Industrial Relations Commission New South Wales Medium Neutral Citation: Minister for Health v Australian Medical Association (NSW) Limited [2014] NSWIRComm 59 Hearing dates: 19 November 2014 Decision date: 18 December 2014 Before: Walton J, Arbitrator Decision: I confirm the making of the Public Hospitals (Visiting Medical Officers Sessional Contracts) Determination 2014 and the Public Hospitals (Visiting Medical Officers Fee-For-Service Contracts) Determination 2014, and, by the publication of these reasons and annexed determinations, I give written notice to the Minister and the Association pursuant to s 95(1) of the Act. Catchwords: ARBITRATION - consent - application for determination under s 89 of the Health Services Act 1997 - VMO Sessional Contracts - VMO Fee-For-Service Contracts - relevant principles - determinations made Legislation Cited: Health Services Act 1997 Industrial Relations Act 1996 Industrial Relations (Public Sector Conditions of Employment) Regulation 2011 Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 Parliamentary, Local Council and Public Sector Executives Remuneration Legislation Amendment Act 2011 State Revenue and Other Legislation Amendment (Budget Measures) Act 2014 Cases Cited: Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales v State of New South Wales [2014] NSWCA 16 Secretary of the Treasury v Public Service Association & Professional Officers' Association Amalgamated Union of New South Wales [2014] NSWCA 138 Category: Principal judgment Parties: Minister for Health (Initiator) Australian Medical Association (NSW) Limited (Respondent) Representation: Minister for Health (Initiator) Australian Medical Association (NSW) Limited (Respondent) File Number(s): ARB 1 of 2014 ARBITRATOR APPOINTED PURSUANT TO SECTION 90 OF THE HEALTH SERVICES ACT 1997 reasons for decision 1This matter concerns a joint application by the Secretary of the NSW Ministry of Health ('MOH') and the Australian Medical Association (NSW) Limited ('AMA') for a determination under Pt 2 of Ch 8 of the Health Services Act 1997 ('the Act') in relation to Visiting Medical Officers' ('VMOs') service contracts. The parties sought separate determinations for Sessional and Fee-For-Service Contracts as defined in the Act. 2The Minister for Health sought the appointment of an arbitrator under s 89 of the Act by way of application made to the Minister for Industrial Relations. 3On 29 September 2014, I received that appointment by an Instrument of Appointment made pursuant to s 90 of the Act by the Minister for Industrial Relations. 4Upon hearing the parties on 19 November, two determinations known respectively as the 'Public Hospitals (Visiting Medical Officers Sessional Contracts) Determination 2014' and the 'Public Hospitals (Visiting Medical Officers Fee-For-Service Contracts) Determination 2014' were made on that day ('the determinations'). The determinations are annexed. The decision was accompanied by an intimation that reasons for decision would follow in due course. 5These are the reasons for the making of those determinations. Consideration Submissions 6As to the substance of the matter, the parties provided detailed joint written and oral submissions in support of the application. The joint written submissions were in the following terms: BACKGROUND 1.In late 2011, the Auditor General produced a performance audit report on visiting medical officers (VMOs) and staff specialists. One of the recommendations of this report was that NSW Health, after appropriate consultation with the Australian Medical Association, amend the model VMO contracts to impose stricter controls over the submission of VMO claims for payment. 2.This recommendation was made in response to some VMOs not submitting their claims for payment by the fifteenth day of the next calendar month as required by the Determinations. 3.It is not possible by contract to oust the provision of the Determinations as to the payments to which VMOs are entitled. In order to give substantive effect to the recommendation, amendment of the Determinations is required. 4.Following lengthy discussions with the AMA agreement was finally reached on the proposal that is reflected in the amended Determinations: after 12 months a claim can be discounted by 50%, after 28 days' notice has been provided to the VMO, and after 24 months no payment need be made (again subject to 28 days' notice to the VMO). 5.On 2 February 2014, the Minister for Health wrote to the Minister for Industrial Relations to appoint an arbitrator for the purposes of making new versions of the Public Hospitals (Visiting Medical Officers Sessional Contracts) Determination 2007 and the Public Hospitals (Visiting Medical Officers Fee-for-Service Contracts) Determination 2007 to replace those made in 2007. 6.These proceedings are brought forward by way of an application made on behalf of the Minister for Health but they do so as a consent application with the Australian Medical Association. NATURE OF PROCEEDINGS 7.These proceedings are not proceedings of the Industrial Relations Commission. The legislative context is provided by the relevant provisions of the Health Services Act 1997 and not the Industrial Relations Act 1996. However, the relevant provisions are in similar terms and the nature of the proceedings is similar to an arbitration made under the Industrial Relations Act. STATUTORY CONTEXT 8.Section 89 of the Health Services Act relevantly provides that the Minister of Health or the Australian Medical Association may apply (either jointly or individually) to the relevant Minister for the appointment of an arbitrator to determine the terms and conditions of work, the amounts or rates of remuneration and the bases on which those amounts or rates are applicable, in respect of medical services provided by visiting medical officers under fee-for-service contracts or sessional contracts (or both). 9.Section 90 provides that the relevant Minister, who is the Minister for Industrial Relations, must appoint a judicial member of the Industrial Relations Commission nominated by the President of the Commission to be the arbitrator for the purposes of making a determination. 