Industrial Relations Commission New South Wales Medium Neutral Citation: Australian Workers Union v BlueScope Steel Limited [2011] NSWIRComm 1033 Hearing dates: 14-17 June, 2011 Decision date: 11 August 2011 Jurisdiction: Industrial Relations Commission Before: Connor C Decision: Application for a wage increase based on work value considerations rejected Catchwords: CLAIM FOR WAGE INCREASE - steelworks - coupled pickle cold mill operators - referral agreement - wage fixation principles - alleged changes in work value - productivity improvements - application rejected Legislation Cited: Industrial Relations Act 1996 Industrial Relations (Commonwealth Powers) Act 2010 Federal Fair Work Australia Act 2009 Federal Fair Work Amendment (State Referrals and Other Measures) Act 2010 Federal Workplace Relations Amendment (Work Choices) Act 2005 Cases Cited: Australian Maritime Officers' Union v Newcastle Port Corporation - unreported BHP Steel (AIS) Pty Limited - Hot Strip Mill Restructured Ironworkers Classifications Rates of Pay Award Case - unreported BHP Steel (AIS) Pty Limited - O'Brien's Drift Restructured Ironworkers Classifications Rates of Pay Award Case - unreported BHP Steel (JLA) Pty Limited v Australian Workers Union [2003] NSWIRComm 189 Club Employees (State) Award Case (2002) 122 IR 272 Coupled Pickled Cold Mill Work Value Case [2007] NSWIRComm 1088 Council of the City of South Sydney v Horiatopoulos (1992) 47 IR 93 Crown Employees (Roads and Tradffic Authority of New South Wales - Salaried Staff) Award No 2 Case [2011] NSWIRComm 1028 Crown Employees (Roads and Traffic Authority of New South Wales Salaried Staff) Award Case [2011] NSWIRComm 1017 Re Health Employees Pharmacists (State) Award (2003) 132 IR 244 Hot Strip Mill Work Value Case [2008] NSWIRComm 1071 John Lysaght (Australia) Limited Port Kembla General Award Case - unreported Re Public Hospital Nurses (State) Award (No 3) (2002) 121 IR 28 Reference by the Minister for Industrial Relations of a Dispute Between BHP Billiton and the Australian Workers Union - unreported Scientific Officers Case (1962) AR 250 State Wage Case (1989) 30 IR 107 Re Operational Ambulance Officers (State) Award [2001]113 IR 384 State Wage Case No 2 [2011] NSWIRComm 29 Category: Principal judgment Parties: Australian Workers Union (applicant) BlueScope Steel Limited (respondent) Representation: Adam Hatcher (Applicant) Maurice Blackburn Lawyers (Applicant) Ken Brotherson Duncan Cotterill Lawyers (Respondent) File Number(s): IRC 1739 of 2009 DECISION INTRODUCTION 1On Thursday, 5 November, 2009, the Australian Workers Union lodged a notification of an industrial dispute with BlueScope Steel Limited under the provisions of s.130 of the Industrial Relations Act 1996 . The dispute concerns the rates of pay of operators employed by BlueScope Steel in the Coupled Pickled Cold Mill [the CPCM] at the Springhill works. The matter was allocated to me and I set it down for a conference on Monday, 9 November, 2009 and mentions and further conferences on Monday, 30 November, 2009, Tuesday, 9 February, 2010, Monday, 1 March, 2010, Tuesday, 9 March, 2010, Tuesday, 30 March, 2010, Wednesday, 7 April, 2010, Wednesday, 5 May, 2010, Tuesday, 15 June, 2010, Tuesday, 29 June, 2010, Tuesday, 3 August, 2010, Tuesday, 21 December, 2010, Wednesday, 16 February, 2011 and Wednesday, 23 March, 2011. 2This matter ultimately proceeded for an inspection of the CPCM on Monday, 30 May, 2011 and to arbitration in a hearing on Tuesday, 14 June, 2011, Wednesday, 15 June, 2011, Thursday, 16 June, 2011 and Friday, 17 June, 2011. Mr Hatcher represented the AWU in the hearing, calling as witnesses two operators in the CPCM: Mr Ilija Sukoski and Mr Steve Micallef. A written statement provided by Mr Andy Gillespie, the branch secretary of the AWU, was admitted into evidence without his being required for cross-examination by Mr Brotherson , who represented BlueScope Steel in the hearing. Mr Brotherson called three witnesses to give evidence in the hearing: Mr Peter Corkish, the manager of employee relations, systems and compliance of BlueScope Steel (AIS) Pty Limited, Mr Keith Stevenson, the operations manager for the uncoated department of BlueScope Steel, and Mr Anton Kiesel, a shift manager of the uncoated department (D crew). I have issued the certificate of attempted conciliation required by s.135 and lodged it in the prescribed manner to permit the matter to proceed to arbitration. All the proceedings concerning this matter were convened in the State Commission's premises at 90 Crown Street, Wollongong. 3BlueScope Steel is, of course, a trading corporate within the meaning of s.51(xx) of the Commonwealth Constitution. Its industrial activities therefore fall primarily under the federal Workplace Relations Amendment (Work Choices) Act 2005 and the federal Fair Work Australia Act 2009 which has replaced it. The CPCM employees are covered by the BlueScope Steel Limited Springhill and CRM Employees Award which by virtue of a 2006 amendment to the State IR Act was converted into an enterprise agreement - and, as such, became a "preserved State agreement" - PSA - under Work Choices and the FW Act [ State of New South Wales v Commonwealth of Australia (2006) 156 IR 1] . 4Nevertheless, a protocol has been established between BlueScope Steel and trade unions representing its employees at the Port Kembla steelworks, including the AWU, which provides for such matters to come before the State Commission for resolution and in the past that has been the position. Effective from Friday, 1 January, 2010 complementary Federal and State legislation - the State Industrial Relations (Commonwealth Powers) Act 2010 and the federal Fair Work Amendment (State Referrals and Other Measures) Act 2010 - took effect. In particular, s.146B of the State IR Act, (which has its counterpart in ss.738 and 740 of the federal FW Act) authorises the State Commission to exercise functions in the resolution of industrial disputes with respect to federal enterprise agreements where the parties to the dispute are bound by the enterprise agreement and the State Commission is so authorised under the enterprise agreement. But the AWU notification under s.130 before me in this hearing pre-dated the operative date for those new legislative arrangements. I therefore propose to rely instead on the established protocol between BlueScope Steel and the trade unions representing its employees for my jurisdiction for this matter. (And that has implications for this hearing which I will discuss later in this decision.) THE CPCM OPERATIONS 5The CPCM was commissioned in the middle of 1989. It is part of the BlueScope Steel uncoated department which also includes a raw coil storage area and a roll service area. It was a new facility at that time combining a pickling function (cleaning steel strips in an acid bath) and a cold reduction process (passing the steel strips at high speed to reduce the thickness of the steel to meet specific customer requirements). It formerly included a coil temper mill and coil annealing departments which have now been decommissioned. The CPCM has the capacity to produce one million tonnes of steel per annum for the metal coating lines [MCL] at Springhill and Westernport (in Victoria), for "electric" steel products for BlueScope Steel's service centre operations for the cold rolled mill at Port Kembla and cold rolled full hard products for the export market. 6The CPCM operates continuously with four crews working 12 hour shifts. Each crew presently now comprises 8 operators (with 2 operators as annual leave relief) working under the supervision and control of a shift management team [SMT] comprising 3 persons - a shift manager, a shift technical officer and a staff roller - and with an electrician, a fitter, a roll grinder and 2 roll shop operators. 7An application had been made in 2002 by BHP Steel (JLA) Pty Limited (the forerunner of BlueScope Steel) to reduce the manning levels for each crew of CPCM operators from 10 operators per shift (with the 2 operators on annual leave relief) to 7 operators per shift (retaining the 2 employees as annual leave relief). That matter came before Grayson DP who on Thursday, 25 June, 2003 in his decision in BHP Steel (JLA) Pty Limited v Australian Workers Union [2003] NSWIRComm 189 accepted the reduced manning levels. However, to meet a number of operational requirements, in 2004 the number of operators in the CPCM was increased from 7 operators per shift to 8 operators per shift (with the retention of the 2 annual leave relief employees). 8That is the current manning of the CPCM: a forklift operator, a coil press operator, a welder, an operator for entry crib relief, a operator for exit crib relief, a side trimmer, two mill operators and two annual leave and training relief. The CPCM may still operate at reduced speed, and with 6 operators, provided there is a co-ordinated stoppage for crib breaks. The crews works for four days and then have four days off. Additional overtime is frequently needed to support the operations. Generally, there is now some flexibility in the working arrangements for the CPCM and most operators (but not all) are trained to perform the full range of duties to be performed in the CPCM and paid accordingly. 9Coils of rolled up lengths of steel which are a few millimetres thick are transported by rail truck from the hot strip mill of AIS to the entry end of the CPCM, placed automatically onto a conveyor - a walking beam. The strap around the coil is cut off by the operator at the entry point and a check is made by him of any possible defects in the coil before it is processed. The coil then moves to the pay off reel where the front end of the coil is welded to the back end of the previous coil, "scarfed" (ie smoothed out so that it may be processed). The steel then moves through a series of rollers and treatment with acid in pickle tanks to remove rust and dirt. The thickness of the steel is also reduced during that process and the sides cut and trimmed. 