do not include cost centre management and budget preparation, participation in planning and policy development or membership of senior executive management teams. 218 The Full Bench had requested information about the managerial allowances received by the ASMOF witnesses, including those who were involved in the inspections. Of the 25 staff specialists who were witnesses or who had a role during the inspections, eight received the level 3 allowance, five received level 1, one received level 2 and information regarding the others was not available. HAC's case 219 The HAC accepted that the nature and extent of the changes that have occurred in the managerial responsibilities assigned to some staff specialists in the system over the last five to ten years have been such as to warrant increases in those allowances. This was especially so, it was submitted, in circumstances where the parties have now agreed on new or substantially revised criteria for the level 1, level 2 and level 3 managerial allowances that are available to staff specialists and the fact that the parties have agreed on variations to the existing "performance agreements" clause of the Award such that it makes it clear that staff specialists in receipt of their managerial allowances would henceforth be required to ensure that each staff specialist has an annual "performance agreement" and that the terms of that agreement are properly implemented/honoured. In his submissions Mr Kimber stated: So the object of the exercise has been very much to place on the staff specialists receiving managerial allowance a very real responsibility for ensuring that the process works. That in conjunction with the growth of managerial responsibility together forms the foundation that there should be an increase in the levels. Consideration regarding managerial allowances 220 It may be seen there is a substantial amount of agreement between the parties in respect of managerial allowances, although the agreement falls short of an accord in relation to the amount of increase in the allowances. 221 What is apparent from the material in the proceedings is that the current allowances are entirely inadequate to compensate for the duties and responsibilities required under the agreed criteria for payment of the allowances. 222 In claiming the increases it has in managerial allowances, ASMOF has placed some reliance on the rates paid to nurses who perform a managerial role. It appears that the HAC has not demurred from such comparisons and it has not proposed any alternatives. In his submissions Mr Nolan for ASMOF stated in relation to the managerial allowance claim: The current levels are based on a 1997 negotiated settlement. Thus there was no assessment of the value of the additional responsibilities and no account taken of the change in staff specialist managerial responsibilities between the time that administrative allowances were introduced and 1997. As a result, a staff specialist director of a major multi-specialty multi-facility multi-million dollars business unit is paid a lower amount for managerial responsibilities than the nurse unit manager of a small ward in a small hospital. In other words, not only is there recognition of the skill and scope of responsibilities in an objective sense, but in a comparative sense the nurse manager positions have really overshadowed the doctor specialist manager positions with increases in the salary rates for nurse managers and the introduction of this new nurse manager classification has come into the nurse hierarchy over the years and in particular in recent years. 223 We understand that there are 224 staff specialists currently receiving the level 1 allowance, 120 receiving a level 2 allowance and 56 receiving a level 3 allowance. These numbers may change given the more stringent criteria that has been agreed upon in order to attract the payment of a managerial allowance. 224 We note that it was agreed that certain grades of nurse manager could be approximately equated to the three levels of staff specialist managerial allowances. That would mean substantial increases in the managerial allowances and whilst we recognise payment of the allowances will be in compensation for staff specialists assuming quite significant managerial responsibilities will only be made according to strict criteria, we intend to take a reasonably conservative approach to the fixing of these allowances given what we intend in relation to salaries and to ensure there is no double counting. ECONOMIC IMPACT 225 The final issue for determination is the impact of the claim in the context of the Commission's duty to have regard to the state of the economy of New South Wales and the likely effect of its decision on that economy. ASMOF's case 226 The applicant noted that based on information provided by the HAC, it was estimated that a one per cent increase in the salaries of staff specialists would cost approximately $3.452 million. On this assumption, a 41 per cent increase would cost $141.5 million. 227 It was submitted that recent fully funded consent public sector pay agreements suggest the Government is budgeting for 4 per cent pay increases for four years commencing July 2004. The actual cost of the pay claim to the New South Wales budget would, therefore, be the total cost less this amount (141.5 - 55.2 = $86.3 million). In addition, the estimated cost of the claimed increase in managerial allowances is $8.53 million. 