10.Section 91(1) provides that the arbitrator must, as soon as practicable after being appointed determine: (a) the terms and conditions of work, the amounts or rates of remuneration and the bases on which those amounts or rates are applicable, in respect of medical services provided by visiting medical officers under fee-for-service contracts or sessional contracts (or both), and (b) the date from which any determination is to have effect. 11.Section 91(2) provides that the arbitrator must endeavour to bring the persons appearing before the arbitrator to agreement regarding the matters in respect of which the arbitrator is required to make a determination. 12.Section 92 provides as follows: (1) In making a determination under this Part, the arbitrator: (a) is not bound by the rules of evidence and may inform himself or herself on any matter as the arbitrator sees fit, and (b) must act judicially and be governed by equity and good conscience, without regard to technicalities or legal forms. (2) In making a determination under this Part, the arbitrator is to give effect to the same policies on increases in remuneration as those that the Industrial Relations Commission is required to give effect to under section 146C of the Industrial Relations Act when making or varying awards or orders relating to the conditions of employment of public sector employees. 13.Section 93 relevantly provides that the Minister and the Australian Medical Association may appear before and be heard by an arbitrator by their respective representatives in any proceedings before the arbitrator. 14.Section 94 relevantly provides that proceedings before the arbitrator are to be conducted in whatever manner the arbitrator may determine. (NB - there are no relevant regulations.) 15.Section 95 relevantly provides that the arbitrator must give written notice to the Minister and the Association of the arbitrator's determination. The relevant statutory provisions have changed since the last visiting medical officer determinations were made in 2007 16.There have been some significant changes to the relevant statutory provisions in the Health Services Act about the making of Determinations since the current Determinations were made in 2007. 17.Section 92 addresses the matters to which the arbitrator must have regard in making a Determination. In 2007, section 92(2) required the arbitrator in making a Determination to have regard to: a)the economic consequences of the proposed Determination; and b)the established principles of the Industrial Relations Commission in connection with the determination of remuneration under awards made under the Industrial Relations Act. 18.In 2011 section 92(2) was amended and is now as set out in clause 12 alone. MINOR UPDATING CHANGES 19.The opportunity has also been taken to make some minor editorial changes, most notably replacing references to the Department of Health with the Ministry of Health. Relevant Legislative Provisions 7Section 91 of the Act provides: Nature of determination (1) The arbitrator must, as soon as practicable after being appointed under section 90, determine: (a) the terms and conditions of work, the amounts or rates of remuneration and the bases on which those amounts or rates are applicable, in respect of medical services provided by visiting medical officers under fee-for-service contracts or sessional contracts (or both), and (b) the date or dates (not being a date or dates earlier than the date of the determination) on and from which any determination made under paragraph (a) is to have effect. (2) The arbitrator must endeavour to bring the persons appearing before the arbitrator to agreement regarding the matters in respect of which the arbitrator is required to make a determination under this Part. 8Section 92 is in the following terms: Manner of exercise of arbitrator's functions (1) In making a determination under this Part, the arbitrator: (a) is not bound by the rules of evidence and may inform himself or herself on any matter as the arbitrator sees fit, and (b) must act judicially and be governed by equity and good conscience, without regard to technicalities or legal forms. (2) In making a determination under this Part, the arbitrator is to give effect to the same policies on increases in remuneration as those that the Industrial Relations Commission is required to give effect to under section 146C of the Industrial Relations Act 1996 when making or varying awards or orders relating to the conditions of employment of public sector employees. 9It may be noted that s 92(2) was amended by the Parliamentary, Local Council and Public Sector Executives Remuneration Legislation Amendment Act 2011 by removing the factors which an arbitrator was previously required to have regard to in making a determination, namely, the economic consequences of a proposed determination and established principles of the Commission, and in lieu thereof requiring an arbitrator to give effect to the same policies on increases in remuneration as those that the Industrial Relations Commission of New South Wales is required to give effect to under s 146C of the Industrial Relations Act 1996 ('the IR Act'). 10Section 146C is in the following terms: Commission to give effect to certain aspects of government policy on public sector employment (1) The Commission must, when making or varying any award or order, give effect to any policy on conditions of employment of public sector employees: (a) that is declared by the regulations to be an aspect of government policy that is required to be given effect to by the Commission, and (b) that applies to the matter to which the award or order relates. (2) Any such regulation may declare a policy by setting out the policy in the regulation or by adopting a policy set out in a relevant document referred to in the regulation. (3) An award or order of the Commission does not have effect to the extent that it is inconsistent with the obligation of the Commission under this section. (4) This section extends to appeals or references to the Full Bench of the Commission. (5) This section does not apply to the Commission in Court Session. (6) This section extends to proceedings that are pending in the Commission on the commencement of this section. A regulation made under this section extends to proceedings that are pending in the Commission on the commencement of the regulation, unless