Industrial Relations Commission New South Wales Medium Neutral Citation: Transport Industry – General Carriers Contract Determination 2017 [2017] NSWIRComm 1013 Hearing dates: 15 March 2017 Date of orders: 15 March 2017 Decision date: 15 March 2017 Jurisdiction: Industrial Relations Commission Before: Newall C Decision: New contract determination made Catchwords: TRANSPORT INDUSTRY – New general contract determination – agreed model for determining costs – inclusion of margin in calculation – extension of coverage of determination – staggered introduction of new rates – model to be platform for future variations – new General Carriers Contract Determination made. CONTRACT DETERMINATIONS – principles applicable to making awards provide guidance for making and varying contract determinations. Legislation Cited: Industrial Relations Act 1996 ss.10, 17, 313, 316 Cases Cited: Re Building and Construction Industry State Award (2006) 158 IR 110 Re Butchers Wholesale (Cumberland) Award (1971) AR 425 Transport Industry - General Carriers Contract Determination [2016] NSWIRComm 3 Transport Industry – General Carriers Contract Determination – application for removal of Special Fuel Price Surcharge [2010] NSWIRComm 166 Category: Principal judgment Parties: Transport Workers' Union of NSW (applicant) Representation: Mr A Howell (counsel) applicant Mr N Ward - NSW Business chamber Ltd Mr R Grace – Master Builders Association Mr D Bray – Australian Industry Group Ms A Perigo (counsel) – Minister of Industrial Relations Mr M Moir (counsel) – TNT Australia Pty Limited Mr D Sloane – Toll Holdings Limited Mr M Baroni – Australian Road Transport Industry Organisation NSW Branch; Linfox Australia Limited Ms J McDonald – Australian Federation of Employers and Industries Ms A Ballard – National Road Transport Organisation File Number(s): 2016/24907 EX TEMPORE Judgment 1. In these proceedings an application is made for a new consent contract determination pursuant to part 2 of Chapter 6 of the Industrial Relations Act 1996 ('the Act') The determination is to be known as the Transport Industry - General Carriers Contract Determination and it is intended that the proposed determination replace the Transport Industry - General Carriers Interim Contract Determination which was made during an earlier part of these proceedings by his Honour Kite AJ in April 2016. 2. It is worth setting out, given that the parties have come before the Commission with what is effectively a consent position, a matter to which I will return, some short background to the proceedings. These matters were set out in some detail in Kite AJ's decision of April 2016. I do not propose to repeat all of that detail, but in that decision, Transport Industry - General Carriers Contract Determination [2016] NSWIRComm 3, his Honour set out the steps that have been taken along the path to bring the matter before the Commission today. 3. The original application was filed by the present applicant, the Transport Workers' Union of NSW, in December 2013 and it was said at the time, and I think fairly, to be a substantial review, perhaps the first really substantial review of the General Carriers Determination since its creation 30 years before. The proceedings were split into two parts, stage 1 dealing with what have been described as non-rates issues and stage 2 dealing with rates issues. There was extensive conciliation which preceded the hearing of the issues in stage 1 which then resulted in his Honour's decision to which I have adverted, and there was further conciliation on rates questions following stage 1, but that failed to resolve, in the first instance at least, differences between the parties. The matter was actually set down for hearing, but on the application of the parties, or certainly the major parties, the hearings were vacated and a further conciliation was conducted. 4. In December 2016 the parties confirmed to the Commission that in principle at least an agreement had been reached between them, or most of them, on the terms of a new determination to replace the interim determination struck by Kite AJ. I add that were parties – certainly the Australian Industry Group and the Australian Federation of Employers and Industries - who advanced that they did not consent, but their position was not one of active opposition. Each of those parties restated that position today. 5. That is the path by which the matter then came before the Commission as presently constituted for a determination of a new contract determination. It is correct to say, as it has been advanced in written submissions, that the new contract determination proposed is a product of negotiations between the parties. It has been described as an industrial compromise, but I have something more to say about that as I proceed. 6. Can I broadly summarise what the more significant impacts of what is put before the Commission, as I say, as essentially an agreed position. Firstly, from 1 January 2019 the coverage of the determination will be extended. It will apply to parts of the State to which it did not previously apply and to kinds of cartage work to which it did not previously apply. Included with or indeed perhaps balanced against this extension of coverage is an agreed review mechanism to ensure there are not any unintended consequences arising out of these changes. 7. The proposed new determination also updates the standing hourly and running, that is per kilometre, rates by reviewing and revising the makeup of those rates. There are quite substantial changes made to both the standing and running rates in the interim determination and those are carried through into the present determination. Again, there is an acknowledgment of the capacity to review those matters if necessary through a leave reserved provision in the proposed determination. 