10The steel is then again coiled up and re-strapped. The finished coils are moved to the exit end of the CPCM. Rolls are changed manually by the CPCM operators. Some of the coils then move to the MCL (where the steel is metal coated) or the paintline (where it is painted on both sides) but some are sold or exported after leaving the CPCM with no further processing being required. 11According to Mr Stevenson in a written statement he provided as the basis of his evidence in the hearing: "...Since December, 2004 the maximum operation of the process section of the line has been 190 metres per second. This is only for certain products and operators will only operate at that speed continuously when the eighth operator is in attendance, or with six operators, provided the line stops for common crib breaks. At other times (ie when seven operators are present) operators will only operate the line continuously at 175 metres per second, which is the maximum speed it has historically operated at. In fact, the average line speed of the process section of the line when operating in 2010 was only 12.8 metres per second...Production levels are now approaching design capacity..." 12The inspection on Monday, 31 May, 2011 comprehensively covered all facets of the work in the CPCM and, for the purposes of comparison, the work of the MCL and paintlines of the painting and finishing department [PFD] for BlueScope Steel and the plate mill and the hot strip mill of AIS. Whilst there are some differences in the work of the CPCM, the MCL, the paintline, the plate mill and the hot strip mill, and the level of responsibility of the operators employed there, the work performed in those areas is roughly comparable, in my opinion - and so, at least generally speaking, is the wage levels paid to the employees involved in that work. THE WAGE STRUCTURE 13There are presently four levels of operators in the CPCM: a learner operator and operators at Level 1, Level 2 and Level 3. Formerly, there was also a Level 4 classification (made by appointment only) to provide relief to the staff roller when he was at crib or on annual leave, etc. Mr Sukoski, an acknowledged experienced operator, occupied that position. That grading has now been abolished, however. 14The grades were established by McMahon DP of the former State Industrial Commission in 1990 - the John Lysaght (Australia) Limited Port Kembla General Award Case [Matter No.665 of 1990]. Mr Gillespie indicated in his written statement that the CPCM operators: "....have not been subject of a work value increase for a substantial period of time, despite there being substantial improvement in productivity and consequent demand on the employees' skill and responsibilities..." 15But, of course, they have nevertheless shared in general wage movements for the BlueScope Steel operations in Port Kembla. 16The range of duties that an operator is able to perform in the CPCM dictates the level at which he is paid. Mr Stevenson recorded in his written statement: "....The CPCM operator model has always required CPCM operators to rotate through all positions they are trained for along the line. This is dependent on their classification and training. Rotation generally occurs every shift or block of shifts. There has always been an expectation that (with certain exceptions) all operators will get to Level 3. The decision of McMahon DP confirmed that 'multi-skilling and job rotation' was part of the CPCM operator model..." 17At the present time 28 of the 39 CPCM operators are classified at Level 3 and are available to perform the full range of their duties. Some employees are currently undergoing training to achieve Level 3. Some long serving employees have apparently preferred to remain at Level 2, however. 18Strictly there is presently no pay matrix for the BlueScope Steel operations at Springhill as there is in the operations of AIS at the Port Kembla steelworks (where the pay matrix for operators ranges from Level 1 - the bottom of the range - to Level 16 - the top of the range ). However, Mr Corkish has indicated in the written statement he provided as the basis of his evidence in this hearing, that the learner operator at the CPCM falls approximately in line with Level 6 of the AIS matrix; a Level 1 operator falls approximately at Level 10 of the AIS matrix: a Level 2 operator falls midway between Level 12 and Level 13 of the AIS matrix; and a Level 3 operator falls just above Level 14 of the AIS matrix. (The former Level 4 classification was struck, with the agreement of the AWU, at Level 16 on the AIS matrix.) 19The AWU claim seeks an increase to the rates for the CPCM by 4.4%. That means the Level 3 classification would fall halfway between Levels 15 and 16 of the AIS matrix with equivalent increases to the other positions, viz: Classification Current Rate Rate Plus 4.4% Increase $ $ $ per week per week per week Learner Operator 993.06 1,036.75 43.69 Operator Level 1 1,107.80 1,156.54 48.74 Operator Level 2 1,185.66 1,237.83 52.17 Operator Level 3 1,235.82 1,290.20 54.38 20Mr Corkish commented in his written statement that: "....the claim by the AWU must be viewed cautiously, given it seeks to place the CPCM Operator 3 at almost the top of the matrix and between two very senior levels that are not heavily populated. The potential consequential movements to other CPCM operator classifications are also significant..." EARLIER PROCEEDINGS 21The AWU claim for a wage increase for the CPCM operators has followed a particularly tortuous path to this arbitration. On Wednesday, 21 December, 2005, the AWU had lodged an earlier s.130 notification of an industrial dispute with BlueScope Steel over the rates of pay for CPCM operators. The AWU claimed then - as it also now claims - that there were changes to the skills and responsibilities of the CPCM operators which warranted an adjustment to the rates of pay for them in accordance with wage fixation principles, viz: "...Changes in work value may arise from changes in the nature of the work, skill and responsibility required or the conditions under which work is performed. Changes in work by themselves may not lead to a change in wage rates. The strict test for an alteration in wage rates is that the change in the nature of the work should constitute such a significant net addition to work requirements as to warrant the creation of a new classification or upgrading to a higher classification..." 22In particular, the AWU had consistently asserted that a reduction in the manning levels flowing from the decision of Grayson DP in BHP Steel (JLA) Pty Limited v Australian Workers Union has led to an increase in workload and the skills required of the CPCM employees. 23The current wage fixation principles have recently been confirmed by the decision of the Full Bench of the Commission (Boland J - President, Walton J - Vice President, Harrison and Grayson DPP and Tabbaa C) in the 2010 State Wage Case No.2 [2011] NSWIRComm 29. However, with that decision of the Full Bench there have been some changes, essentially to the format of the wage fixation principles dealing with arbitrated matters, to which Mr Hatcher referred both in opening submissions and his final submissions in this hearing and which I will discuss in greater detail later in this decision since they appear to have a significant impact on my determination of the matter before me in this hearing. 24The earlier s.130 notification by the AWU was allocated to me and it was the subject of a conference on Monday, 16 January, 2006 and Monday, 6 February, 2006. Conciliation failed to settle the matter. I programmed it for arbitration, issuing the certificate of attempted conciliation required by s.135 and lodging it in the prescribed manner. In fact, I inspected the operations of the CPCM on Monday, 20 March, 2006 and set proceedings down for a further mention on Monday, 1 May, 2006 for the purpose of programming the matter for arbitration. 25However, with Work Choices, operating on and from Monday, 27 March, 2006, restrictions were imposed on the State industrial jurisdiction as far as the operations of BlueScope Steel were concerned. In proceedings before me on Monday, 1 May, 2006 the representative of BlueScope Steel at that time raised that as a jurisdictional issue, ie that the restrictions imposed by Work Choices proscribed variation to the BlueScope Steel Award which was what was being sought by the AWU. Consequently, the proceedings were aborted. 26I adjourned the proceedings on Monday, 1 May, 2006 and Monday, 8 May, 2006 to give the parties the opportunity to consider their respective positions with the matter. Those dates for mention were vacated at the request of BlueScope Steel due to the unavailability of a BlueScope Steel representative at that time. I reconvened the proceedings on Monday, 22 May, 2006, standing the matter over generally at that time to await further developments. However, on my own initiative, I set the matter down for further mentions on Tuesday, 13 June, 2006 and Tuesday, 1 August, 2006. The attitude of BlueScope Steel remained unchanged. 