the regulation otherwise provides. (7) This section has effect despite section 10 or 146 or any other provision of this or any other Act. (8) In this section: "award or order" includes: (a) an award (as defined in the Dictionary) or an exemption from an award, and (b) a decision to approve an enterprise agreement under Part 2 of Chapter 2, and (c) the adoption under section 50 of the principles or provisions of a National decision or the making of a State decision under section 51, and (d) anything done in arbitration proceedings or proceedings for a dispute order under Chapter 3. "conditions of employment" -see Dictionary. "public sector employee" means a person who is employed in any capacity in: (a) the Public Service, the Teaching Service, the NSW Police Force, the NSW Health Service, the service of Parliament or any other service of the Crown, or (b) the service of any body (other than a council or other local authority) that is constituted by an Act and that is prescribed by the regulations for the purposes of this section. 11The operation of s 146C was succinctly summarised by Bathurst CJ in Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales v State of New South Wales [2014] NSWCA 16 ('PSA') at [49], as follows: In considering the context in which the regulation falls to be considered, it is necessary to have regard to the opening words of s 146C(1), and s 146C(1)(a) of the Act. The opening words of s 146C(1) require the Commission when making or varying an award or order to give effect to any policy on conditions of employment of public sector employees. The extent of that requirement is limited by s 146C(1)(a) to any such policy that is declared by the Regulations to be an aspect of government policy that is required to be given effect to by the Commission and that applies to the matter to which the award or order relates (per s 146C(1)(b)). The matters in regs 5 and 6 of the Regulations are matters which are said to be aspects of government policy. So much is made clear by reg 4. The purpose of the legislation can thus be seen to require the Commission to comply with certain aspects of government policy concerning public sector employees in setting awards or resolving industrial disputes. 12Similarly, in Secretary of the Treasury v Public Service Association & Professional Officers' Association Amalgamated Union of New South Wales [2014] NSWCA 138 ('Secretary of Treasury') at [34] and [35], the Chief Justice (with whom Beazley P agreed) stated: 34 The effect of s 146C(7) of the Act is, relevantly, that the award-making powers of the Commission, contained in s 10, are constrained by s 146C and the policies declared in the Regulation which the Commission is required to give effect to: PSA v Director of Public Employment at [17] and [58]. 35 One policy to which effect is required to be given is that contained in the clause, namely that awarded increases in remuneration or other conditions of employment do not increase employee-related costs by more than 2.5% per annum (subject to the provisions of cl 6(1)(b) of the Regulation). The clause looks to the effect of the award. 13The regulation to which his Honour referred was the Industrial Relations (Public Sector Conditions of Employment) Regulation 2011 ('the 2011 Regulation'). That regulation was repealed by the State Revenue and Other Legislation Amendment (Budget Measures) Act 2014 ('the Budget Measures Act'). By that Act, a new regulation, the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 ('the 2014 Regulation') was made in relevantly similar terms. 14Clause 5.1(2) of Sch 5 of the Budget Measures Act provides that the 2014 Regulation is a regulation validly made under s 146C of the IR Act. It follows that, by virtue of s 92(2) of the Act, I must give effect to the policies promulgated by the 2014 Regulation which, for present purposes, is materially the same as those stipulated by the 2011 Regulation and the subject of the aforementioned observations in PSA and Secretary of Treasury. 15Section 95 is in the following terms: Notification of determination and finality of determination (1) The arbitrator must give written notice to the Minister and the Association of the arbitrator's determination under this Part. (2) Except as provided by section 96, a determination made under this Part (or a purported determination): (a) is final, and (b) may not be appealed against, reviewed, quashed or called into question by any court or tribunal (whether on an issue of fact, law, jurisdiction or otherwise). Consideration 16The determinations were sought by consent of the parties. This bears upon the merits of the application as the settlement of applications for a determination is highly desirable (see s 91(2)). By this means parties have the opportunity of tailoring outcomes which are closest to their respective needs. However, this factor cannot be determinative as, by s 92(2), the arbitrator is required to give effect to the same policies on increases in remuneration as those that the Industrial Relation Commission of New South Wales is required to give effect to under s 146C of the IR Act. 17In this matter, s 92(2) represented no barrier to the making of the determinations sought by the parties. The variation to the former determinations did not represent an increase in remuneration. The change in the system of making claims for payment brought about by the determinations does not alter the remuneration paid and must only have the effect of reducing costs by introducing more efficiency and predictability in the payments system. These same considerations also indicate the applications are meritorious. Operative Date 18The parties agreed the determinations would operate on and from 19 November 2014 and I have made the determinations accordingly. Conclusion 19I confirm the making of the Public Hospitals (Visiting Medical Officers Sessional Contracts) Determination 2014 and the Public Hospitals (Visiting Medical Officers Fee-For-Service Contracts) Determination 2014, and, by the publication of these reasons and annexed determinations, I give written notice to the Minister and the Association pursuant to s 95(1) of the Act. ********** Annexure A (PDF) Annexure B (PDF) 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: 18 December 2014