PN3892

VICE PRESIDENT HATCHER: Before we call the next witness, are we in a position to deal with the documents supplied by the Department, Mr Harding?

PN3893

MR HARDING: Yes, we are.

PN3894

VICE PRESIDENT HATCHER: Is there any objection to that being admitted?

PN3895

MR ZEVARI: No, your Honour.

PN3896

VICE PRESIDENT HATCHER: The documents supplied by the Department of Social Services headed Disability Maintenance Instrument Proforma will be marked exhibit 38.

EXHIBIT #38 DEPARTMENT OF SOCIAL SERVICES DOCUMENT DISABILITY MAINTENANCE INSTRUMENT PROFORMA

PN3897

Right, so who is the first witness for this morning?

PN3898

MR ZEVARI: Mr Michael Smith, your Honour.

PN3899

THE ASSOCIATE: Please state your full name and address.

PN3900

MR SMITH: Michael Smith (address supplied).

<MICHAEL SMITH, SWORN�� [10.06 AM]

EXAMINATION-IN-CHIEF BY MR ZEVARI�� [10.06 AM]

PN3901

MR ZEVARI: Good morning. Is your name Michael Smith?‑‑‑It is.

PN3902

Your address is (address supplied)?‑‑‑It is.

PN3903

Have you prepared a statement in these proceedings dated 20 November 2017 which runs to 82 paragraphs?‑‑‑I have.

PN3904

Is that statement in front of you Mr Smith?‑‑‑It is.

***�� MICHAEL SMITH�� XN MR ZEVARI

PN3905

Are there any corrections you wish to make to that statement?‑‑‑No.

PN3906

Is the statement true and correct to the best of your knowledge and belief?‑‑‑It is a true and correct statement of my opinions where I've expressed them.

PN3907

I seek to tender that statement.

PN3908

VICE PRESIDENT HATCHER: The witness statement of Michael Smith dated 20 November 2017 will be marked exhibit 39.

EXHIBIT #39 WITNESS STATEMENT OF MICHAEL SMITH DATED 20/11/2017

PN3909

MR ZEVARI: Mr Smith, Mr Harding will now ask you some questions.

PN3910

VICE PRESIDENT HATCHER: Mr Harding.

CROSS-EXAMINATION BY MR HARDING�� [10.07 AM]

PN3911

MR HARDING: Thank you, your Honour. Mr Smith, you say in your statement that you were asked by the NDS to provide expert opinion on the subjects you identify in paragraph 17(a) to (c) of your statement?‑‑‑That's correct.

PN3912

Your expertise arises from you say 30 years of direct experience in the field of disability services, is that right?‑‑‑That's correct, yes.

PN3913

You provide some of your experience really from paragraph 2 through to 14 of your statement, but it would be correct to say that after May 1989, that experience was acquired in senior executive positions in ADEs. Is that a fair statement?‑‑‑That's correct. Sorry, could I amend that slightly? Not solely in ADEs, as I've said in my statement I did make reference to the fact that I was responsible for a residential hostel which I closed to put people in the community and I was also responsible for the Equal Access Employment Service which was a competitive employment placement and training service which later became known as the Disability Employment Service.

PN3914

When you say later, so it started its life as a competitive employment service and then translated into an ADE, is that accurate?‑‑‑Well, the translation was because of the change of Commonwealth terminology more than anything else. It was the same service throughout.

***�� MICHAEL SMITH�� XXN MR HARDING

PN3915

But again, the expertise you've acquired is in senior management positions dealing with the subject of disability employment?‑‑‑Absolutely.

PN3916

You state in paragraph 1 that you hold a Bachelor of Commerce degree?‑‑‑I do.

PN3917

You don't have any post-graduate qualifications?‑‑‑No.

PN3918

You haven't published in the field?‑‑‑No.

PN3919

You don't cite any literature in your statement, so is it fair to say that this statement represents your opinions?‑‑‑Absolutely.

PN3920

Thank you. I'm going to skip through some of this material, Mr Smith. You deal with under a heading on page 4, you deal with what you are the differences between employment in an open labour market and supported employment in the context of ADEs is, and the associated cost implications and you do that from paragraphs 23 all the way through really until paragraph 52?‑‑‑Yes.

PN3921

It would be fair to say, wouldn't it, that in those paragraphs what you're identifying is that there are differences between ADE employment where you've got persons where the majority of the workforce are disabled and those where the majority of the workforce is not?‑‑‑I'm saying that the rationale behind how they operate is different.

PN3922

Yes?‑‑‑There may be a number of common features, but I think the driving issues within them result in different approaches to their management and their costing, which then impacts on what the service is. The fundamental issue is that - as I've said in my statement, for a commercial enterprise the primary driving force is commercial viability, hopefully profit making and how you achieve it. The driving force behind an ADE, is a service for people with disabilities and the provision of opportunities to be employed, develop skills and so on.

PN3923

But you accept that in so doing, the ADE is expected by the Commonwealth to operate commercially?‑‑‑I accept that they are meant to operate viably, absolutely.

PN3924

Can I show you a document that you in your experience may have come across this? It's the Operational Guidelines for Disability Employment Assistance?‑‑‑Mm-hm.

***�� MICHAEL SMITH�� XXN MR HARDING

PN3925

The evidence has been Mr Smith, that these are the guidelines that are utilised by the Commonwealth to fund ADEs. This is exhibit 7, your Honour. It's a basis for Commonwealth funding. Are you familiar with these?‑‑‑I am. It's a while since I've looked at them however, but I looked at them when I was working, yes.

PN3926

By way of context, the document deals with the circumstance where people are being funded under the DMI levels; are you familiar with those?‑‑‑Yes.

PN3927

And also the transition to the NDIS?‑‑‑Right.

PN3928

If I can take you to page 14 of that document. Tell me when you've got there?‑‑‑Yes.

PN3929

Paragraph 8, enhancing performance. This sets out the Commonwealth's expectations of how ADEs will be providing services in an NDIS world and you will note on paragraph 8.2 that individualized funding - this is the second sentence:

PN3930

Is likely to ultimately mean that consumers will be looking for services offering the best working conditions, flexibility, choice and best value for their funding dollars.

PN3931

Then if you look at 8.3(b), it tells us that the expectation is that ADEs will reduce reliance of DSS funding by building robust thriving commercial businesses?‑‑‑I accept that, yes.

PN3932

You accept that that's a Commonwealth expectation of ADEs?‑‑‑I do.

PN3933

That's more than operating viably, that's operating commercially?‑‑‑I guess, I have to say, I think we're talking semantics a little here, because eligibility for Commonwealth funding is that you operate as a not for-profit organisation, therefore the profit making motive is obviously there, you have to be viable, and you do want to make the best profit you can, but as I said in my earlier response to your question, we're talking about why you are there and it is providing employment opportunities to people with disabilities. Now, if a service isn't operating viably and if we want to use viably and commercially as interchangeable, that's your choice. I certainly accept the issue of viable and certainly when I was a CEO I was endeavouring to make the best surplus I possibly could in order to improve the conditions of the supported employees who work for us.

***�� MICHAEL SMITH�� XXN MR HARDING

PN3934

Including their working conditions?‑‑‑Absolutely.

PN3935

Just look at 9.5 by way of completeness. I think the intention that's expressed there is that in short, that ADEs will generate sufficient income to cover their costs?‑‑‑Absolutely.

PN3936

In that sense, viably and commercially are interchangeable in the sense that you've described. They're both intended to ensure that ADEs operate in a way that's self-sustaining with Commonwealth assistance?‑‑‑Well, that was a qualification that I was going to make. It's unlikely given the nature of the model that any ADE could operate viably without Commonwealth assistance. If I can elaborate on that, I'm not aware of any country in the world where there has been a private for-profit sector involvement in those sorts of operations which does beg the question, is it conceivable? If there was, then presumably there would be some private for-profit involvement.

PN3937

That Commonwealth assistance Mr Smith, takes the form of funding for the provision of support?‑‑‑Absolutely.

PN3938

In your statement, you say don't you, that a purpose of the provision of support is to ensure a level playing field as between commercial enterprises and ADEs?‑‑‑That's correct.

PN3939

That recognises the differences between the types of workforce that we're talking about?‑‑‑Ostensibly. I believe that is the Commonwealth's view. In my statement, I've sought to challenge that it does embrace all of those differences.

PN3940

In paragraph 51 of your statement, you say in the second sentence, notionally - and you're talking about providing support services - you're talk here aren't you about Commonwealth support of the support that's provided to individual people with disabilities working in ADEs, that notionally this is to provide a more level playing field. That's your statement?‑‑‑That's right.

PN3941

The reality is, that's what it does, isn't it?‑‑‑I don't believe so in the full analysis of costs. I have elaborated on that in my statement.

PN3942

Your complaint then is that it doesn't take account of all the costs of the ADEs, but it provides a measure of support for the ADEs in terms of the nature of the workforce that they have to utilise?‑‑‑That's correct.

***�� MICHAEL SMITH�� XXN MR HARDING

PN3943

It's also true, isn't it, when we're talking about the question of wages, which is why we're all here, that unlike commercial enterprise, if you can use that word, or for-profit enterprises, ADEs have the benefit of pro-rata wages?‑‑‑They do.

PN3944

In paragraph 29 of your statement, I am just intrigued by something you've said there. About halfway down you say that a disability enterprise essentially functions as a social justice program. Then you go on to say but the individuals who work in it, have been independently assessed as unlikely to succeed in achieving or maintaining employment in the open labour market. You repeat that somewhere else in the statement as well. What's the basis for that evidence, Mr Smith?‑‑‑The basis for that evidence. The primary basis, I guess, is the Commonwealth guidelines for eligibility to access a disability employment service and the assessments they do. I'm not expressing a personal opinion there; I'm referencing Commonwealth guidelines.