8. The alternative remuneration mechanism in cl 21 of the existing determination is varied and what is in substance, I think it is fairly put, is a whole new mechanism for going to alternative remuneration to be known as the annual minimum guaranteed charge rate - small trucks has been added as a new part of this determination. There are further a range of variations which have been characterised as minor, but they are not without significance including updating rates from those currently found in the interim determination and updating the agreed mechanism for reviewing the rates during the life of the determination, a matter which appears to me at least to be a significant matter in my consideration of the appropriateness of making the determination as it is sought. 9. Both the TWU, the applicant, and the notional respondents to the application, but who now come before the Commission largely in support of the consent position, agree in submissions that the rates set out in the agreed determination reflect fair and reasonable minimum rates. Legislative structure 1. I now turn briefly to the legislative framework in which this decision has to be made. The jurisdiction and powers of the Commission with respect to contracts of carriage are set out in s 313 of the Act and the power to make a determination is found at 316 of the Act, the power to vary an existing determination is set out at s 320. It is correct to say that the general functions of the Commission set out in s 146 of the Act which include the setting of remuneration and other conditions of employment, resolving industrial disputes, hearing and determining industrial matters and enquiring into and reporting on any other industrial matter, are also enlivened by an application of the sort made here. 2. In making a determination the Commission must as a consequence of the range of statutory provisions to which I have referred take into account the objects of the Act and the state of the economy of New South Wales, and the effect of its decisions on the economy within the broad spectrum of the public interest consideration which the Commission is bound to observe. As a matter of statute and as a matter of precedent law the Commission has been held to have a wide discretion to vary existing contract determinations. In Haylen J's decision in Transport Industry – General Carriers Contract Determination – application for removal of Special Fuel Price Surcharge [2010] NSWIRComm 166 his Honour observed with approval: "There was no dispute between the parties that there was general and wide discretion provided by s 320 of the Act to vary a determination. It was broadly accepted that in exercising that power to vary a determination the Commission may be guided by similar considerations contained within ss 10 and 17 of the Act." (at [16] 1. That proposition is in my view correct. It is also correct that, like an award, a determination ought set fair and reasonable rates and that, as I have said, the public interest is to be considered in making a variation. True it is that those sections of the Act to which his Honour referred are specifically determined to address awards. However, as the Minister has in my view correctly submitted, and as was recognised by the Commission in the Stage 1 decision, those considerations set out in ss 10 and 17 of the Act appropriately provide guidance to the way in which a contract determination is to be approached, whether the making or the variation of it. 2. Can I deal now with the question of the state of the economy of the State of New South Wales. I am assisted by the Minister's submission in respect of the state of the economy, in particular by bringing to the Commission as an exhibit, it is now ex 11, the New South Wales budget half yearly review. Nothing in the material that I have seen there suggests, and no submission was advanced by the Minister, that making the agreed determination in the terms presently advanced would be contrary to the public interest at all and certainly it was not suggested that it would adversely affect the state of the economy of the State of New South Wales. I am satisfied that the proposed determination has no impact upon, certainly directly, the labour costs and therefore the budgetary position of the New South Wales government. 3. I have touched on the statutory provisions within which the Commission is bound to operate. I have mentioned twice that the matter comes before the Commission as effectively a consent application, but not wholly and perfectly a consent application. Indeed, there is one element of opposition to it to which I will return. However, I am satisfied that the proper approach to be taken in dealing with an application in which there is amongst some parties active consent and amongst other parties a lack of opposition is that to be found in the Full Bench decision in Re Building and Construction Industry State Award (2006) 158 IR 110, and particularly at paragraph 5 where the criteria are set out. I do not propose to read all that onto the record now. The applicant has helpfully and accurately summarised the precepts in its written submissions particularly at paragraph 24. 4. The important elements to which I draw the parties' attention and wish to record for the purpose of this decision today are these. First, the consent of the parties to such an application is important and relevant, but is not of itself determinative because ultimately the Commission must exercise its powers under the Act effectively regardless of the consent of the parties. That is to say, consent of the parties could not cause the Commission to make a determination which it was not properly able to make under its discretion validly exercised within the statutory confines of the Act. Duty to set fair and reasonable conditions 1. Secondly, it is important to emphasise the overarching duty of the Commission when it is dealing with the setting of rates and conditions, and I draw this directly from the stage 1 decision, that it must make rates and conditions which are fair and reasonable. No party today suggested that the rates and conditions that are proposed in the contract determination advanced are anything other than fair and reasonable and the evidence which is advanced by a number of parties, not just the union and the employer registered bodies, but individual employers, is to the effect that the rates are properly seen as fair and reasonable as they are proposed. It is a fundamental responsibility of the Commission that it must be satisfied that the rates are fair and reasonable before it makes any determination. 