228 The applicant also noted that, for every staff specialist who moves from the Level 1 private practice arrangement to a different level, there is a cost saving for the employer. Similarly, there are both cost savings and revenue gains (from facility fees and an increase in trust funds) to the employer for every VMO who becomes a staff specialist. It was submitted that number of the claims made by ASMOF would, if successful, make it somewhat more likely to attract VMOs into staff specialist positions and provide incentives for staff specialists to move from Level 1 to other levels. 229 ASMOF contended that the flow-on implications of its claim were negligible given that other major health unions had already been awarded work value/special case increases by the Commission and/or reached agreement with NSW Health for consent award increases. ASMOF accepted there was a theoretical possibility of a claim for a flow-on to VMOs but the basis of the present pay claim was restoration of staff specialists' relativity with VMOs. Should the Commission choose to adjust staff specialist rates on this basis it was submitted it would, by definition, preclude any flow-on to VMOs. HAC's case 230 The HAC tendered the witness statement of Kenneth Reginald Barker, Chief Financial Officer for the New South Wales Health Department. Mr Barker's statement contained an extensive assessment of the cost of ASMOF's total claim and its impact if granted. However, in respect of salaries, Mr Barker estimated that an increase in the pay of staff specialists generally of one per cent would result in an increase in total salary costs for the staff specialists' workforce of approximately $3.452 million. He said a variation to the Award resulting in a pay increase of 41 per cent applying to all staff specialists would result in an increase in the total salary costs of approximately $156 million. 231 HAC accepted that the Commission would approach the economic impact of the claim in the same manner that it was approached in Public Hospital Nurses' (No. 4) at [233] and [241]-[242] where it was stated: 233 As the HAC contended, the Commission is required, pursuant to s 146(2) of the Act, to take into account the public interest in the exercise of its functions and, for that purpose, must have regard, inter alia, to the state of the economy of New South Wales and the likely effects of its decisions on that economy. Hence, even though wage increases may be justifiable under the work value principle, if to grant them were to have an adverse impact on the economy, a case may exist for restraint. The onus of demonstrating the need for restraint would fall on those opposing the increase because unless it can be convincingly demonstrated that real harm will be done to the economy by the granting of any increase, the employees concerned are entitled to receive remuneration commensurate with the value of their work. ... 241 We find that there has been a significant net addition to the work requirements of registered nurses and ENs over the relevant periods such as to warrant an increase in rates of pay. In assessing the level of pay increase we have concluded that only a moderate increase is justified. Our reasons for arriving at this conclusion are as follows: 1) Many of the changes referred to by the Association as having occurred since 1996 are not new. Many have been the subject of previous inquiries into the work value of nurses going back to 1981 or 1990 respectively. Care has had to be exercised to avoid taking into account the change that occurred prior to the datum points. 2) In many occupations, particularly professional occupations, change, and the requirement to cope with it by coming to terms with new methods and new technology, is an inherent and accepted characteristic of the employment part of the evolutionary process of change which does not provide a basis to award pay increases. 3) The wage increases received by nurses under the 1996-99 agreement; the 2000 MOU and the Interim Decision were, in part, in recognition of work value change or improvements in productivity and efficiency. In order to avoid double counting any wage increase would have to have been substantially discounted. In the seven years to July 2003 the benchmark classifications of registered nurse 8th year received an increase (compounded) of 44 per cent and grade 3 nursing unit manager an increase of 55.5 per cent. 4) The flow on implications of granting further substantial wage increases to nurses on work value grounds are such that a cautious approach is necessary. 5) The fact that nurses' wages in New South Wales are higher than their counterparts in all other States has had a moderating influence in determining the amount of pay increase. 6) The increases in work value across the nursing workforce in the public hospital system have not been uniform. Change is more readily apparent in such areas as emergency departments, intensive care units and community nursing. However, in some other clinical areas it is arguable that in net terms the change is only marginal. In light of the claim for an across the board increase and in the absence of any specific proposals from the HAC as to how any increases might be targeted, a proper balance has to be struck. 