27An amendment to the State IR Act in 2006 provided that a member of the State Commission may be empowered to exercise additional functions - conciliation or arbitration - conferred upon that member by the parties to a dispute themselves. That jurisdiction was conferred by s.146A of the State IR Act. But at that stage BlueScope Steel indicated that it was not prepared to provide a s.146A referral agreement to permit the arbitration of the AWU claim (or other such unresolved AWU claims at that time) to go forward. The question remained at that time whether or not the matter may remain on foot without such a s.146A referral agreement. In the alternative, further conciliation was suggested with respect to the AWU claim on behalf of the CPCM operators but I considered it most unlikely that such further conciliation would be fruitful, having regard to the progress of the matter to date. 28The s.130 matter was therefore scheduled for arbitration to determine whether the matter may proceed independently of a s.146A referral agreement. The AWU had in the proceedings on Tuesday, 13 June, 2006 foreshadowed an application to refer this matter to a Full Bench of the Commission and I reserved its position in that respect but directed the parties to provide written statements of contention in support of their argument on jurisdiction with the matter being set down for a further mention for programming on Tuesday, 3 October, 2006. 29Bearing in mind that I had already conducted an inspection of the site on Monday, 20 March, 2006 as a prelude to the arbitration of the AWU claim on behalf of the CPCM employees, the argument with this particular matter centred on whether or not the issue was part-heard at the time that Work Choices came into effect. If that were so, the matter may proceed to arbitration according to transitional arrangements to Work Choices. It would seem to me that it was open to conclude that the inspection of the operation of the CPCM on Monday, 20 March, 2006 formed an integral part of the hearing of the claim and that, in fact, the AWU claim was therefore part-heard. That was the position taken by the AWU. 30In that respect, for instance, I note that in Council of the City of South Sydney v Horiatopoulos (1992) 47 IR 93 at pp.95 to 98 the Full Bench of the Commission (Cullen and Glynn JJ and Patterson CC) considered that a claim was part-heard at the point where certain evidentiary material - a letter - was received in proceedings. Consequently, if the inspection was a part of the evidence in these current proceedings - and I thought it was - then the matter would have remained within jurisdiction as a part heard matter, notwithstanding that Work Choices had intruded in the meantime. 31In any event, such an argument became otiose. A protocol was, in fact, ultimately developed between BlueScope Steel and trade unions representing its employees that, subject to compliance with the dispute settlement procedure in the BlueScope Steel Award, claims made may be processed in the State Commission by means of a s.146A referral agreement. The referral agreement ultimately provided to me was in the following terms: "...The dispute concerns rates of pay of employees of the company working at the Springhill site on the Coupled Pickle Cold Mill line..." 32Clause 7 of the referral agreement, consistent with the protocol that had been developed, provided that unless the parties agreed to waive the requirement, leave of a Presidential member would be required as a prelude to arbitration, viz: "...an application for leave for the matter to be arbitrated will be heard by a Presidential member of the Commission..." 33In a letter dated Thursday, 28 September, 2006 BlueScope Steel sought that I refer the matter in accordance with that clause. I therefore directed the parties to file brief written submissions concerning their claim for the consideration of Grayson DP and referred the file to him for his consideration. 34Grayson DP considered the matter in chambers on Thursday, 12 October, 2006. The Deputy President recorded on the file that: "...having regard to the competing contentions, leave is granted to arbitrate in accordance with Clause 7 of the referral agreement in this matter..." 35The file was returned to me. I set the matter down for a mention and programming on Tuesday, 24 October, 2006 but vacated that day at the request of BlueScope Steel, and with the concurrence of the AWU. The matter proceeded to mention on Monday, 30 October, 2006. I made directions for the filing of the necessary evidentiary material and set the matter down for a further mention for programming on Tuesday, 12 December, 2006. 36The hearing was originally set down on Monday, 26 February, 2007 and Tuesday, 27 February, 2007 but was vacated at the request of the AWU which sought more time to consider its response to evidentiary material provided for and on behalf of BlueScope Steel. Ultimately, the matter was set down for arbitration in a hearing on Tuesday, 15 May, 2007 and Wednesday, 16 May, 2007. The hearing on Tuesday, 15 May, 2007 was also abandoned to permit the parties to confer further with respect to other jurisdictional difficulties which had been thrown up by the AWU claim in the light of the restrictions now imposed by Work Choices, ie essentially how to vary a Federal industrial instrument which is what the BlueScope Steel Award had now become. 37The matter resumed before me on Wednesday, 16 May, 2007. A further inspection of the CPCM was arranged at the request of the AWU for Tuesday, 12 June, 2007. The matter was set down for hearing on Monday, 25 June, 2007 and Tuesday, 26 June, 2007 but because of the absence of the AWU representative at that time due to his ill health, the AWU sought that the hearing be adjourned yet again. I set the hearing down on Monday, 24 September, 2007, Tuesday, 25 September, 2007 and Wednesday, 26 September, 2007 instead but it became necessary to also vacate those days as well. Ultimately, the hearing was scheduled for Monday, 3 December, 2007, Tuesday, 4 December, 2007 and Wednesday, 5 December, 2007. But that hearing did not proceed either. 38At the commencement of the hearing on Monday, 3 December, 2007, the AWU sought a further adjournment of the hearing. It was the intention of the AWU to brief counsel to advance the claim on behalf of the CPCM operators. BlueScope Steel opposed that further adjournment. Its representative had written to the AWU on Friday, 30 November, 2007 in the following terms: "...We do not accept that the unavailability of counsel you now wish to brief, at this late stage, in circumstances of the AWU having at least six months to consider the relevant issues and accordingly brief counsel, is a reasonable basis for your application. Our client will be prejudiced by any further delay due to a key witness...having retired since the proceedings commenced and who is about to begin an extended trip around Australia. It will be significantly difficult to have (that witness) attend any future hearing dates should the matter be adjourned. Further our client is prejudiced by continuing costs of preparation, briefing of witnesses and mentions for each adjourned hearing. It is in the interests of both parties to bring the proceedings to a conclusion. In the circumstances, we would not oppose the withdrawal of your application to that end and invite you to do so..." 39In my decision of Monday, 3 December, 2007 in the Coupled Pickled Cold Mill Work Value Case [2007] NSWIRComm 1088, I dismissed the s.130 notification by the AWU, commenting (at para.22): "...In the circumstances, I see no good purpose in preserving this long outstanding matter. The only reason I can see to retain the existing s.130 matter as a live matter is to ensure some retrospectivity on any increase to wages for the CPCM employees in accordance with s.15(3)(a), ie from the date of lodgement of the s.130 notification. Such retrospectivity would, of course, be lost by the frequent adjournments of these proceedings, at the initiation of the AWU. The AWU would have the right to pursue its claim in due course, in a fresh notification under s.130, if it chose to do so. And, in the circumstances, I reserve its right to do so. But I dismiss the current s.130 notification..." 40The current s.130 notification, lodged on Thursday, 5 November, 2009, is the AWU's ultimate response to those comments. THE WAGE FIXATION PRINCIPLES 41As I indicated earlier in this decision, there has been some changes to the wage fixation principles flowing from the 2010 State Wage Case No.2 . The work value principle [8.2] remains substantially unchanged, viz: "(a) Changes in work value may arise from changes in the nature of the work, skill and responsibility required or the conditions under which work is performed. Changes in work by themselves may not lead to a change in wage rates. The strict test for an alteration in wage rates is that the change in the nature of the work should constitute such a significant net addition to work requirements as to warrant the creation of a new classification or upgrading to a higher classification. (b) In addition to meeting this test a party making a work value application will need to justify any change to wage relativities that might result within the relevant internal award structure but also against external classifications to which that structure is related. There must be no likelihood of wage leapfrogging arising out of changes in relative positions. (c) The foregoing circumstances are the only ones in which rates may be altered on the ground of work value and the altered rates may be applied only to employees whose work has changed in accordance with this Principle. (d) In applying the Work Value Change Principle, the Commission will have regard to the need for any alterations to wage relativities between awards to be based on skill, responsibility and the conditions under which work is performed. (e) Where new or changed work justifying a higher rate is performed only from time to time by persons covered by a particular classification, or where it is performed only by some of the persons covered by the classification, such new or changed work should be compensated by a special allowance which is payable only when the new or changed work is performed by a particular employee and not by increasing the rate for the classification as a whole. (f) The time from which work value changes in an award should be measured is the date of operation of the second structural efficiency adjustment under the State Wage Case 1989 (1989) 30 IR 107 or the last work value inquiry or the date