PN3945

Are they the guidelines I've just taken you to?‑‑‑No, the guidelines there - I'll show you - there are separate guidelines to eligibility for referral to a disability employment service, as opposed to an ADE. There's a series of dot points. I don't know if they're in here, in this one, but one of them is an assessment of their likelihood, with appropriate intervention to be able to achieve employment in the open labour market for at least eight hours a week.

PN3946

You're just referencing that; you don't know that yourself?‑‑‑I know that it's in the guidelines.

PN3947

You know it's in the guidelines. All right, well, have a look at page 12 of the document I've given you, paragraph 5?‑‑‑Yes.

PN3948

That tells us who's eligible?‑‑‑I'm sorry, are we on the same page?

PN3949

Hopefully?‑‑‑As I'm reading page 12, paragraph 5, we're talking about requirements for a ADE.

PN3950

Yes?‑‑‑And I was talking about eligibility requirements for a disability employment service that places people in open employment.

***�� MICHAEL SMITH�� XXN MR HARDING

PN3951

Well, in paragraph 29 you talk about ADEs, and you say "they are independently assessed (that is the employees of ADEs) are independently assess as unlikely to succeed in achieving and/or maintaining employment in the open labour market"?‑‑‑Can you go back to 29. I think elsewhere in my statement, I've made it very clear that what I'm talking about is that these days, and for some considerable time, the gatekeeper, the primary gatekeeper for access to an ADE has been the job capacity assessor Centrelink process. When people go there, they do initial assessment as to the most appropriate service type. If a person is assessed as having a likelihood to be able to gain and retain employment for at least eight hours a week, with appropriate intervention or support, the customary practice is to refer them to a disability employment service. For those that aren't the gatekeeper, would typically refer them to an ADE. All I'm saying is, that's the normal Commonwealth process. Once they arrived at an ADE, then the organisation would conduct its own internal assessment of the person's skills, abilities, their job interests to see what type of employment they could provide them that would suit them.

PN3952

Mr Smith, 29 specifically refers to ADEs. You would accept, would you not, that there is no evidence that you supply to the Commission that there's an independent assessment conducted as to whether or not, a person who works in an ADE is or is incapable of maintaining employment in the open labour market?‑‑‑I don't think - I'm sorry, the statement says:

PN3953

The primary function is to provide support with employment and training opportunities for people with disabilities who have the aspiration to participate in work and a genuine capacity to do so, albeit limited to some extent by, or as a direct consequence of their disabilities, but who have been independently assessed as unlikely to succeed in the open labour market.

PN3954

Then in the brackets it says:

PN3955

For over a decade, this independent assessment has been carried out by job capacity assessors within Centrelink who served as a primary gatekeeper in the referral of persons with disabilities to both DES providers and ADEs.

PN3956

I'm sorry, I'm not sure what the confusion is, because I think that's abundantly clear.

PN3957

VICE PRESIDENT HATCHER: The point Mr Harding was putting to you is that that doesn't happen. Is that?

PN3958

MR HARDING: Yes.

PN3959

VICE PRESIDENT HATCHER: That it's wrong.

***�� MICHAEL SMITH�� XXN MR HARDING

PN3960

MR HARDING: Yes, that it's wrong. That what you've said there is incorrect in light of the eligibility requirements that are set out in the Commonwealth's own scheme?‑‑‑I think we're comparing two different guidelines. Guidelines for an ADE and we're talking about a referral process to two different types of services.

PN3961

I'd also like to clarity what you say in paragraph 38 of your statement, please. Perhaps if I put to you a proposition and you can tell me whether I'm correct. Are you suggesting in that paragraph that the capacity of ADEs to job redesign and modify duties for its employees is inferior compared with the situation in open employment?‑‑‑I'm suggesting that it's different and the degree of scope is probably less. If what your job redesigner is going to do is say we will take off more complex tasks from the worker and assign them to another worker who perhaps doesn't have a disability and can absorb them, to then create a position explicitly for a person with lower skills, when virtually the bulk of your workforce is people with lower skills to begin with.

PN3962

Some evidence given by Mr Heath Dickens, do you know him?‑‑‑I do.

PN3963

His evidence was that a distinct difference between open employment and supported employment is that the task that supported employee undertake are modified to a far greater extent in order to cater for the employee's disability?‑‑‑I can accept that.

PN3964

Well is he wrong or are you right?‑‑‑I think we're talking different dimensions.

PN3965

Are we? It's a simple proposition?‑‑‑We're talking about an unemployment situation - - -

PN3966

VICE PRESIDENT HATCHER: Just don't talk over each other. Just finish your answer Mr Smith?‑‑‑I think in open employment we're talking about a situation where there's a predominantly non-disabled workforce doing a range of tasks and a DSS service comes along with a candidate who they believe can function in that environment and you can restructure a job by taking more complex tasks off a position to make it suitable for one worker and re-assigning those more complex tasks to members of the non-disabled workforce. In an ADE, certainly the jobs are redesigned but they're redesigned in a much broader context. You're coming in with a workforce that is predominantly people with disabilities and that influences the kind of work you seek which is different from the profit minded company which may begin differently. You're looking at the hours a person can work, you're looking at the skills of your disabled people and you will, as I've said elsewhere, you will try and get work that provides opportunities for the bulk of that workforce. And yes, they will be redesigned, but it's not so much by redesigning them to take off complex tasks to give to non-disabled workers, it's trying to find the work that was in their competence.

***�� MICHAEL SMITH�� XXN MR HARDING

PN3967

Just then talking about the open-employment example, is it your evidence that typically what occurs is that you might customise a role in open employment to reflect the person with a disability's particular requirements, is that right?‑‑‑Sorry?

PN3968

Is that right?‑‑‑Yes.

PN3969

Then in that way, you can allocate duties of a more complex nature to some other people who don't have disabilities, leaving the person with the disability to perform those other tasks?‑‑‑That's right.

PN3970

That in the ADE situation, you're in the end limited by the fact that your major workforce is disabled people?‑‑‑The bulk of the workforce is people with disabilities, for all of whom you are seeking to redesign jobs to make the opportunity available.

PN3971

Yes, but you would accept though, wouldn't you, that disability is necessarily variable?‑‑‑Absolutely, all people with disabilities are individuals and there are some people who can do very close to a standard job. I don't think anywhere in my statement I've suggested otherwise.

PN3972

I'm not asking you about the rest of your statement; I'm just asking you about this part of it. In the case of a person with a disability, you might have some with greater capacity to take on more tasks and some who have lesser capacity by virtue of the disabilities that they have?‑‑‑Mm-hm.

PN3973

It's right to say, isn't it, that the Commonwealth provides a scheme of funding. These are called the DMI levels. Is that right?‑‑‑That's correct.

PN3974

They range from 1 to 4 and an assessment is made of the person's work support need by reference to their work requirements. Is that right?‑‑‑That's correct.

PN3975

Bottom level of funding is level 1; top level of funding is level 4?‑‑‑That's correct.

PN3976

The ADE has the benefit of that funding to compensate for the circumstances of a particular person with a disability?‑‑‑Their support means.

PN3977

Is that correct?‑‑‑That's correct.

***�� MICHAEL SMITH�� XXN MR HARDING

PN3978

From paragraph 53 of your statement you give some evidence about the concept of what you call in 54, an earned wage and a paid wage?‑‑‑Mm-hm.

PN3979

Are you there talking about that as a general economic concept?‑‑‑No, well, I guess I am, but in terms of - you asked me earlier did I have research or publications that back this up. One of my great frustrations in my time in ADEs and services generally, is the absence of anyone who ever seems to have actually looked at this issue. I haven't been able to find in on internet searches or whatever. The same applies to reviews of the supported wage system, which seem to go as far as the assessment of the relative output and never look at the next step. As a result, I'm using terminology here, that I've had to come up with because of the absence of other research to draw on.

PN3980

Well, you're giving evidence as an expert. Are you saying that these concepts have an economic foundation in the literature?‑‑‑I can't say that because I can't find anybody who's done it. What I am saying is, and what I've tried to do in this is because of that absence, I'm trying to outline a scenario in as simple English as I can make it, that hopefully people reading will say, whether I'm an expert or not the actual concept of that seems reasonable. You know, it's up to others to judge whether or not it is.

PN3981

You've not offering it as an expert opinion really, you're just offering it as your opinion?‑‑‑I am offering it as my opinion, yes.

PN3982

If we can trip back to the previous paragraph in 53, you disagree with the concept of the SWS on the basis that you say it cannot legitimately be deemed to represent fair and productivity-based wages?‑‑‑That's my view, yes.

PN3983

That's your view, I can see that that's your view; you've written it. The basis for that view is that you don't accept that SWS is a true productivity measure. Would that be fair?‑‑‑That's my view.

PN3984

You distinguish between an earned wage and a paid wage in this way, and tell me if I'm wrong, obviously. An earned wage is what you might describe as a proper wage that reflects the contribution of the worker to the productive process, whereas the paid wage is what they can get by negotiation. Would that be accurate?‑‑‑That's fairly accurate I would think. I think there's some filigrees to that. But in broad terms I'd say that.

PN3985

In broad terms you accept that distinction?‑‑‑Yes.