242 Having regard to the conclusions reached that a cautious and moderated approach must be adopted to any wage increase, we consider that neither the HAC nor the Minister has demonstrated that an increase at the level we grant is not available on economic or public interest grounds. Consideration regarding economic impact 232 The approach we have decided to take in relation to the economic impact of the claim is the same as that adopted by the Full Bench in Public Hospital Nurses' (No. 4). We consider we have taken a measured and moderate approach to ASMOF's claims in terms of the increases we intend to determine in relation to salaries and the managerial allowance. The impact of the increases will be offset to some degree given the increased flexibility that will be available to the employer in arranging working hours (see new clause 4 - Normal duties) and in relation to the capacity of the employer to deploy staff specialists to work at any of the hospitals etc., conducted by the relevant Public Health Organisation (see new clause 14 - Work Location). AMOUNT OF INCREASE 233 We have decided, in respect of ASMOF's salary claim, to increase salaries by 14 per cent. We consider this amount of increase properly reflects the increase in the value of work of staff specialists that has accrued since 1991 and takes into account the impact of shortages both in a work value and special case sense as we have discussed. The increase will take effect on and from the date of this decision, although we note that there is agreement between the parties that any increase we award will be back-dated, by administrative action, to 1 July 2005. 234 In relation to the managerial allowances we have decided that the new allowances shall be as follows: Level 1 $16,000 per annum Level 2 $28,000 per annum Level 3 $40,000 per annum 235 The same operative date as that applying to the salary increase will apply to the increases in managerial allowances. CONSENT CHANGES 236 As we earlier noted, the parties have filed documents that show the changes introduced by the proposed new award and which have been arrived at by agreement between the parties. The parties are to be commended for the nature and extent of this agreement, which we acknowledge involved difficult decisions for both sides. The changes include: § A new Normal Duties provision (cl 4) with consequential amendments which introduces more flexible working hours arrangements with appropriate safeguards) for staff specialists and new shift arrangements for emergency physicians; § New provisions relating to the application of managerial allowances (cl 11) but not the amount of allowance; § A new provision relating to Performance Agreements (cl 12) whereby each staff specialist will have a written performance agreement developed jointly by the staff specialist and his or her supervisor; § New part time employment arrangements (cl 13); § A new provision relating to Work Location (cl 14) whereby, subject to certain conditions, a staff specialist may be required to work at any of the hospitals, institutions or other health services conducted by the relevant Public Health Organisation; § A new provision relating to outside practice and other business activities (cl 15); § Additional annual leave for staff specialists required to work a certain minimum number of Sundays during a qualifying period of employment for annual leave (cl 17); § New long service leave entitlements consistent with the public sector standard (cl 18); § New Family and Community Services Leave, Personal/Carer's Leave and Maternity, Adoption and Parental Leave provisions (cll 20, 21 and 22); § A new clause dealing with office, secretarial and administrative support (cl 24); § A new clause dealing with Specialist Medical Administrators (cl 25); § Leave reserved in respect of Workforce Shortage Positions; Medical Indemnity Insurance and Principal Staff Specialist (cl 29); § A new no extra claims provision (cl 30). 237 We have considered the agreed changes and are satisfied the changes may be included in any new Award by consent. ORDERS AND DIRECTIONS 238 The Commission makes a new award and makes the following orders and directions: (1) Rates of pay under the Staff Specialists (State) Award are increased by an amount of 14 per cent. (2) Managerial allowances in the award shall be as follows: Level 1 $16,000 per annum Level 2 $28,000 per annum Level 3 $40,000 per annum (3) The Award shall incorporate the terms of proposed draft Award filed on 13 April 2006 and marked as Exhibit 82 in the proceedings. (4) The Award shall take effect from the beginning of the first pay period to commence on or after 28 April 2006 and shall remain in force until 30 June 2008. (5) The applicant is directed to file and serve a draft award reflecting orders (1) to (4) inclusive hereof within 21 days of today. 239 We note the request by the parties in Exhibit 80 seeking the Commission's continued involvement in the implementation of the new Award through monthly report back conferences over the 12 months following the making of the new Award. The Commission will accommodate that request. The first of these report backs will take place before Boland J on the Monday 5 June 2006 at 9.30am. 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.