of a consent award where the parties have agreed pursuant to a consent award the wage increases reflect increases in work value, whichever is later. (g) Care should be exercised to ensure that changes which were, or should have been, taken into account in any previous work value adjustments or in a structural efficiency exercise are not included in any work evaluation under this Principle. (h) Where the tests specified in (a) are met, an assessment will have to be made as to how that alteration should be measured in money terms. Such assessment will normally be based on the previous work requirements, the wage previously fixed for the work and the nature and extent of the change in work or the date of a consent award where the parties have agreed pursuant to a consent award the wage increases reflect increases in work value. (i) The expression 'the conditions under which the work is performed' relates to the environment in which the work is done. (j) The Commission will guard against contrived classifications and over-classification of jobs. (k) Any changes in the nature of the work, skill and responsibility required or the conditions under which the work is performed, taken into account in assessing an increase under any other Principle of these Principles, will not be taken into account under this Principle. (l) In arbitrating an application made under this Principle, the Commission is required to determine whether or not future State Wage Case general increases will apply to the award." 42However, formerly the work value principle stood alone as a separate wage fixation principle and claims based on changes in work value could be considered by single members of the Commission and determined by them on that basis. Now, with the 2010 State Wage Case No.2 all arbitrated claims, including work value claims, are dealt with together under the one heading - Principle 8. 43And Principle 8 also deals with claims for adjustment of rates of pay based on productivity and efficiency considerations [8.3]: "Productivity and efficiency measures that have delivered substantial costs savings and/or productivity or efficiency improvements or which have made a substantial contribution towards the attainment of the objectives of the employer (including departments and agencies of the Crown) in seeking to become more competitive and/or efficient, to which employees have made a significant contribution, may constitute the basis for increases to wages and salaries or improvements in employment conditions without the requirement to make out a special case, provided that such measures, savings or improvements have not already been taken into account in previous wage adjustments." 44And special cases [8.4]: "1. A claim for increases in wages and salaries, or changes in conditions in awards, other than those allowed elsewhere in the Principles, and which is not based on work value and/or productivity and efficiency pursuant to this Principle, will be processed as a special case in accordance with the principles laid down in Re Operational Ambulance Officers (State) Award [2001] NSWIRComm 331; (2001) 113 IR 384 and the cases referred to therein at [165] - [168]. 2. All special cases shall be tested against the public interest." 45And exclusions [8.5]: "1. Claims that are based substantially on comparative wage justice, attraction and retention or community standards will not be countenanced except as provided in Re Public Hospital Nurses (State) Award (No.3) NSWIRComm 325; (2002) 121 IR 28 and Re Health Employees Pharmacists (State) Award [2003] NSWIRComm 453; (2003) 132 IR 244. 2. There shall be no double counting, provided however that an Arbitrated Case claim may rely upon a cumulation of the factors referred to in this Principle." 46Principle 8 is prefaced [8.1] with the following: "...Any claim for increases in wages and salaries, or changes in conditions in awards, other than those allowed elsewhere in the Principles, will be processed as an Arbitrated Case by a Full Bench of the Commission unless otherwise allocated by the President...." 47The file has been allocated to me to determine by Boland J, the President of the Commission, in accordance with Principle 8.1 in place of the Full Bench. 48Mr Hatcher argued in his opening submissions on Tuesday, 15 June, 2011 that, since all arbitrated wage claims are now contained in the one wage fixation principle - Principle 8 - not only should I consider the current claim on behalf of the CPCM operators under the work value considerations [8.2] but also in the light of productivity and efficiency considerations [8.3] and as a special case [8.4] (and no doubt bearing in mind the exclusion for comparative wage justice [8.5]). Mr Brotherson argued instead that I should confine my decision to work value considerations alone. 49No doubt this is an issue more appropriately addressed as a preliminary matter but, in view of the lengthy history of this matter already (and my impending retirement), I am reluctant to throw another spanner in the works at this late stage. It was therefore my view (shared by the parties) that the hearing should be directed to the consideration of the AWU claim on its merits and that I address this jurisdictional issue in my ultimate decision. I now do so. 50Firstly, of course, the BlueScope Steel Award is no longer an award of the State Commission, and therefore strictly it is not covered by Principle 8 at all. But, in fact, as Mr Brotherson has described it in his submissions, it is now a federal instrument and, were it not for the BlueScope Steel protocol and the agreement of the parties flowing from it which brings this matter to the State Commission for determination, actually beyond the jurisdiction of the State Commission and its wage fixation principles. Consequently, I believe that my jurisdiction in this matter flows entirely out of the referral arrangements under which I have determined these matters in the past. 51In particular, as Mr Brotherson submitted in the hearing, these proceedings have to be considered in the context of Clause 5, No Extra Claims, of the BlueScope Steel Award which provides as follows: "1. General - It is a term of this award that the unions (with whom this award is made) undertake, for the period until the nominal expiry term of the award, not to raise any further claims, award or overaward, including claims arising from national or State wage cases. There will be agreed scope to arbitrate, if necessary, unresolved issues about classification restructuring or work value claims. 2. Leave Reserved - Leave is reserved to apply in respect of: (a) hours of work; (b) the addition of annualised salary agreements to Division 2 - Work Redesign Agreements, of Part B - Agreements; and (c) Trade Union Training Leave." 52As I indicated in my decision of Thursday, 30 June, 2011 in the Crown Employees (Roads and Traffic Authority of New South Wales - Salaried Staff) Award No. 2 Case [2011] NSW IRComm 1028 at para.15: "...Historically, the (State) Commission has assessed the wages and working conditions of employees coming before it as what is fair, just and reasonable in the circumstances [the Scientific Officers Case (1962) AR 250 at p.274 and the Club Employees (State) Award Case (2002) 122 IR 272 at para.102]. It is presently a fundamental object of the State IR Act to provide a framework for the conduct of industrial relations that is fair and just [s.3(a)] and for me to act according to equity, good conscience and the substantial merits of the case [s.163(1)(c)]... That task must also be considered in the context and restrictions of current wage fixation principles...". 53As I see his position, Mr Hatcher has primarily emphasised in his submissions the historic role of the Commission in determining the appropriate fair wages for the CPCM operators - but not necessarily in the context of current wage fixation principles, which he does not believe actually bind me whilst acting under the referral arrangements with respect to which I operate in this hearing. He has taken a view that in evaluating the actual wording "...work value claims..." in Clause 5 it is open to me to conclude the issue without necessarily being bound by wage fixation principles at all. 54I regard that submission as pure sophistry. This matter has been referred to me under the BlueScope Steel protocol as a member of the State Commission and, as such, I am bound to apply the rules of the State Commission, including the wage fixation principles laid down for it. I am not a free agent - and the referral arrangements for the Port Kembla steelworks operations of BlueScope Steel does not make me one. In interpreting the concept of work value change, I am not at large to determine matters referred to me outside the restrictions imposed of Principle 8.2. 55Alternatively, as I understand his submissions, Mr Hatcher has claimed that, if BlueScope Steel actually wished to rely on the protocol and Clause 5, interpreting the words "...work value claims..." in Clause 5 to mean the work value principle [8.2] of those wage fixation principles of the State Commission, that must also mean all of the wage fixation principles should apply, including those dealing with productivity and efficiency [8.3] and special cases [8.5]. There is no dispute that there have been significant improvements in productivity in the CPCM over the period of review in this hearing. How much of that is due to the efforts of the employees and how much has arisen by virtue of new technology becomes, in Mr Hatcher's view, an irrelevant consideration. 56I accept that, as Mr Hatcher submitted, issues of productivity may still also fall under the consideration of changes to work value of employees. I believe that there is a certain amount of commonality in the separate headings in Principle 6 of current wage fixation principles to that extent. Changes in technology, for instance, may still place additional demands on employees, and require of them the acquisition of additional skills, which it would be legitimate to include in an evaluation of changes in work value. 