***�� MICHAEL SMITH�� XXN MR HARDING

PN3986

Is it your evidence that the earned wage is a more valid measure of wages than the paid wage?‑‑‑No, I'm not making comment that one is more or less valid either side. What I'm suggesting is they may well be different and I think the issue of an earned wage brings in economic considerations and I've stated - so I'm saying that I would argue and others can judge on this, that if the production income generated by a person's production efforts is such that it doesn't cover the cost of their wages, I'm not sure how it could be defined as a productivity-based wage. If it does, it may well be. It then enters into the issue of other considerations which may be ethical, philosophical, ideological, that if you want to page a wage that isn't affordable from the income generated by the worker, so that the income is not coming in to pay for it; where does it come from? If there's a discrepancy, then surely the logical debate is to say well this is what the production generates; this what we want to pay, now let's have a sensible discussion how we will that out.

PN3987

Are you familiar with the way in which wage-fixing occurs by the Commission in relation to minimum wages?‑‑‑Broadly.

PN3988

You realise that the way in which the Commission fixes minimum wages is to determine the work value of the work and then to determine a rate of pay for the work?‑‑‑I may be wrong, but I also understood that the employers and the unions and the various parties produced evidence on factors and considerations that impact on that. Certainly, the unions, from what I've seen, frequently put forward the arguments about productivity. But if I'm wrong, I'll stand corrected.

PN3989

But you do talk about in 58, productivity as something that brings in legitimate costs associated with achieving the output of the work?‑‑‑Yes.

PN3990

Your conception of productivity is one that encompasses the costs of operating the business, is that right? Is that fair?‑‑‑The research that I did into the concept of productivity, and I looked at several reports and tried to find definitions of them, and there's a multitude of definitions depending on who you go to. But in almost every instance, productivity was defined in the context of efficiency and relationships between inputs and outputs. Whether it's input cost output values, whether it was the efficiency of the use of machinery, whether it was the efficient use of capital, but it was a relationship issue. I could not find any definition in any source that equated productivity solely with output.

PN3991

I'll point to a couple of places where it has been dealt with. If I can hand you, just for fairness, I'm handing the witness a decision of a Full Bench of this Commission. I won't take him to all of it, but just parts of the decision. I don't expect you to read all of this material. It's a decision by the Full Bench pertaining to a part of the Act which we're not concerned with, save that the Full Bench deals with the concept of productivity starting at page 248. Have you got that? Yes, you do?‑‑‑I do.

***�� MICHAEL SMITH�� XXN MR HARDING

PN3992

Paragraph 35 and it starts with a description of what United Voice is contending for by reference to some evidence from a Mr Cowgall, do you see that?‑‑‑I do.

PN3993

Turn the page, and the Full Bench extracts from that decision Mr Cowgall's evidence, namely to the extent that productivity is properly understood as the quantity of outputs produced per unit of input?‑‑‑Mm-hm.

PN3994

If I can take you to paragraph 39, there is a definition from the Productivity Commission and also the Commonwealth Treasury. If you want to read those, both of them seem to reflect productivity as a matter of input and output?‑‑‑That's all right. I think that's what I conceded earlier, that it was a relationship. It wasn't just output. I thought I conceded that, I'm sorry.

PN3995

In paragraph 45, the Full Bench states that:

PN3996

the conventional economic concept of productivity is the quantity of output relative to the quantity of input. Consideration of the price of inputs, including the cost of labour, raise separate considerations which relate to business competitiveness and employment costs.

PN3997

THE WITNESS: That's what it says.

PN3998

MR HARDING: Well, that's inconsistent with your view, isn't it.

PN3999

VICE PRESIDENT HATCHER: Sorry, your views expressed where?

PN4000

MR HARDING: Paragraph 58?‑‑‑My paragraph 58 as I read it, said that the SWS purports to be a productivity-based wage assessment tool. At no point in the SW Handbook and its associated guidelines, is the term productivity defined or directly considered. Instead the SWS methodology implicitly equates productivity with output (indistinct). I stand by my statement that productivity is normally assessed as a relationship issue and a measure of efficiency.

***�� MICHAEL SMITH�� XXN MR HARDING

PN4001

Yes, but you say that's invalid, don't you, because it ignores legitimate business costs?‑‑‑I'm saying it's invalid because it doesn't express a relationship. In terms of business costs, the reason I think it's a flaw, is a combination of that factor and the basic mathematical principle that if you are going to compare one with another, and what the SWS does, it comes up with an output which is your production, not your productivity, and a quantum figure, with a dollar figure for a wage. Now, mathematically, if you were going to do that, the wage the SWS works, is that it would only be valid if the dollar if that quantum of output equals the dollar value of wage. If you're then going to say 50 per cent of it, is 50 per cent, 40 per cent. If it isn't, then mathematically, it's invalid. That's the argument.

PN4002

The premise of that argument, Mr Smith, is that - as I understand your evidence, that it's invalid because that wage has been fixed on a basis that doesn't take into account the costs of running the business?‑‑‑The costs of producing the production.

PN4003

Well, the production is the ultimate product that is then sold by the business?‑‑‑Yes.

PN4004

Over which the employee has no control. They can't control the price at which the output is sold?‑‑‑I accept that fully. What I'm concerned about is my argument in that entire section of my report, is a sequential argument linking issues. You start off with one issue, which I'm saying is I don't believe that the definition of productivity is a definition of relative efficiency; it's just output. I then go on to talk about costs and I believe I've absolutely conceded that there's some pre-conditions, to be fair. That there must be a market for the goods, the customers must be prepared to pay a fair price, that the business is operating efficiently and a whole range of issues. If we take all of that as given, then you apply the mathematical principles of the SWS, I am saying there is a gap. The issue then is how we deal with that gap, and that is a matter I believe for the Commission to consider. I am simply trying to raise the issue that there is a gap.

PN4005

Mr Smith, you've come along to the Commission saying you're an expert in relation to these subjects and you've offered some evidence about flaws in the SWS methodology, principally on the basis that it's not a true productivity measure. Is that fair?‑‑‑That's correct.

PN4006

But your concept of productivity differs from the concepts of productivity utilised in its traditional economic sense?‑‑‑Perhaps it's a deficiency in me. I don't think so. I go back to my starting point that productivity is normally assessed as a relationship and an issue of efficiency. What I am saying is, when I read the SWS guidelines, the whole purposes of the assessment steps is to come up and say person A achieves production output of X, person B produces a production output of Y. You compare them, and that is productivity.

PN4007

What I'm suggesting to you, that that's a perfectly appropriate and economically conventional way of assessing productivity. Do you accept that?‑‑‑I disagree. But I disagree in the context of then translating that figure to a wage. But other people may think differently. My arguments are there for people to consider.

***�� MICHAEL SMITH�� XXN MR HARDING

PN4008

They're offered as arguments now; they're not offered as evidence?‑‑‑As I said I looked for material that I could use for that and I can't find any.

PN4009

Couldn't find any?‑‑‑Because as I've said, my frustration is that there's been multiple reviews of the SWS going back to the year 2000. The reviews stop as soon as somebody gets to the figure of relative production output. Now, if the next step is flawed, I would have thought somebody would - if they're doing a review of the SWS, somebody, just out of professional competence, if they're putting all of that to the test, might have put the next step to the test.

PN4010

VICE PRESIDENT HATCHER: What was the next step you were referring to?‑‑‑The bit where they take the relative productivity output and then looks at the wage translation step. It's just taken as given.

PN4011

It's taken as a given because it operates by reference to a pre-prescribed award wage. That is, the whole purpose of it is to give a percentage of what the award wage is. That's why it's a given, isn't it?‑‑‑Yes.

PN4012

I thought your point was that it doesn't properly relate the output to the unit input. That is a different question, is it?‑‑‑Well, partly that, and partly if you're looking at an ADE, and the whole first part of my paper was saying this is why it's different, and that it's not pure employment, it's a supported employment service, that that will have different cost structures. You look at it as the model, you look at those and you say well, does that work? Now, you deal with the problem at the end, I'm not professing to have the expertise to deal with. What I'm saying is I see a mathematical flaw and a mathematical gap - how do you solve it?

PN4013

DEPUTY PRESIDENT BOOTH: Mr Smith, I wonder whether you're saying this, and you may not be, so correct me if I'm wrong. When you apply the productivity measure to the award rate as the Vice President indicated, the dollar figure doesn't reflect the economic value created by the individual for that enterprise?‑‑‑Certainly I'm saying that.

PN4014

MR HARDING: But just taking on her Honour's question, value in that sense necessarily means value to the employer though, doesn't it?‑‑‑It means I'm talking about the economic value of the production output in terms of meeting the costs associated with producing it.

***�� MICHAEL SMITH�� XXN MR HARDING

PN4015

That's value to the employer, isn't it?‑‑‑It is, but it's also if the employer's role is to provide the employment opportunity, the employer must at least meet the costs of providing that, otherwise the employer is bankrupt. What I'm trying to say is, that for a person on a full award rate, the economic value of the production they produce has to pay not only their wage, but their wage entitlements that are on top and the other costs associated with providing that employment place. If you start at that and you say the production output of that person is X, from which there's a derived wage that's been determined through the Fair Work Commission process in determining wage rates and that wage is less than the total value of it, then you've got to look at the impact of the value of the wage when you're doing the pro-rata.

PN4016

But Mr Smith, you're describing the operation of a business. We're concerned here with the fixation of a minimum rate of pay?‑‑‑Mm-hm.

PN4017

Your description necessarily equates, doesn't it, the value offered by a worker to the value received by the business?‑‑‑Mm-hm.

PN4018

Yes?‑‑‑The value received by the business in order to provide that employment place, absolutely.

PN4019

Is the answer yes?‑‑‑Yes, but it's a symbiotic relationship.

PN4020

I understand that, but is the answer yes, to the proposition that I've just put to you?‑‑‑Yes, it's yes.

PN4021

Thank you, no further questions.

PN4022

VICE PRESIDENT HATCHER: Any re-examination, Mr Zevari?