2. In this matter I am satisfied that the approach that has been taken to rates and conditions is fair and reasonable and that the determination as proposed will provide for fair and reasonable rates and conditions for those who will be working under it. It is necessary that the Commission be given sufficient information to make that view: Re Butchers Wholesale (Cumberland) Award (1971) AR 425 per Cook J, and here I am satisfied that the material put before the Commission, which is compendious, does provide a sufficient degree of confidence to the Commission on that point. Elements of the proposed new Determination 1. Having broadly outlined at the outset of this decision the general provisions of the new determination, I turn in some more detail to what in fact the new determination does. The proposed determination will provide contract carriers with an increase in rates of pay. Schedule A to the proposed determination provides an increase to the hourly standing rate of the current rates in the interim determination. That is appropriate in my view given that those rates have not been adjusted since 15 December 2014. The rates set out in schedule A will continue to apply until 31 December 2018. That is a significant projection into the future and I think it has been fairly submitted that that will provide stability and continuity for contract carriers and principal carriers operating under the determination. From 1 January 2019 new rates of pay will come into effect. 2. I have made reference to the fact that the submissions before the Commission have advanced that this matter comes before the Commission by consent as an industrial compromise or an industrial agreement between the parties, but it ought not be thought, in my view at least, that this is simply a matter of the parties doing a deal. The parties - and I will return to this again later, the importance of this approach - rather than simply haggling out some figures that they could live with, have adopted the approach of developing a quite sophisticated cost and rate model which is now exhibit 5 in these proceedings. I have not seen an exercise of that complexity undertaken by any industry in advancing a new proposal for the structure of rates and conditions at any time whether in this Commission or in my experience in other industrial tribunals. 3. I accept what has been said to me that this model has been developed with the investment of significant time and resources. Its value it seems to me to lie in this: not only does it provide a proper justification for the rates that are advanced in the present contract determination application, but it provides a platform for dealing with disputes if there any during the life of the determination and further, for dealing with variations to the determination going forward. Based on that model and based on the reports and input that went into developing the model I am satisfied, as I have said, that the new rates do set a fair and reasonable safety net of cartage rates for contract carriers. 4. I accept, as it was submitted to me by the NSW Business Chamber, one of the employer group representatives, that the rates reflect proper cost recovery principles and therefore they allow contract carriers to be properly remunerated including covering costs. On the other hand they do not impose unfair costs on principal contractors or provide any kind of windfall gain. They are properly calculated rates factoring in cost recovery and, as was pointed out in submissions today, a margin. 5. Importantly, the proposed determination also contains transitional provisions providing for the phasing in of these rates over a period of time. The proposition that the approach taken by the parties will allow stability in the industry is properly put and it is one the Commission endorses. The way in which the parties have gone about structuring increases of rates going forward in the future will in my view provide that stability and I commend the parties on taking that approach. 6. I have referred to the fact that the new rates will have an expanded coverage. They will apply for the first time to single journeys commencing within the county of Cumberland and finishing within either a 50 kilometre radius of Newcastle GPO or within a specified vicinity of the Wollongong GPO and will also apply for the first time to certain categories of work that were not previously regulated by any determination. I accept that the extent of the expansion is modest, certainly compared to what was initially sought, but modest compared to the scope of the determination as it presently stands. It is also relevant to that fact that the new rates to which I have just referred do not come into effect at all until 1 January 2019, which provides a reasonable period of time for industry to prepare for that expansion of regulation. Further, as I say, there is capacity expressly provided at cl 19.3 of the determination for review by this Commission during 2021. 7. It is appropriate that a conservative and modest approach has been taken to this expansion of the determination in my view. It has been submitted, and I accept, that the task of setting minimum cartage rates across the whole of New South Wales at this moment at least would be fraught with difficulty, given a range of matters including significant price differentials between a range of transport corridors in regional and remote New South Wales. 