57In that respect Mr Hatcher drew my attention to an unreported decision of Harrison C of Fair Work Australia on Wednesday, 18 August, 2010 - Australian Maritime Officers' Union v Newcastle Port Corporation [Matter No.B2009/288] - which he provided to me after the hearing had concluded. My research has failed to identify that decision as a published decision of FWA: my understanding is that it is really a decision flowing entirely from an agreement reached between the parties for FWA to determine the matter, ie in effect, a private arbitration, confined to operations for the Port of Newcastle alone. As such, its value as a precedent is diminished, in my opinion. 58Mr Brotherson indicated in a letter he forwarded to me, also after the hearing had concluded, that it was an agreement reached between the parties in Australian Maritime Officers' Union v Newcastle Port Corporation which brought the matter for determination before FWA (including a recognition of changes in productivity as well as work value). To that extent, the situation there was fundamentally different to the BlueScope Steel protocol on which this matter depends. The State Commission's authority to determine the AWU claim before me in this hearing remains limited to Principle 8.2 of the wage fixation principles of the State Commission. 59The decision in Australian Maritime Officers' Union v Newcastle Port Corporation outlined the nature of the arbitration before FWA (at para.2), ie that it was a consent arbitration based on an exchange of correspondence between the parties, viz: "....The subject matter of the arbitration shall be salaries and related conditions and working arrangements of marine pilots employed by the Corporation, having regard to: (i) changes in productivity and work value...; (ii) future changes to the Port of Newcastle and their projected effect on productivity and work value; (iii) relativity with other marine pilots; (iv) New South Wales Public Sector Wages Policy 2007; and (v) any other relevant factors..." 60However, I accept the reasoning in that decision (at para.52) , ie that "...the expression '...conditions under which work is performed..." (in the work value change principle) means also "...the environment in which the work is done...". The decision goes on to say (in para.52): "...rapidly changing technology, dramatic or unanticipated changes which result in a need for new skills and/or increased responsibility may justify a wage increase on work value grounds. But progressive or evolutionary change is insufficient. An increase in the skills, knowledge or other expertise required to adequately undertake the duties concerned demonstrates an increase in work value..." 61And later (also in para.52): "...The introduction of a new training programme or the necessity to undertake additional training is illustrative of the increased level of skill required due to the change in the nature of the work. But keeping abreast of changes and developments in any trade or profession is part of the requirements of that trade or profession and generally only some basic change in the educational requirements can be regarded, of itself, as constituting a change in work value. Increased workload generally goes to the issue of manning levels not work value. But, where an increase in workload leads to increased pressure on skills and the speed with which vital decisions must be made then it may be a relevant consideration... " 62I am prepared to accept productivity improvements, new technology and reduced manning levels in the CPCM may still form part of work value considerations but only insofar as they may act to create additional pressures, advanced skills and responsibilities on the CPCM operators. 63Furthermore, as Mr Brotherson submitted in the hearing, as far as productivity and efficiency measures [Principle 8.3] is concerned, it has to be considered in the context of the structural improvements in the Port Kembla steelworks flowing initially from the Steel Industry Plan which has operated since 1984, viz: "....Successive agreements between the parties and applicable industrial instruments highlight the emphasis given by the parties to workplace change and business improvement. In return, employees have enjoyed various benefits including wage increases, lump sum payments [LSPS] and employment security..." 64Walton J, the Vice President of the Commission, in his recommendation of Monday, 13 May, 2002 in the Reference by the Minister for Industrial Relations of a Dispute Between BHP Billiton and the Australian Workers Union [Matter No.IRC 8095 of 2001] traced the history of arrangements in the Port Kembla steelworks in that respect, commenting (at pp.5 and 6): "...The Steel Industry Plan had, as its primary aim, the provision of assistance to the steel industry to '...regain international competitiveness and provide job security for the workforce...'. That plan arose in circumstances where, according to the Steel Industry Advisory Council Report of 1983, there existed a marked decline in steel demand, excess world steel capacity and declining productivity in the local industry, together with upward labour cost pressures. BHP (referring in this sense to the then national corporate entity), at the time of the council report, saw its major problem as being the loss of competitiveness, resulting in a need to upgrade and modernise facilities and reverse the productivity decline. The Steel Industry Plan required contributions by the Federal Government, BHP and the unions (at a national and State level). For present purposes, it is relevant to note that, in addition to the plan requiring a substantial investment from BHP, it would provide job security (on the proviso that the plan was successful). The unions were required to provide wage restraint, assist in the re-establishment of productivity levels (to the extent that it fell within their province) and strictly adhere to dispute settlement procedures. The Steel Industry Plan operated in the period 1984 to 1988. At the end of the year 1988, the parties to the plan introduced alternative arrangements to ensure that '...the success achieved during the five year life of the plan would be maintained and built upon...'. In the result, there was developed a 'National Steel Industry Development Programme Agreement' between BHP Steel and steel industry unions. That agreement had as its aim '...achieving the inter-related objectives of the business goals of BHP Steel, the continued viability of its operations into the 1990's and the satisfaction of the aspirations of employees...'. Those objectives were particularised as constituting, for employees, inter alia , security of employment and improvements in conditions of employment and remuneration and, for BHP and investors, '...confidence in investments in a highly productive industry offering attractive returns in a stable industrial relations environment...'. Customers were to receive a reliable delivery of high quality steel products at a competitive price. The 'National Steel Industry Development Programme Agreement' had within it a number of clauses which were similar to those later found in the steel industry agreements. In particular, the agreement provided a security of employment clause, a consultation clause and a resolution of disputes provision. It is noted that the resolution of disputes provision identified that during the five years of the Steel Industry Plan industrial relations had improved and that this was essential for the achievement of the objectives of the agreement. The agreement required strict observance to the dispute settling procedures which were agreed at a divisional level. The agreement operated with respect to the BHP Steel Group which included operations at Port Kembla, Whyalla and Western Port. It operated for three years. The National Steel Industry Development Programme Agreement was proceeded by a series of agreements of a similar character, some of which were directed specifically to the Port Kembla steelworks. One such agreement came into operation in 1989. There were similar agreements made throughout the 1990's until the most recent Steel Industry Agreement applying at the Port Kembla steelworks which operated for the period 1998 to 2001... There are a number of features of the terms of the Steel Industry Plan and subsequent steel industry agreements which are significant in the current context: 1. The agreements were designed to make the steelmaking operations in Port Kembla efficient, internationally competitive and give a good business return to investors. 2. In order to achieve this outcome, the plans and agreements sought to bring about a number of important changes, including improvements in labour productivity, reductions in the costs of operations (matched with a process of managed wage and conditions changes for employees) and a stable and benign industrial environment. The agreements provided for a continuous process of change, subject to requirements for consultation and dispute resolution mechanisms. 3. For their commitment to these arrangements, the unions and their members received a number of benefits. Paramount amongst these benefits was the provision of security of employment. 