PN4023

MR ZEVARI: No, your Honour.

PN4024

VICE PRESIDENT HATCHER: Thank you very much, Mr Smith, you're excused?‑‑‑Thank you.

<THE WITNESS WITHDREW�� [10.47 AM]

PN4025

VICE PRESIDENT HATCHER: I think Mr Donne is the next witness, so we might have to adjourn for a short period while we dial in Queensland.

SHORT ADJOURNMENT�� [10.48 AM]

RESUMED�� [10.57 AM]

***�� MICHAEL SMITH�� XXN MR HARDING

PN4026

VICE PRESIDENT HATCHER: Now we're taking the next witness by telephone. We have an appearance - Ms Brattey, are you appearing now for Endeavour, is that right?

PN4027

MS BRATTEY: I am your Honour, for today only.

PN4028

VICE PRESIDENT HATCHER: You're going to call Mr Donne as your witness today, is that right?

PN4029

MS BRATTEY: That's right, Andrew Donne.

PN4030

VICE PRESIDENT HATCHER: He's with you, is he?

PN4031

MS BRATTEY: He is.

PN4032

VICE PRESIDENT HATCHER: All right, so Mr Donne, are you there?

PN4033

MR DONNE: Yes, I am, Vice President, and the pronunciation is 'Don' just to clarify.

PN4034

VICE PRESIDENT HATCHER: I'm sorry, Mr Donne, all right.

PN4035

MR DONNE: That's okay, I'm not offended by that at all.

PN4036

VICE PRESIDENT HATCHER: Mr Donne, the court officer is now going to administer the affirmation to you.

PN4037

THE ASSOCIATE: Please state your full name and address.

PN4038

MR DONNE: Andrew John Donne, (address supplied).

<ANDREW JOHN DONNE, AFFIRMED�� [10.58 AM]

EXAMINATION-IN-CHIEF BY MS BRATTEY�� [10.58 AM]

PN4039

VICE PRESIDENT HATCHER: All right, Ms Brattey.

***�� ANDREW JOHN DONNE�� XN MS BRATTEY

PN4040

MS BRATTEY: Thank you. Mr Donne, to you have in front of you a copy of your statement?‑‑‑Yes, I have a clean copy of my statement and supporting documentation.

PN4041

Does that statement run to paragraph 150?‑‑‑It does.

PN4042

Does it have annexures 1 to 11?‑‑‑Correct.

PN4043

Mr Donne is there any corrections you'd like to make your statement?‑‑‑If I can draw the Commission's attention to AD1, there are two changes to our lists of Endeavour Foundation ADEs. The first one is in relation to our Bendigo service in Victoria where we are in the process of selling that business and while the sale hasn't been completed today, the likelihood that it will be completed over the next couple of days is relevant. Also, on the back page, our ADE at Maribyrnong also in Victoria we sold that business late last year and we've transitioned most of the supporting employees to other locations in Victoria. But as far as the rest of the evidence goes, I'm comfortable with the content.

PN4044

I seek to tender Mr Donne's statement, your Honour.

PN4045

VICE PRESIDENT HATCHER: The witness statement of Andrew Donne in the form that was filed on 2 February 2018, will be marked as exhibit 40.

EXHIBIT #40 WITNESS STATEMENT OF ANDREW DONNE DATED 02/02/2018

PN4046

VICE PRESIDENT HATCHER: Mr Donne, Mr Harding is going to ask you some questions now?‑‑‑Thank you.

PN4047

Please tell us if you can't hear him properly?‑‑‑Yes, if that's the case.

CROSS-EXAMINATION BY MR HARDING�� [11.00 AM]

PN4048

MR HARDING: Mr Donne, can you hear me. It's Malcolm Harding here?‑‑‑Yes, Mr Harding.

***�� ANDREW JOHN DONNE�� XXN MR HARDING

PN4049

Thank you. If I can take you to your statement. Can I just clarify, paragraph 10 of your statement you refer to the types of person who you have - the types of disabilities that your service or your various ADEs employ, and there's a range of disabilities there. Is it correct to say that all of those people have intellectual disabilities, notwithstanding the other disabilities that they might have?‑‑‑Look, 98 per cent of our supported employees have an intellectual disability. We do have some vision impaired people and some people with physical disabilities. However, the vast majority of the people employed at our ADE operations are people with intellectual disability covered under those categories as listed in point 10.

PN4050

In paragraph 13, you talk about the range of work that's undertaken and the capacity of individual employees. You see that? You give examples - are you able to still hear me? There's a bit of static on my end, Mr Donne?‑‑‑No Mr Harding, I can hear you loud and clear.

PN4051

The range of capacities you've got, you say employees who've got the capacity to drive trucks, forklifts or supervise production teams, while other supported employee may be able to undertake very straightforward tasks?‑‑‑Correct.

PN4052

You've got some employees, because of their capacity are able to do supervisory work and do the functions of trucks and forklifts, and some who've got very basic skills and you can only apply them to very basic tasks. Is that a fair assessment?‑‑‑That's a fair assessment. In terms of the percentages though, it's a very low percentage of the people that are capable of doing the high performing tasks and a very high percentage of our employees that unfortunately only have the capacity to do the lower level tasks.

PN4053

I think you give some evidence of that at paragraph 66, don't you, in term so the levels of Greenacres that you pay at?‑‑‑That's correct. The table there covers the percentage of people under the Greenacre assessment at the six different and five different levels.

PN4054

You give an example of at level E, a worker whose able to or does drive a forklift and at level A, someone who paints?‑‑‑Paints a peg.

PN4055

Yes, paints a peg. Can I take you to paragraph 38 of your statement that's where we've just been discussing the two examples that you've mentioned and can I ask - as I understand this evidence, the way in which you operate the Greenacres tool, is that you first allocate tasks to wage levels? Is that an accurate assessment?‑‑‑The way we operate the Greenacres tool, is that when a supported employee joints the organisation, they will - the first thing is to go onto our training and support level for a 13 week period and during that period, we will work with the supported employee to determine what skills or additional training or support that they will require to enable them to transition into the respective A, B, C, D or E levels.

***�� ANDREW JOHN DONNE�� XXN MR HARDING

PN4056

But you say - the first sentence of paragraph 38 is 'Each task is allocated a wage level'?‑‑‑Correct.

PN4057

The task of painting a wooden peg is allocated to level A?‑‑‑Level A with the Greenacres tool there are three measures. There is the task skill, the underpinning work skill and of course the productivity. The task skill associated with painting a peg, would be classified under level A.

PN4058

Is the answer to my question that that's correct? You allocate that task to wage level A?‑‑‑For painting a peg, yes.

PN4059

You allocate the task of driving a forklift to wage level E?‑‑‑Potentially, depending on whether or not the supported employee meets the relevant measures under the underpinning work skills or the task skill associated with driving a forklift. A person may be driving a forklift that may not necessarily be in task level E, because they don't meet the relevant underpinning work skills which may relate to workplace health and safety or quality standards or behaviour in the workplace.

PN4060

You might have someone actually doing the work of a forklift, but being paid less than level E because of your assessment of their knowledge of occupational health and safety, for instance?‑‑‑We wouldn't - occupational health and safety is a key element of our workforce because the high risk nature of it and the requirements to focus on safety in the workplace for employees, because they are high risk. It would be very unlikely that someone would be driving a forklift without a complete understanding of workplace health and safety guidelines in the workplace.

PN4061

I understand that that's probably, but just sticking with the example, there is a level of individual assessment in order to determine which wage level a person is placed, regardless of the task they're performing. That's accurate, isn't it?‑‑‑The task they're performing is relevant to their capacity under the respective wage levels. Both the underpinning work skills and the task skills. So, we don't necessarily say just because you're a forklift driver you go to level E. If you don't meet the relevant task skills or underpinning work skills in level D for example, you wouldn't progress to level E.

PN4062

So, what I put to you is correct. You also assess the individual by reference to these underlying work skills and task skills in order to determine which wage level they're in, regardless of the task they're performing?‑‑‑That's correct. They task they're performing will be dependent on their success in meeting the requirement of key competencies whether task skill or underpinning work skill. We don't allocate a specific job to a specific wage level.

***�� ANDREW JOHN DONNE�� XXN MR HARDING

PN4063

I though you did. I thought that's what your evidence was in paragraph 38. 'Each task is allocated a wage level' is what you say?‑‑‑The tasks, if you go to the evidence, I think it's AD5 that looks at the way the tasks are allocated, they're the skills the person would need to have in place in order for them to be operating at the relevant wage level.

PN4064

I just want to clarify this, because I'm a little confused. Because when I look at these tasks and these skill levels and task skills, the language that's utilised is language of individual assessment, of an individual worker. Would you agree with that?‑‑‑Could just repeat that question again, please.

PN4065

The language that's utilised in the task skills and underpinning work skills, is language that's consistent with an assessment of an individual worker?‑‑‑Correct.

PN4066

An assessment is made of their task skills and underpinning work skills and your evidence is that you could be performing a task that would normally attract a wage level of E, for instance, but actually be paid at the level prior because on an individual assessment, say their underpinning work skills don't meet that level?‑‑‑That's correct.

PN4067

We've just been talking about the example of a forklift - a person who's driving a forklift and I think your evidence was that there's only a few people in the organisation to be capable of doing that, but under the modern award, the operation of forklifts, is graded at level 3. Are you able to explain why you grade it at level 2 and at wage level E?‑‑‑If you look at my evidence, I think I say somewhere that the majority of our - just referring to it - it you go to point 64 Mr Harding. I've said wage assessments are conducted annually for employees. The assessment determines the percentage that applied to grade level 2 rate at clause 14.2 of the award. Grade 2 of the award is relevant to the majority of tasks undertaken by the supported employees who work at Endeavour. We actually do have supported employees who are graded level 3 and people driving a forklift would fall into that category.