8. At the time that this was thought to be an application that would meet opposition and need to be determined adversarially on the evidence, a range of material was advanced in evidence which went to that matter, the possibility of addressing rates across NSW. As it has emerged that contest has not arisen. I have looked at the evidence, but I have not been required to make any findings about it for the purpose of the consent determination and I do not do so. 9. I touched very briefly earlier on alternative remuneration arrangements. Clause 21 of the proposed determination allows for principal contractors to utilise alternative systems or methods of remuneration provided that the contract carrier is no worse off. It has been put that this provision is essential to the modernisation of the determination because it permits utilisation based remuneration practices which it is said are likely to drive greater productivity and efficiency across the supply chain. It seems to me that that submission is properly put and indeed such an approach, that is to say, the availability of utilisation based remuneration practices, is a necessary approach in this industry and perhaps in other industries on which I am not required to rule today. It is sufficiently clear that such an approach is likely to be the way forward in the industry, at least, for reason that productivity and efficiency will demand it. Ongoing stakeholder involvement in monitoring the proposed Determination 1. There is at cl 23 a provision or a scheme for ongoing stakeholder engagement when monitoring the determination and its impact. I deal at this point with an application made by the body NatRoad to be involved in that process. That was spoken for by Ms Ballard and against by some parties. Ultimately, I am bound to express the view that the Commission's long-standing system of registration of industrial parties is there for a good reason and is to be observed. I am not disposed and I do not propose to extend the ability to participate, as if a registered body, in this matter or any award matters or similar matters of this kind to an unregistered party, an unregistered body. There is always an ability for any party who has an interest in an award or a determination matter to come forward and demonstrate that interest on evidence, and if that is done a decision will be made about their ability to appear. That approach was not taken today, perhaps understandably, but the answer is that I do not propose to make any kind of provision that permits any person not a party to the award and not having demonstrated sufficient interest on evidence to participate in that process going forward. This is not directed against NatRoad particularly or alone. It is an approach that I would take and have taken to other industrial proceedings and I imagine any member of the Commission will take the same approach. Conclusion 1. In my view it is appropriate the determination be made in the terms in which it is advanced, subject to the minor amendments made today which have been noted and are now contained within an updated and amended exhibit 1. That will be the ur-text upon which the determination will be made. The parties of course would have an ability to approach the Commission were there thought to be any consequential need to make any minor amendments based on a mutual understanding that a mistake had been made, but otherwise I proceed on that basis. It seems to me proper that the starting date for the making of the determination, that is, the date to be inserted where the present draft determination says "insert date" should be 15 April 2017. 2. The Minister conveyed commendation to the parties for having achieved a consent position and the Commission also commends the parties on having achieved a consent position. That may sound like the usual comment that might fall from the Commission – I do not say this about the minister's commendation of course, but from the Commission that might be thought to be a platitude – but it is not on this occasion. The parties have decided to take the step of developing, indeed investing in, this model and approaching their differences and resolving them in what is for industrial proceedings a particularly sophisticated way. It is a way which allows the parties to resolve not just this immediate difficulty, but the next round and perhaps the one after that. There is now a model which everyone understands and about which everyone agrees which is based not just on haggling and horse trading, but on proper modelling, proper expert reports, and verifiable evidence. That model allows the parties to see exactly where they stand and to factor in variations in the future. 3. Why is that important? For this reason. The parties cannot assume that the Commission in its present form, or at very least with its present highly prescriptive statutory powers, will always be with you. Indeed there are a number of signs that may very well not be the case. The parties in this matter - and I do not patronise you by saying this - have demonstrated in their approach to this proposed contract determination that they have learned how to deal with matters between themselves in a way that gives them a solid platform going forward. 4. As I say, it has been described an industrial compromise, but this new Determination is not just the product of doing a deal, but going to the trouble to establish a basis for constructive relations about these vitally important matters. If it does occur that the Commission in its present form does not survive, or does not continue to be equipped with the same statutory powers that it now has, including the capacity to assist or direct parties towards conclusions which it presently possesses, then the parties will have been well served by the steps they took leading up to today in making sure that they know what they are doing in their industry at least. 5. I do commend the parties for having taken that approach. I approve the contract determination. As I say, it will have a date of effect of 15 April 2017. PETER NEWALL Commissioner ********** Amendments 24 March 2017 - Cover sheet - Mr M Moir (counsel) - TNT Australia Pty Limited added 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: 24 March 2017