4. Employment security was provided in the plan and the subsequent steel industry agreements in various forms. In substance, these arrangements had two main elements: (i) subject to various conditions, an employee displaced as a result of changes in the companies' operations and workplace would be retained in employment by the companies, unless that employee elected to leave employment voluntarily; and (ii) employment security was linked to the fulfilment of certain objectives: in the plan, job security was granted provided the plan was successful: in the most recent agreement, employment security was made subject to the particular provisions of the employment security clause...and '...the implementation of actions and undertakings outlined in (the) agreement...': Neither the plan nor the agreements, specified how a failure to meet a term attached to the provision of employment security would be remedied. It is not clear whether such a failure would give rise to the right to terminate the agreement or the plan. It would appear that the plan and the agreements were broadly successful in meeting their stated objectives. This is not merely ascertained by reference to the desire of the parties to continue the plan in the form of various agreements and the renewal and improvement of the agreements over a substantial period of time. The material before the Commission would suggest that significant improvements for both the companies and their employees were afforded by the operation of those agreements (and the collateral processes of award making with the Commission). The companies are now one of the world's most efficient producers of steel and have experienced substantial improvements in labour productivity during the period of the operation of the plan and the agreements. There has been a 72% reduction in the employees of the company. Production levels have steadily increased from 1988 and by the 1990's reached levels commensurate with any earlier production levels since 1977 (although it should be noted that many different factors have contributed to this trend). Further, BHP is at the low end of the international steel industry comparative cost curve as a result of the restructuring of its operations..." 65It seems to me that, in the light of those observations, to grant a further increase to the wages of the CPCM based on productivity and efficiency measures, may simply be a case of double counting. Productivity improvements in the Port Kembla operations of BlueScope Steel have been factored into the wage levels the employees already receive. 66Finally, Mr Hatcher has also argued that, in any event, the claim being mounted by the AWU on behalf of the CPCM operators actually fell outside the "no extra claims" commitment in Clause 5. It had its genesis as far back as Wednesday, 21 December, 2005 when the AWU lodged its first s.130 notification. In that respect in my interlocutory decision of Friday, 29 April, 2011 in the Crown Employees (Roads and Traffic Authority of New South Wales Salaried Staff) Award Case [2011] NSWIRComm 1017, I concluded that a "no extra claims" commitment in a State award would have no operation on an entitlement which employees had at the time the commitment was made but subsequently lost. 67But in this case the original s.130 notification by the AWU was dismissed by me on Monday, 3 December, 2007, albeit I reserved the right of the AWU to revive its claim. It did so on Thursday, 5 November, 2009 but I do not believe it is open to it to now argue that it was not caught under the "no extra claims" commitment it made before that date by the AWU. 68In the circumstances, these arbitrated proceedings are in my view confined by what is described in Clause 5 of the BlueScope Steel Award and that has to be interpreted as meaning the work value considerations and the wage fixation principles in the State Commission concerning it alone. CHANGES IN THE WORK 69It is agreed between the parties that the work value assessment in this case is measured from 1991, coinciding with the decision of McMahon DP in the John Lysaght (Australia) Limited Port Kembla General Award Case which was the date of the last work value review of the wages of the CPCM operators. Quite apart from the reduced manning levels flowing from the 2003 decision of Grayson DP in BHP Steel (JLA) Pty Limited v Australian Workers Union , which Mr Hatcher argues has placed greater responsibilities on the remaining CPCM operators, there have been several changes to the operations of the CPCM - some of which were considered by Grayson DP in his decision in BHP Steel (JLA) Pty Limited v Australian Workers Union and some of which were not. 70In particular, Mr Sukoski identified the following in his evidence and Mr Hatcher has highlighted them his submissions, viz: * The role of tally clerk has been abolished in 1993 to coincide with the introduction of a computer system [Stockman], an automated system which schedules products to be processed on the line. Mr Sukoski claimed in his evidence that the duties of the tally clerk have been transferred to the forklift operator. Mr Brotherson argues in his submissions that, in fact, that really is not correct and that the former role of tally clerk has been entirely automated and operates by remote control. It is not really a transfer of the role to the forklift operator. * Formerly there was a dedicated crane driver position for the crane [Crane No.15] in the CPCM. That task was, as Mr Sukoski described it in his evidence a dedicated and specialist position because of the important role the crane had during roll changes. The occupant of that position did not rotate through the other operator positions. Since 1994 a decision was taken by BlueScope Steel to incorporate the crane operator position into the CPCM crew and the operation of the crane is now performed by the CPCM operators (Level 3) as part of their duties and the flexible working arrangements under which they work. *The former positions of pay off reel pulpit operator and welder were originally located close together in the CPCM. Those positions have been merged so that one employee now operates both functions. Mr Kiesel indicated in his evidence that formerly the roles of the pay off reel operator and the welder were interchangeable and the employees at both stations performed both functions, making that change appropriate, in his view. According to Mr Sukoski, however, there have been significant changes imposed on that welder operator position as a result of new technology - the Temate weld inspection system - and the abolition of the pay off real operator position. *There has been a reduction in maintenance staff on shift. Mr Sukoski recalled in his evidence that in 2003 there were 3 maintenance fitters and 3 electricians supporting each crew on shift and 3 trades assistants. There is now a single maintenance fitter and a single electrician on shift and no trades assistants. The operators are required to assist the trades staff on shift. No doubt some of that change is possible because of the improved technology in the CPCM. Also, as I understand the position, the CPCM operators did in the past provide some assistant to trades staff on shift, within the limits of their qualifications. However, Mr Sukoski claimed that additional work was now required of the operators as a result of that change and they now provided assistance to the trades staff more frequently than had formerly been the position. *As Mr Kiesel indicated in his evidence, the CPCM is now considerably more automated than had previously been the position. For instance, at the exit end of the CPCM some new equipment has been introduced after the cold mill five stand, including a carousel reel and a robot labeller. Previously, the mill was required to stop for the removal of a coil but the carousel wheel now facilitates the continuous operation of the mill. Mr Sukoski conceded in his evidence that the responsibility for the carousel wheel falls on the staff roller but he also asserted that additional skills were required of operators with the introduction of the carousel wheel. Mr Sukoski also spoke in his evidence of the additional duties involved with the robot labeller, which applies stickers to coils after they have been processed. He claimed that, whilst the robot labeller was an automated system, it still required constant maintenance and monitoring. * Automatic guided vehicles [AGV's] have also been introduced in the CPCM. But they seem to me to have released the operators from certain duties. They are not raised as issues by Mr Hatcher as issues justifying a wage increase to the operators. The AGV's replaced the original larraine cars which the CPCM operators drove but no longer are required to do. * A new automatic radial bander was introduced into the CPCM in 2007. Initially, there was opposition to the CPCM operators to the training required of them to operate the bander, prompting BlueScope Steel to seek the reconvening of the proceedings before me at that time in response to the earlier s.130 notification by the AWU which was subsequently aborted and to which I have referred to earlier in this decision. The operators subsequently embarked on that training. Mr Sukoski argues that additional work and greater skills is required to work on the new bander. *From 1992 a new computer system [Citect] was installed to operate in parts of the CPCM and replace the former computer system in use [GEM]. Its use in the CPCM has progressively been extended and since 2005 it is now used by all CPCM employees, including operators. As far as the operators are concerned, Citect assists in identifying maintenance issues and faults in the steel strips, etc. They are required to report on the operations of the line and enter information concerning delays or breakdowns into Citect. Formerly, according to Mr Sukoski, that information was obtained by the GEM screens and conveyed principally by verbal communication and written notes. According to Mr Stevenson and Mr Kiesel, it is staff officers and trades staff who make the most entries in Citect but that claim is rejected by Mr Sukoski and Mr Micallef. I accept that the Citec is considerably more user friendly than GEM, however, albeit it provides more information than had hitherto been available in the CPCM. * Mr Hatcher pointed out in his submissions that there has been a reduction in the time allocated for crib breaks in the CPCM. Nevertheless, as Mr Brotherson submitted in the hearing, the CPCM still enjoy crib breaks in excess of those enjoyed by other BlueScope Steel employees and set out in the BlueScope Steel Award. * The improvement in workplace safety in the CPCM is impressive. Mr Stevenson indicated that since 2008 there has not been a lost time injury and since 2001 only 3 instances. This is a very satisfactory result, particularly having regard to the hazardous nature of the work in the CPCM. Obviously it could not have been achieved without the active participation of the CPCM operators. They should be commended for their attitude. But it is not really an issue that I believe it is appropriate to factor in for a wage increase. Workplace safety brings its own rewards to the employees and it would, in my opinion, be against public policy to equate a wage increase to safety issues. 