PN4068

But I thought you said in paragraph 38 that they'd be classified at wage level E. That's wage level E of the Greenacres tool, isn't it?‑‑‑The Greenacres tool is level E, but once they progress past wage level E, they move onto the supported wage system.

PN4069

Which is?‑‑‑As I said those people would be paid under grade level 3.

***�� ANDREW JOHN DONNE�� XXN MR HARDING

PN4070

VICE PRESIDENT HATCHER: Mr Donne, to be clear about this, the Greenacres tool only applies at level 2 tasks, doesn't it?‑‑‑I'm not aware - I don't know how to answer that question. As I say, we do employ people on grade level 3, so I'm assuming that they would still be applicable to the Greenacres wages tool.

PN4071

You can apply the Greenacres tool a grade 3 employee under the award?‑‑‑Yes, when I look at our pay structure and our rates of pay, we do have people classified under grade level 3 and the relevant percentages that we apply as per the table in the evidence I provided, the relevant percentages apply to that grade 3 level.

PN4072

But the actual forklift drivers you have, are they then assigned a Greenacres level, or are they then assessed under the SWS?‑‑‑The majority of them would probably be assessed under the SWS, but as I said before, if they didn't meet the underpinning work skills in relation to level E, they would probably still be operating on the Greenacres tool.

PN4073

But just staying with forklift drivers, how can you allow someone to operate a forklift if they didn't have the underpinning work skills. That is, you wouldn't let them in the first place, would you?‑‑‑Well, various parts of the underpinning work skills relate to vocational functions of the role. One of those might be punctuality, one of those might be working as a team, one of those might be relationship with your peers. If you're assigned and turning up two hours late from work every day and we need you there at 7am, it's unlikely that we would continue to utilise you as a forklift driver because you're not meeting the punctuality standards we would expect.

PN4074

Thank you.

PN4075

MR HARDING: Just following on from that, you say it's unlikely you wouldn't use them as a forklift driver, but if you do use them as a forklift driver, how does that reconcile with your evidence that they could be driving a forklift and still be being paid at the lower wage level by reference to their underpinning work skills?‑‑‑As I said, the way the tool operates, is that if they don't meet the relevant competencies under the underpinning work skills they don't transition to the supported wage system. However, they may be paid at the grade level 3 given the Greenacres tool.

PN4076

Can I draw your attention to paragraph 64 of your statement? You're talking about there:

***�� ANDREW JOHN DONNE�� XXN MR HARDING

PN4077

Wage assessments are conducted annually for all supported employees. The assessment determines the percentage which is applied to the grade 2 rate contained at clause 14.2 of the award.

PN4078

Is that wrong in light of your evidence?‑‑‑If we go to the final sentence:

PN4079

Grade 2 of the majority of tasks undertaken by the supported employees who work at Endeavour.

PN4080

THE WITNESS: We do take people under grade 3 and the forklift drivers would be potentially one of those groups of people.

PN4081

MR HARDING: Whilst I've got you there on page 9, the paragraph prior to that, paragraph 63 deals with the position of those who are at the advanced level and maintain that for 12 months. You say in that situation Endeavour no longer uses the Greenacres tool and the supported employee transitions to the SWS tool. Is that a correct statement of your evidence?‑‑‑That's correct.

PN4082

Why 12 months?‑‑‑We need to ensure that the supported employee meet the standard over a period of time.

PN4083

Why 12 months?‑‑‑To ensure that the supported employees meet the relevant standards in terms of both task skills and the underpinning work skills. It would be remiss of us to place a person on a forklift and start paying them the rate if they didn't meet all the relevant workplace behaviours or skills required to drive that forklift.

PN4084

Why do you need 12 months to make that assessment Mr Donne?‑‑‑That's the period of time that's set out under the wages tool.

PN4085

It's entirely arbitrary, isn't it?‑‑‑Well, as I say, we're following the guidelines for the wages tool in relation to that.

PN4086

Well, would you accept the proposition that I've just put to you, that it's an entirely arbitrary number?‑‑‑We think 12 months works very well for us to ensure that the driver that we're giving the responsibility of driving a forklift, meets all the relevant safety standards and workplace behaviours that we think are appropriate for that person to drive a forklift.

***�� ANDREW JOHN DONNE�� XXN MR HARDING

PN4087

But you have no specific evidence you can offer the Commission that justifies that number is appropriate for all employees though, do you?‑‑‑Apart from the fact that it's contained in the guidelines of the wages tool, no.

PN4088

Is it the case that after that 12 month period the employee automatically transitions to the SWS?‑‑‑Providing they meet the relevant standards under wage level E. Then we have an independent assessor from Job Access who are an approved SWS assessor to come in to determine the rate of pay under the SWS tool.

PN4089

Is the answer to my question, that provided they continue to meeting level E standards for 12 months, if they do, after 12 months, do they automatically transition to the SWS?‑‑‑To my knowledge, yes.

PN4090

Because, can I take you to the exhibit which I think is AD3 and as I understand AD3, this is an internal procedure the Endeavour Foundation utilises?‑‑‑Correct.

PN4091

To determine the quality procedure and this is intended to guide the operation of the Greenacres wages assessment in Endeavour Enterprises, is that right?‑‑‑Correct.

PN4092

If you can turn to page 10 of that document please, there's a heading 6, Progression to Supported Wages System?‑‑‑Yes.

PN4093

It starts by saying when the TDA - what's a TDA?‑‑‑Training Development Officer.

PN4094

That's an employee of Endeavour?‑‑‑Correct.

PN4095

Identifies that a supported employee has been assessed at performing at level E tasks to an advanced level. This is brought to the attention of the EFI manager. Who is the EFI manager?‑‑‑Endeavour Foundation Industries manager, responsible for that particular service.

PN4096

It's then subject to that person's approval to progress to a SWS assessment?‑‑‑That's what it says.

PN4097

That's what it says, but then it goes on to say 'In the first instance, progression of the SWS is at the discretion of the manager'?‑‑‑Correct, that's what the paragraph says.

***�� ANDREW JOHN DONNE�� XXN MR HARDING

PN4098

It's inconsistent with it being automatic?‑‑‑That's a point that we need to take on task to address that particular paragraph.

PN4099

Are you saying the paragraph is wrong and should be changed?‑‑‑The second paragraph, yes. It should be changed to reflect what we spoke about in relation to the previous point.

PN4100

Bear with me for a moment, please Mr Donne. Can I take you to the previous page, or a couple of pages prior to that, if you've still got the quality procedure in front of you. On page 6?‑‑‑Yes.

PN4101

Is a description of how the Greenacres tool would be applied and I'm asking you these questions because you've conceded that one of the paragraphs in this procedure is wrong, and I just want to make sure that there aren't any other problems. There's an example here for a supported employee working on a skill level B job, with advanced level productivity on a full time basis. They must make 80 per cent of the UWS, that's underpinning work skills, is that right?‑‑‑Correct.

PN4102

For skill level B and 100 per cent of the underlying work skills for skill level A, to receive skill level B pay rates, yes?‑‑‑Correct.

PN4103

Is that accurate?‑‑‑It's actually - it should read 80 per cent of the tasks skills, not underpinning work skills.

PN4104

That's another error. Is it right though, that you've got a worker whose performing at an advanced level of productivity but you would still discount their wages. My reference to their underpinning work skills, notwithstanding that the business is getting the benefit of that productivity?‑‑‑The productivity is not the only measure that is important to us. The productivity might be for a short period of time. That person may be disruptive in the workplace, that person may have behavioural issues that we need to spend time on training that person to behave appropriately in the workplace. He might need some specialist support behaviour to do that. While the productivity is one measure, it's not the only consideration that ADEs or employment organisations, regardless of whether or not they're supported employment or main stream employment, take into account.

***�� ANDREW JOHN DONNE�� XXN MR HARDING

PN4105

If they're disruptive and going off task, that's going to affect their productivity because they're not working when they're doing those things?‑‑‑That's correct. In an open employment situation, that would be tolerated once or twice and that person would be terminated, but in supported employment we actually receive funding to assist with improving the behaviour and reformed supported employees and that's where we would focus.

PN4106

You get some funding to assist them to improve their behaviour which assists in increasing their productivity. It follows, doesn't it?‑‑‑Not necessarily.

PN4107

I suppose the object is to assist in increasing their productivity whether it necessarily results in that on every single occasion may be dependent on the individual?‑‑‑No, it may also be to assist them with the quality of their own particular life. It may assist them managing some of the challenges outside the workplace, it may assist them with financial management, it may assist them if they've been the subject of some form of abuse in the community. It covers a whole host of different areas.

PN4108

I understand that, but going back to your example, I think you said that if a worker in open employment or non-ADE employment was performing in the way that we've just been discussing, the likelihood is that employment might be brought to an end?‑‑‑Right.

PN4109

In the circumstance where you're dealing with productivity, it's correct to say, isn't it, that if a worker is behaving in ways that distract them from performing their duties their productivity will be low, or lower?‑‑‑That's correct.

PN4110

If they're performing work and that's work that Endeavour values in the sense that that's what it wants the worker to do; their productive?‑‑‑That's the objective.

PN4111

In which case, if a worker is productive in the way that we've been describing it, is it correct to say that Endeavour would still discount their rate of pay by reference to other criteria underpinning work skills, regardless of the productive output they're generating for Endeavour?‑‑‑The Greenacres wage tool covers three components. It's productivity, it's the task skills and it's the underpinning work skills. The rate of pay is based on performance around those three criteria.