71In his written statement Mr Stevenson acknowledges changes in the work of the CPCM operators. But he believes that their role is now less physically demanding and involves more monitoring activities. He adds in his written statement that: "....I do not accept that with the processes now in place that monitoring and other requirements are significantly more demanding on operators than was previously the case... Much of these processes have assisted operators.... Associated with the various changes to the CPCM, including the increased throughput, has been a significantly improved safety performance at the CPCM, again improving the overall environment of the operators..." SUBMISSIONS 72Mr Hatcher argues that there have been changes to the work of the CPCM operators, based on both productivity and work value considerations, to justify a wage increase to them. He claimed that a significant reduction in staffing levels at the CPCM has meant that each operator has an increased work load and responsibility and has become more productive. In that respect, he relied on comments made by Grayson DP in his the 2003 manning decision in BHP Steel (JLA) Pty Limited v Australian Workers Union (at paras 81 and 82), viz: "....The evidence clearly shows that over the course of the last 13 years there have been significant operational improvements in the CPCM which allow the CPCM to run more efficiently and smoothly and to reduce the level of manual intervention required of employees. The evidence is also that the employees are significantly more skilled at the operations now - hence significantly more efficient with the consequence that the mill performance has reduced problems requiring manual intervention. AWU witnesses described improvements as resulting both from changes introduced by the company and because employees are much more skilled in their positions. Some of those improvements are external to the CPCM. For example, the hot strip mill has set higher tolerances on the quality of acceptable coil to be forwarded to the CPCM..." 73Mr Hatcher asserted that before 2003 CPCM operators had little responsibility for quality control or troubleshooting and that in the past when an alarm indicated some mechanical fault to the line the operator's role was to simply call in an electrician or fitter. However, now in the absence of the shift technical officer from time to time the operators take on a greater role in quality control. 74Mr Hatcher also spoke in his submissions of the initiatives which BlueScope Steel had taken to maximise line speed in the CPCM. As a result, there has been a significant improvement in productivity. Mr Hatcher asserted that the intensity of work and the level of mental demand on the part of the operators have increased as a result. There is also a new requirement upon CPCM operators to input data concerning slow rolling events, including identification of the cause. Additional duties now also fall on the operators as a result of the new equipment installed in the CPCM: eg the carousel reel. 75According to Mr Hatcher , I should consider this matter in isolation and he rejected arguments based on the threat of leapfrogging which he regarded as an outdated concept - very 1980's, as far as Mr Hatcher is concerned. Nevertheless, concern over the prospect of leapfrogging and issues of wage relativities are specifically commented on in the current wage fixation principles on work value assessments [8.2(b) and (d)] and I am not convinced that I should depart from the comments I made in the Hot Strip Mill Work Value Case [2008] NSWIRComm 1071 at para.161], viz: "....Mr Hatcher (who also represented the AWU in those proceedings) referred to the requirement in the Work Value Change principle of the current wage fixation principles to protect against leapfrogging as "...somewhat anachronistic, being referable to a different era of industrial relations...". In speaking of "leapfrogging", I think Mr Hatcher is referring also to wage relativity issues. I am not so convinced that "leapfrogging" and wage relativity issues are the dead letter that Mr Hatcher is suggesting however, particularly in large, complex organisations such as BlueScope Steel where wage movements have usually flowed generally to all staff at the one time and where employees tend to look over their shoulder at the wage levels of their fellow employees..." 76Mr Brotherson indicated that BlueScope Steel was opposed to AWU claim made on behalf of the CPCM operators and emphasised that the test in the wage fixation principles was a strict test, ie it has to be established that there has been "...such a significant net addition to work requirements..." as to justify a wage increase. Whilst he acknowledges changes in the work of the CPCM operators and the constructive role they have played in the CPCM, he disputes that there was such a significant change as to warrant a wage increase to them. He argues that the matrix flowing from the AIS operations was utilised to ensure parity in wages for all restructured operators and that Level 15 and 16 of that matrix is reserved for the most senior of the operators, ie positions where there is actual control of a major operating unit, a high level of technical expertise, a high level of decision making and the need to exercise significant judgment. Whilst the matrix is not strictly applied by BlueScope Steel, it should be used as a guide and under that matrix the CPCM operators are presently receiving remuneration consistent with their current responsibilities. 77It is obvious that there has been much new technology introduced in the CPCM over the period of review in this decision for a wage increase based on work value grounds, and a commensurate change in the work of the operators, involving less purely manual work and more monitoring of the equipment. But Mr Brotherson argues that the inherent responsibilities of the operators remains largely unchanged; that certain tasks previously performed by the operators are no longer required of them; that much of the new "user friendly" technology has made the work of the operators easier, involving less manual interventions, and not more difficult; and that the mental demands placed on the operators has been exaggerated by Mr Hatcher . 78Mr Brotherson denies that the troubleshooting role of the CPCM operators that was suggested by Mr Hatcher in his submissions was in any way exceptional, having regard to the work of comparable employees working elsewhere in the Port Kembla steelworks. He claimed that the evidence before me suggested that the task of the CPCM operators was essentially to identify a problem and resolve basic process issues. Beyond that role, technical and quality issues continued to fall as the responsibility of the staff positions and tradesmen (in particular the electricians). The overview and control of the CPCM processes remained with the shift staff positions. CONCLUSION 79At no time does it appear that a nexus has been conclusively established between the CPCM operators (or other operators of BlueScope Steel at Springhill, for that matter) and the comparable positions in AIS and the matrix that applies for AIS operations. In fact, in 1989 McMahon DP in the John Lysaght (Australia) Limited Port Kembla General Award Case (at pp.9 and 10) specifically rejected comparisons between the CPCM and the hot strip mill of AIS as being inconsistent with the wage fixation principles. 80Nevertheless, I believe that it is naive to believe that I can consider this particular wage claim in isolation and without regard to the steelworks as a whole. The decision of McMahon DP in the John Lysaght (Australia) Limited Port Kembla General Award Case was made prior to the establishment of the matrix in the AIS. And, for instance, in an unreported decision of Hungerford J on Thursday, 21 March, 1996 in BHP Steel (AIS) Pty Limited - Hot Strip Mill Restructured Ironworkers Classifications Rates of Pay Award Case [Matter No.2080 of 1995] he had this to say (at p.73): "....I think it is appropriate to give special weight to the agreed margins for the new classifications in the hot strip mill by reference to the margins for the existing (1989) classifications because, in my view, the integrity of the internal structure is of prime importance. At the end of the day, however, one should ensure a reasonable relativity with other comparable classifications in the steelworks..." 81In this case, of course, the CPCM is not a part of the AIS operations but I believe it is unrealistic to believe that steelwork employees carrying out essentially similar functions in different parts of the steelworks - either BlueScope Steel or AIS - would not be influenced by one section receiving an additional wage increase, particularly since negotiations for new enterprise agreements for the Port Kembla steelworks operations of BlueScope Steel and AIS are shortly to commence. To my mind, that would upset the relativities which BlueScope Steel and AIS management have sought to preserve, largely it would appear to me with the agreement of the AWU on the appropriate grades for specific positions - with only a few exceptions of which the Hot Strip Mill Work Value Case was example. 82The evidence before me in this hearing establishes to my satisfaction that there have been substantial improvements in productivity in the CPCM over recent years and that, I believe, has been achieved in part by the work of the CPCM operators and in part by the changes in technology. I also accept, that there has been a significant change in the nature of the work performed now by the CPCM operators when compared with what they formerly performed. As Mr Hatcher submitted in the hearing, I should consider all of the issues raised by him as grounds for a wage increase for the CPCM operators together. The Full Bench of the Commission (Walton J - Vice President, Grayson DP and McLeay C) indicated as much in the Health Employees Pharmacists Award Case (at p. 282): "...The test of whether there have been changes in work value such as to satisfy the relevant wage fixing principles is necessarily a global one. It is not amenable to microscopic evaluation of discrete functions of the particular classification or classifications under review..." 83In my unreported decision of Monday, 20 December, 1999 in the BHP Steel (AIS) Pty Limited - O'Brien's Drift Restructured Ironworker Classifications Rates of Pay Award [Matter No.IRC 3343 of 1999] I dealt with an argument that changes in the nature of work performed by a group of employees be expressed in purely mathematical terms, ie the previous rate of pay plus the additional supervisory responsibilities placed on employees less a figure to discount for the fact that not all of those supervisory responsibilities were transferred to them. I rejected that argument, commenting at p.19 that: "...I hold some doubts that an exercise of that nature produces an entirely fair result: sometimes the outcome of such an exercise is greater than the sum of its parts..." 84Therefore, it is appropriate, in my opinion, to have regard in my determination of this issue to all of the matters raised by Mr Hatcher , and consider them together, to determine if there has been a change in work value of the employees. As the Full Bench indicated in the Health Employees Pharmacists Award Case , I should treat the evidence before me in this hearing and any effect that any change may have on the HSM operators globally without examining each particular change in isolation and assessing it separately. 85But does an exercise of that nature lead to the conclusion that a wage increase is justified to the CPCM operators? I do not believe that it does. To satisfy the work value change principle from the current wage fixation principles for any particular group of employees, there must be "...changes in the nature of the work, skill and responsibility required or the conditions under which work is performed..." to the extent that there has been "...a significant net addition to work requirements as to warrant the creation of a new classification or upgrading to a higher classification...". 86I accept that there have been significant changes in the operations of the CPCM over the last 20 years or so. As Mr Brotherson suggested in his submissions, there would be few employment situations where the type of technology referred to in the evidence before me in this hearing have not been experienced by employees. The steelworks in general, and the CPCM in particular, are not unique in that respect. 87Mr Stevenson gave an extensive outline of the new technology in the CPCM in his written statement: "....Many of the changes to operator duties since 1990 are what would have been expected over that period of time, and are also consistent with the productivity improvements expected from steel industry wage increases and other benefits, such as employment security. This includes greater use of computers, and requirements to maximise available work time and to work flexibly by assisting other operators or tradespeople. Furthermore, many of the changes which have occurred have reduced the work load of operators, particularly in terms of physical demands, and/or improved the conditions under which they work. For example, with increased automation and greater process reliability most operators are able to spend more time in air conditioned cabins than out on the line than as once the case. The decrease in the operator workload that comes from improved line performance is leading to a change in focus for support staff, shift staff and operators. The focus is on reporting around plant conditions in order to prevent stoppages, ie a focus on prevention of problems rather than a cure. Some tasks originally performed by operators are simply no longer required. For example, tasks associated with mill operating in uncoupled mode, and driving larraine cars which were replaced by AGV's. Other tasks intended to be done by operators are, in fact, done by others. For example, supervising the tank farm and carrying out mill coolant tests. Improvements in the automation functions of the CPCM include automation of the 'prep shear' for the coil preparation operator. This cuts an outer layer off the coil at the entry end of the CPCM. This has meant a reduction in workload for the operator and a greater capacity for the coil preparation operator to be able to help on the welder platform if needed. Automation has led to a more consistent weld performance at the welder of the CPCM. This means fewer instances of re-welds are needed. When a re-weld is needed, the operator must intervene using manual controls to 'jog' the strip back, cut the strip out and re-weld. By manual I mean the manual operation of machinery which performs the work... The introduction of Temate and a data logger for use by the welder operator has greatly assisted operators in identifying weld defects, and lessened the previous sole reliance on visual and acoustic assessment by an operator. Maintenance practices and improved welding performance have led to a significant reduction in breakdown events such as strip breaks and weld breaks. The result of this is less need for manual intervention by operators to remove scrap or strips from the mill, and to rethread the mill (ie the process of threading the strip back through the rolls where the defect strip has been removed). The improvements in maintenance practices have reduced the workload of operators, including making it less physically demanding. The work required of operators dealing with stoppages due to strip breaks and weld breaks has also been substantially reduced... The improved maintenance practices have also facilitated circumstances allowing for the reduction in the number of shift tradespersons, and removal of the trades assistant roles. This has not placed any undue burden on operators, and is consistent with the steel industry goals. The Citect system was first installed at the CPCM in 1992 to replace Texas PLC Graphics display for the tension real and exit conveyor. Its use has expanded since that time and is now used by all employees at the CPCM to varying degrees, not just operators. From a shift crew perspective, it is the staff officers and shift trades who make the most extensive use of the information available on Citect. In 1995 Citect was used for the newly installed carousel reel. Then in 2004 Citect was implemented to replace the welder and side trimmer Imagem operator interfaces. The operator interface of Citect allows the operator and staff roller to control the relevant section of equipment, adjust settings and update tracking information. The system also allows the operator and staff roller to monitor the automated sequences, and check on equipment interlocks. The system also displays alarms that notify the operator and staff of line problems. Further, the staff roller has additional computer interfaces relating to the operation of the mill over and above those at any single operator station. Citect stores historical information that is normally used by shift tradespersons, shift staff and day work support staff to analyse and solve problems, and understand plant performance. The engineers responsible for implementing the system developed the interface starting with the then Imagem screens, and spent time with CPCM employees, including operators enhancing those operator interfaces. Citect is an easy to use system. Employees generally readily adapt to it. Rather than adding to mental demands of operators, Citect has overall made the work an operator less demanding both physically and mentally. Citect as a system is not unique to the CPCM. The system is used elsewhere, including the MCL. Computers ar now used by operators at the CPCM for the completion of shift reports and by all employees for event recording. These were previously completed by using a paper-based system. In terms of fault finding using Citect it is clear, including from a review of shift reports and event reporting, that for anything other than basic identification of an issue, fault finding and analysis is undertaken by the shift staff and shift trades..." 88Notwithstanding the views of Mr Sukoski and Mr Micaleff to the contrary, and Mr Hatcher's submissions, I believe that the evidence before me in this hearing supports the views expressed by Mr Stevenson and the submissions of Mr Brotherson . I regard Mr Stevenson's comments in his written statement as persuasive and I do not regard the changes referred to me in this hearing as meeting the strict test of the wage fixation principles which, notwithstanding Mr Hatcher's arguments, I believe I am still bound to apply in considering the claim by the AWU on behalf of the CPCM operators. 89For that reason I propose to dismiss the AWU claim before me in this hearing. P J CONNOR Commissioner DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 August 2011