PN4112

I understand that's the way the tool works, but I'm just asking you at a factual level, as a fact, if a worker is performing productively and Endeavour is receiving the benefit of that productivity under the tool, a further discount in wages would be affected if they didn't meet the underpinning work skills for that level. That's a fact, isn't it?‑‑‑That's correct, yes.

***�� ANDREW JOHN DONNE�� XXN MR HARDING

PN4113

Then down the page, there is a discussion of different treatment if there's a BSWAT assessment and the worker is working at skill level B. Can you explain why the BSWAT employees, if they had been assessed on that tool, would be treated differently?‑‑‑I'll just read the paragraph, so just bear with me. When we transitioned from ISWAT to Greenacres, we made a commitment not to lower the wage rates of any supported employee based on the Greenacre assessment. What we're saying here is the person who may have transitioned under BSWAT to Greenacres will still be paid at the same rate regardless of the Greenacres assessment.

PN4114

Is it the case that Greenacres reduced your wage costs or increased them?‑‑‑When we transitioned to Greenacres, in the 2015, 2016 year, our average wages for our supported employees went up by 14.9 per cent.

PN4115

You were able to sustain that?‑‑‑Well, not form a profitability perspective. We've documented there, I mean, we're struggling from a financial perspective at present.

PN4116

But you accept, wouldn't you, that we had two tools in the award both of which at the time BSWAT was in the award, enabled an employer to choose whether they wanted to be assessed under BSWAT or whether they wanted to assess wages under Greenacres. An employer could choose which one they preferred?‑‑‑Yes, when the wages tool - when the Federal Government reform process 2005 came in relation to ADEs, Endeavour chose the BSWAT, we chose that for two reasons. First of all because it was an independent assessment carried out by third parties, and the second was that it was the government-owned tool and we thought we would stick with what the government had produced because we put more faith in the government assessment, as opposed to seeking to develop our own tool at that particular point of time.

PN4117

That description applies to the SWS, doesn't it?‑‑‑In terms of the external assessment, yes. I don't have a problem with external assessments with the exception of the SWS. I would be quite happy for the government to fund an external assessment of our supported employees utilising the Greenacres tool. It would save a considerable amount of money from our perspective and it would also produce an unbiased result.

PN4118

Do you accept therefore, that there's a potential for bias when you're doing internal assessments which is eradicated if there is an external assessment?‑‑‑I would be very surprised if there was any bias directed towards any of our supported employees. The fact that our wages grew by 14.9 per cent when we transitioned to the Greenacres tool, would suggest that there is absolutely no bias. I mean, people who undertake the assessments are there for holistic reasons. There is no benefit for any individual or the organisation by trying to reduce a person's wage assessment.

***�� ANDREW JOHN DONNE�� XXN MR HARDING

PN4119

I understand that. But you would accept, wouldn't you that there's a problem inherent in the award where you could have a situation where an employer could choose one tool sanctioned by the award at one moment, and then select another tool which produces a 14.9 per cent difference in the minimum wage?‑‑‑It's not minimum wage. It's 14.9 per cent in the average wages that we paid our support employees when we transitioned to the Greenacres from BSWAT.

PN4120

Yes, that's right, but of course the tool assesses, determines how much of the minimum wage is paid?‑‑‑The tool, that's correct, yes.

PN4121

In which case you could have one tool namely BSWAT, which produces one rate of minimum wage and another tool which produces an entirely different, higher minimum wage. That's your experience, isn't it?‑‑‑That's the way the tool works, yes.

PN4122

That's Endeavour's experience, isn't it?‑‑‑Correct.

PN4123

VICE PRESIDENT HATCHER: Mr Donne, do you think it would be a desirable objective for whatever assessment method you use, that they, as it were, produce the same outcomes across the board for people doing equivalent tasks with equivalent levels of disability?‑‑‑No, that's definitely not the case, the reason being that when we receive a job into Endeavour, we deconstruct that job and then we reconstruct it on the capability of our workforce. If the same job was sent to two different ADEs, there would be different configuration for the supported employees in terms of both their capacity and productivity. Then an organisation would deconstruct and then reconstruct the job based on the workforce that they have on hand.

***�� ANDREW JOHN DONNE�� XXN MR HARDING

PN4124

I understand that, but let's assume you have a particular deconstructed task done by a person with a certain level of disability. It would be a desirable objective, would it not, that whatever method is used, it results in the same pay outcome, not that there could be two different pay outcomes depending upon which tool the employer happens to choose?‑‑‑The way it works, and an everyday example of this, would be the situation that we saw at the Mt Druitt facility last Tuesday week where we witnessed the support employee's packaging the pappadams. On one line there was I think five people and on the other line there was seven people and if you were to look at that, you would say well, that seems a bit strange, why don't you have six people on both lines. The answer to that is on closer inspection, on the line that was down the end which was closest to me where the seven people were, the first half for the individual was to pick the carton up out of the box, compress it and put it onto the belt where it went to the next person who inserted the pappadam onto the carton. He put it on the belt. Then it went to the third person who sealed the carton by closing the tabs. She put it on the belt and it went down the belt to be stickered and labelled and place into another carton. Whereas on the belt adjoining, the first person on the line was a lady. She picked the carton up, compressed it, inserted the pappadam and also sealed the tabs. So, on one production line we had three people doing an individual job and the reason why they were doing the individual job, is because they didn't have the motor skills or the physical dexterity to be able to close the tabs or insert the pappadam. Whereas, on the other line, we had the one person doing the three jobs. Trying to introduce a productivity-based tool, based on that scenario, just doesn't work.

PN4125

I think I was trying to put a different proposition. I'll try this one more time, Mr Donne. Let's say on your pappadam line you have a person Mary, who's doing a particular deconstructed task in the way you've described it, and it may not be the same task as anybody else in the line, but it's a particular task. It would be a desirable objective that there is one pay outcome produced by the award for Mary, not that Mary could get a different pay outcome depending upon which tool the employer chose to use. Do you accept that?‑‑‑That would be desirable in a perfect world, yes.

PN4126

Thank you.

PN4127

MR HARDING: Mr Donne, you've given some evidence about the evaluation you say of the SWS tool that has been undertaken but you have a small number of employees for whom you utilise the SWS, that's correct, isn't it?‑‑‑Correct.

PN4128

You haven't done a general overall costing of what it might cost to introduce the SWS across the whole workforce, have you?‑‑‑We utilise that data based on the SWS trial, I think in 2016 and we've amortised that data across the entire network. But I mean the costs associated with the inconvenience of doing a trial on 2330 support employees wouldn't be practical as part of a trial process.

PN4129

So, you haven't done it?‑‑‑We've done it on 20 people and amortised that result over the workforce. Given that 75 per cent of the work that we do is consistent with the work that was undertaken at the two trial sites, I am very comfortable that that would extrapolate to what the true cost of implemented the supported wage system to Endeavour would cost.

PN4130

That trial you're referring to, I think is commonly referred to as the ARDT trial, would that be consistent with your understanding?‑‑‑Yes.

***�� ANDREW JOHN DONNE�� XXN MR HARDING

PN4131

You've given some evidence in paragraph 95 about some concerns that you have if the SWS was the mandated tool. The first one in (i) is questions remain about whether the assessment could or should take into account the range of complexities of duties and tasks undertaken by the employee and the relevance of support and supervision the employee needs.

PN4132

You're not an SWS qualified assessor, are you?‑‑‑No, but this is information that was taken straight out of the ARTD report.

PN4133

So, you're relying on that report?‑‑‑That's correct. That was the Federal Government funded report.

PN4134

Yes, and there's some evidence been given that in an SWS assessment, supervision is excluded from the measurement of an employee's productivity. Does that satisfy your concern?‑‑‑Could you repeat that statement please?

PN4135

There's been evidence given that in conducting an SWS assessment, the supervision is excluded from the assessment of an individual's productivity. Does that satisfy your concern?‑‑‑I'm not sure where the relationship between supervision and the SWS award.

PN4136

Well, you said in (i) and I know you're referring to the ARDT report, the last part of the sentence is 'and the relevance of support and in supervision to employee needs'. Maybe I've read that wrong, but I thought that you were saying here, that there's some concern about whether the support and supervision provided to employees distorts the productivity outcome that might be given for an individual employee. Is that your concern?‑‑‑I've reiterated what was said in the report in relation to all of bullet point 95.

PN4137

You're reiterating them; I presume you share those concerns. Do you or don't you?‑‑‑I'm just rereading the point. Well, I think what they're referring to here is applicable to actually one of the trials that we undertook where a support employee actually got up and left the work station as part of a trial. So, without the supervision there to redirect the person back to continue with the trial, I think that's where the issue is.

PN4138

There's evidence that in both situations, namely where the employee left the work station that that would be excluded from their assessment and that the supervision would also be excluded from the assessment. Does that satisfy any concern you have about the distorting results of both those scenarios in the assessment of productivity?‑‑‑Yes, in relation to that the productivity assessment for that particular employee wasn't taken into account when they left the work station.

***�� ANDREW JOHN DONNE�� XXN MR HARDING

PN4139

In which case, their productivity would not be affected by the fact that they left the work station?‑‑‑Well, it would be because they're there to do a job and if they are constantly getting up and leaving the work station, of course their productivity is going to be impacted.

PN4140

Their productivity might be affected, but that means that they'll have a lower rate of pay, according to the productivity measure that's adopted by the SWS?‑‑‑Yes, for the trial and the information in the ARTD report too, where I think 65 per cent of the people involved in the trial, didn't support the productivity measure was an accurate account of what actually took place.

PN4141

I'll have another go. All I'm talking here about is the rate of pay that Endeavour ends up having to pay, yes? Just focus on that issue. If in assessing productivity a worker who is doing a job walks away and the clock stops so that it doesn't come into the assessment of productivity, that will ensure there's a lower rate of pay than if the clock hadn't stopped. Do you agree with that?‑‑‑No, if the clock stops and starts again when the employee comes back that will ensure a higher level of productivity because it won't be registered for the time that they are away from the job.

PN4142

Yes, well maybe I'm expressing the question incorrectly. But if you have a situation in - well yes, you're right. I think the evidence in fact is, that the clock remains, in which case that going off task means that it's part of the person's productivity in which case it's taken into account in the assessment of the wage?‑‑‑But this is where the underpinning work skills comes into play, because if a person is constantly doing that, walking off the job, as part of the underpinning work skills, we will identify that as a training opportunity to ensure that the person stays on the job to improve the productivity and ultimately to improve their wage level.

PN4143

I'm sure that's right and no doubt very desirable, but we're only here interested in the burden of wages that Endeavour will have to pay. Do you accept that?‑‑‑I don't understand your comment in relation to the burden of the wages Endeavour have to pay.

PN4144

VICE PRESIDENT HATCHER: Mr Donne, can I jump in here. I think what's being put to you is that if you have a worker who often goes off task and wanders away, then if the clock starts running, so that period of absence counts in the calculation of productivity for SWS purposes?‑‑‑Yes.

PN4145

Then that is a proper reflection of the problem with that employee's work skills?‑‑‑Correct.

***�� ANDREW JOHN DONNE�� XXN MR HARDING

PN4146

That is, if they're there for eight hours, but they're only actually working for four, as long as you take into account the four hours they did nothing, that will adequately measure the worker's productivity?‑‑‑Correct.

PN4147

Does that serve as another way of what you deal with under the Greenacres model of assessing work skills, that is, under the Greenacres model, you give them a discount if they don't meet the requisite work skills, but it could be done in another way by assessing the time lost in the productivity count?‑‑‑In the actual assessment that took place as part of the trial, we actually stop the clock for that person when they went away. So, we didn't actually measure their productivity for the period of time that they were away from the trial.

PN4148

But if you hadn't stopped the clock, and counter that dead time in the productivity, that would then capture the problem with that person's work skills. Do you agree with that?‑‑‑Yes. So, their productivity probably would have been lower, but we would have identified that there was an opportunity then to work with that employee to keep them on task. That's the beauty of the Greenacres tool that's not available under the SWS. There's no opportunity for us to focus on - if the ultimate aim is to improve the productivity, workplace behaviour is a critical part of that. But the SWS doesn't enable us to focus in on those areas of opportunity or the areas of training to help support an employee actually improve their productivity.

PN4149

MR HARDING: Isn't the difference though, Mr Donne, that that opportunity that you've just described, is taken into account under the Greenacres tool in a way that reduces the wages of the worker?‑‑‑It gives the opportunity to actually, in the long term, improve the wages of the worker by focussing on areas of opportunity for improvement.

PN4150

It might be in the long term, but let's just focus on the short term when you're actually having to come up with a rate of pay that you pay the worker. Isn't it the effect of your evidence that it leads to a wages discount for that worker?‑‑‑Well, no, because in this particular example that we're talking about, the wage rate wasn't reduced to the fact that the person walked away from the work station during the analysis. In the case of any wage assessment, if the same thing took place, the clock would be stopped as well, but once the wage level is put in place, and the supported employee does walk away from the work station, that's when the productivity starts to decline, however, we still pay the supported employee the rate of pay that they were assessed at as part of the trial period.

***�� ANDREW JOHN DONNE�� XXN MR HARDING

PN4151

I'm just wanting to focus again on the specific sort of example that we've been discussing. We're talking about a worker who walks away, the clock continues, it doesn't stop as I earlier suggested, so that means if a non-disabled worker can perform the task in one hour and the fact that the worker who wanders away performs it in two hours, then that would results under the SWS in 50 per cent of the minimum wage?‑‑‑Can we just go to - so this is evidence AD9 that we're referring to, is that correct?

PN4152

No, no, I'm just asking you a question. Just asking you a question?‑‑‑In this particular case the trial period - if I can take you to AD9, if you'd like to look at it, because it's what we're talking about.

PN4153

VICE PRESIDENT HATCHER: Mr Donne, I think Mr Harding is just asking you a question. So, can I ask you to sort of listen to that question and see if you can answer it?‑‑‑Right.

PN4154

Mr Harding, ask the question again.

PN4155

MR HARDING: Can I just ask you to put the statement down for the moment, Mr Donne. Just put it down?‑‑‑Okay.

PN4156

All I want you to focus on is the question that I've asked, and the question is this. If you've got a non-disabled worker who performs a task in one hour and then a disabled worker, who because of the fact that they walk away from the work station, performs the task in two hours, under the SWS that results in 50 per cent of the minimum wage. Do you accept that?‑‑‑Yes.

PN4157

In which case, the fact that they've walked away from the work station, is captured in the assessment of their wage?‑‑‑Yes.

PN4158

In the example that we've been discussing, Endeavour's obligation to that employee would be only 50 per cent of the minimum wage, by reason of the worker's particular behaviours?‑‑‑That's based on a 50 per cent situation. The maths work very well. I mean, if it was a different figure - - -

PN4159

Mr Donne, do you accept the proposition I've just put to you, or do you reject it?‑‑‑I'd like to answer the question in my way if that's okay.

PN4160

No, just answer the question I've put to you.

PN4161

VICE PRESIDENT HATCHER: Well, give the answer and see how we go?‑‑‑Give my answer?

***�� ANDREW JOHN DONNE�� XXN MR HARDING

PN4162

Yes?‑‑‑If a supported employee paints 60 pegs in one hour and they're assessed at 70 per cent. An abled bodied person paints 180 pegs in an hour. The able-bodied person will be paid at the full award rate. To get to 180 pegs for the supported employee, they are paid three times 70 per cent of the rate which is 210 per cent of what the able-bodied person is being paid. So, the cost associated with painting 180 pegs if we used an abled bodied person would be the award rate, but it would be three times the cost based on 70 per cent productivity assessment for a person with a disability. So, the cost associated with employing the person with a disability are far greater in a productive output perspective than for an able-bodied person, which is why if we went to the SWS, it would lead to substantial job losses.

PN4163

MR HARDING: I don't get your maths.

PN4164

VICE PRESIDENT HATCHER: Mr Donne, why would the person be assessed at 70 per cent if they had one third of the productivity?‑‑‑Because if they were assessed at 70 per cent and they did 60 pegs in an hour, the able-bodied person did 180 pegs in an hour, that's where the third comes in. So, for them to do 180 pegs, they would take three hours. Do we agree with the maths there?

PN4165

I don't understand where the 70 per cent assessment comes from Mr Donne?‑‑‑That's the 70 per cent that would have been assessed under this particular trial. So, this person was assessed at 70 per cent. Their productivity was assessed at 70 per cent.

PN4166

MR HARDING: They were assessed at 70 per cent and doesn't that result in 70 per cent of the minimum wage, that's the assessment?‑‑‑That's correct. But the number of pegs that they did was only 60, whereas the able-bodied person did 180, so the cost per peg is significantly higher from the supported employee than it is to the able-bodied person.

PN4167

VICE PRESIDENT HATCHER: Mr Donne, is this an actual factual scenario, or is this hypothetical?‑‑‑This is taken straight off the trial undertaken by ARDT. It's evidence AD9.

PN4168

But that suggests the benchmark was wrong in the first place, that is if somebody was only doing one third of the productivity, the benchmark for standard performance must have been wrong in order for them to have been assessed at 70 per cent?‑‑‑Well, the SWS assessors, assessed that person at 70 per cent, even though they were only doing one third of the productivity and that's why the SWS is not appropriate.

***�� ANDREW JOHN DONNE�� XXN MR HARDING

PN4169

MR HARDING: But aren't you drawing too much from that? I mean there clearly must have been a flaw in the assessment. If that's the case, that's not a necessarily a flaw in the design of the whole system, is it? It's just the subject matter for a dispute?‑‑‑No, well it actually relates to all 20 of the assessments that were undertaken. It's also supported by the commentary in the ARDT report that said 65 per cent of people were not happy with the way their productivity was calculated.

PN4170

In which case, the complaint is with the manner in which the assessment was conducted?‑‑‑We don't know that. I don't agree with that. I think that it's in relation to the way the SWS calculates the level of productivity?‑‑‑Are we clear on the maths because it's a really relevant point.

PN4171

VICE PRESIDENT HATCHER: Mr Donne, I think the point we're not clear on, is how SWS came up with the 70 per cent figure?‑‑‑It's part of the trial. We sent trained people out, so the ARDT report says that staff weren't trained. Our staff went to South Australia to do the SWS training before they undertook it. The trial involved a qualified SWS assessor and a trained Endeavour employee. So, they assessed the productivity of the 20 people across the two services. If one assessor assessed the productivity at 70 per cent and one of the other assessors assessed it at 60 per cent, they agreed that the productivity as per the trial would be 65 per cent. So, the actual data that I'm referring to here relates to the actual Federal Government Funded trial of the particular supported employee. It's hard evidence.

PN4172

MR HARDING: On your example, wasn't it the case that - this is all premised on the fact that the number of pegs being produced by the supported employee was lower than what the productivity figures suggested?‑‑‑The data is there. They produced 60 pegs over an hour and five minutes. The data is there in the table.

PN4173

Am I correct - just getting to your complaint. Your complaint is here, that the productivity that was assessed for that worker was wrong. That's your complaint, isn't it?‑‑‑Well, the SWS trial, the use of the SWS tool produced that wrong productivity analysis.

PN4174

The assessment produced that analysis and you disagree with the assessment?‑‑‑No, the tool that was used produced that assessment and I disagree with the assessment.

***�� ANDREW JOHN DONNE�� XXN MR HARDING

PN4175

Can I just take you to paragraph 106 of your statement. The concern I think you're identifying here is that there could be a situation of the SWS where a more capable supported employee undertaking a more complex task is paid less than someone who is performing a simple task. Is that your concern?‑‑‑It's around the level of productivity which is - this statement is also supported in the ARDT report as well.

PN4176

Well, there was a demonstration project done following the ARDT report. Are you familiar with that?‑‑‑No.

PN4177

No further questions.

PN4178

VICE PRESIDENT HATCHER: Thank you. Any re-examination, Ms Brattey?

RE-EXAMINATION BY MS BRATTEY�� [11.56 AM]

PN4179

MS BRATTEY: Yes please, your Honour.

PN4180

Mr Donne, if you can go back to the sample that has been discussed at 89?‑‑‑Sure.

PN4181

The assessment conducted under the modified trial?‑‑‑Yes.

PN4182

As I understand that data that's produced in this table, this employee produced 60 pegs over a certain period of time in terms of productivity?‑‑‑Approximately over a one hour period.

PN4183

Over one hour. Do you know - is it likely that that employee would continue to produce 60 pegs in terms of productivity.

PN4184

VICE PRESIDENT HATCHER: Sorry Ms Brattey, there's an objection. What's the question?

PN4185

MR HARDING: It's a leading question.

PN4186

VICE PRESIDENT HATCHER: I think that was a leading question, Ms Brattey. Can you reformulate it please?

PN4187

MS BRATTEY: Of course, thank you. In terms of productivity, I'll rephrase the question along the lines of the Greenacres tool. Over what period of time was productivity assessed for an employee?‑‑‑It was over a three month period.

***�� ANDREW JOHN DONNE�� RXN MS BRATTEY

PN4188

In your understanding, what length of time under the SWS tool was productivity assessed?‑‑‑The trial that took place, we had three 20 minute trials.

PN4189

Three 20 minute trials?‑‑‑Yes, where at that particular point of time, the supported employee in question was aware that they were being trialled as part of a wage assessment process.

PN4190

What levels of productivity do you see with employees during the course of the day?‑‑‑The level of productivity of employees fluctuate up and down, depending on what's happening around them. Whether there's pay issues with other supported employees, whether there might be something going on at home, or whether there might be something in the workplace that's impacting them. It's highly unlikely, almost be impossible for that supported employee to attain that level of productivity for eight hours a day, 250 days of the year. It just would not happen.

PN4191

I have no further questions, your Honour.

PN4192

VICE PRESIDENT HATCHER: Thank you for your evidence Mr Donne, you're excused and you're free to go. Ms Brattey, do you wish to be excused too.

PN4193

MS BRATTEY: Yes, please, your Honour.

PN4194

VICE PRESIDENT HATCHER: All right, you're excused Ms Brattey?‑‑‑Thank you.

<THE WITNESS WITHDREW�� [11.59 PM]

PN4195

The next witness is being called by Blueline Laundry in Tasmania. Do we have an appearance for Blueline in Hobart?

PN4196

MR D HODGSON: Yes, your Honour. Hodgson, initial D.

PN4197

VICE PRESIDENT HATCHER: Is Mr Fraser available to give evidence, Mr Hodgson?

PN4198

MR HODGSON: Yes, I understand he's just outside the court room, so I'll just get him in now.

***�� ANDREW JOHN DONNE�� RXN MS BRATTEY

PN4199

VICE PRESIDENT HATCHER: Can you bring him in please?

PN4200

MR HODGSON: Yes.

PN4201

VICE PRESIDENT HATCHER: All right, thank you.

PN4202

Mr Fraser, can you just remain standing and the court officer here will administer the affirmation for you.

PN4203

THE ASSOCIATE: Can you please state your full name and address.

PN4204

MR FRASER: Robert Gordon Fraser (address supplied).

<ROBERT GORDON FRASER, AFFIRMED�� [12.01 PM]

EXAMINATION-IN-CHIEF BY MR HODGSON�� [12.01 PM]

PN4205

VICE PRESIDENT HATCHER: Please be seated. Mr Hodgson.

PN4206

MR HODGSON: Mr Fraser, do you have a copy of your statement in front of you?‑‑‑Yes, I do.

PN4207

Comprising paragraphs 1 through to 17?‑‑‑Yes.

PN4208

Do you need to make any corrections to that statement?‑‑‑No.

PN4209

Your Honour, we seek to tender that as evidence.

PN4210

VICE PRESIDENT HATCHER: Thank you. The statement of Robert Fraser dated 21 November 2017 will be marked exhibit 41.

EXHIBIT #41 STATEMENT OF ROBERT FRASER DATED 21/11/2017

PN4211

MR HODGSON: Thank you, I have no further questions.

***�� ROBERT GORDON FRASER�� XN MR HODGSON

PN4212

VICE PRESIDENT HATCHER: Mr Fraser, Mr Harding in Sydney will now ask you some questions.

CROSS-EXAMINATION BY MR HARDING�� [12.02 PM]

PN4213

MR HARDING: Mr Fraser, can you hear me?‑‑‑Yes, I can.

PN4214

I am going to endeavour to ask you some questions around the wage assessment tool that the Blueline Laundry utilises and I appreciate that the document that I'm going to take you to will not be in down in Hobart, so we'll just see how we go.

PN4215

Your Honour's and Commissioner, I was going to take Mr Fraser to the analysis of wage assessment tools that we spoke of yesterday and read parts to him and see whether or not we can track down some elements of his evidence about how that tool operates. I think it was tab 3 of Ms Wilson's statement which is headed Analysis of Wage Assessment Tools Used by Business Services. For the benefit of the Bench, the Blueline Wage Assessment tool was described at paragraph 2.

PN4216

Mr Fraser, you say that in paragraph 10 of your statement that the Blueline Wage Assessment tool is industry specific and based on the competencies required to work in a commercial laundry and the supported employees are benchmarked against a laundry employee who does not have a disability. If you focus on that part of the statement first. What I'm referring to, Mr Fraser, for the purposes of fairness, is an analysis of the wage assessment tools that was conducted by the Commonwealth Government and is referred to in the award and is commonly referred to as the Pearson Report. Are you familiar with that document?‑‑‑Yes, I am.

PN4217

Paragraph 2 of the part of the Pearson Report that I'm referring to, describes the Blueline Laundry Wage Assessment tool. Have you had occasion in the past to familiarise yourself with what is said in that document about the Blueline tool in general terms?‑‑‑Yes, I have.

PN4218

Paragraph 2.5 of that document, and I realise you don't have it in front of you, so I'm just going to read parts to you. First of all, it identifies some work areas for the Blueline Laundry as sorting and receiving, washing, press, tumble dry, folding and theatre prepack. They're the sort of functions that you ADE performs. Is that correct?‑‑‑That's correct.

PN4219

Then the assessment sheets are divided into a productivity-based assessment of each work task and if I can pause there. The tasks that you're referring to, or that is, this document is referring to, are the tasks of say sorting and receiving or washing. Is that right?‑‑‑Yes.

***�� ROBERT GORDON FRASER�� XXN MR HARDING

PN4220

Each of the items that I've - - -

PN4221

VICE PRESIDENT HATCHER: Just hold on a second Mr Harding. Mr Fraser, can I ask you to get a bit closer and speak as close as you can into the microphone in front of you because we are having a little trouble hearing you?‑‑‑Is that better?

PN4222

A little better, yes thank you.

PN4223

MR HARDING: Bear with me Mr Fraser. Your Honour, Deputy President, have you got the document, or do you want some - - -

PN4224

DEPUTY PRESIDENT BOOTH: I think there might - either there are two Pearson Reports or I'm off track, but in any event. I'm assisted - yes there's three. I'm assisted by the Deputy President, so yes, I've got it, thank you.

PN4225

MR HARDING: Great, thank you. I'm referring the witness to paragraph 2.5, your Honour. Mr Fraser, I think where I left things was that each of the work areas that are listed in the dot points in paragraph 2.5 which I will just repeat for your benefit - sorting and receiving, wash, press, tumble dry, folding. Each accurately described as a task. Is that right?‑‑‑Yes, they're separate tasks. In the laundry there are separate work areas.

PN4226

Under the tool, there would be a productivity assessment of a worker in relation to their performance of one of those tasks which you then allocate to the worker?‑‑‑That's correct.

PN4227

Is it the case that a worker is allocated one task or more than one task?‑‑‑It depends on the nature of the production for that day. For example, some people might sort dirty linen and then when the sorting is complete, they may then go over to an ironer or a tumble dryer.

PN4228

They can perform multiple tasks in the one day?‑‑‑Potentially yes, depending on the work flow.

PN4229

Is their productivity assessed against all the tasks that they perform on that day, or each individual task?‑‑‑Each task has a set of criteria they will be judged against. But in practice, generally people would mostly stay in one area.

PN4230

Mostly, most of your employees would do, for instance, the washing task or the press task?‑‑‑Depending on where people are distributed the people that would be working on the press say, they may be there all day.

***�� ROBERT GORDON FRASER�� XXN MR HARDING

PN4231

You would have an opportunity then to assess the productivity of each of those workers in their performance of the press task against a benchmark of a non-disabled worker?‑‑‑That is correct.

PN4232

That assessment then forms part of 50 per cent of their wage?‑‑‑Yes, that's correct.

PN4233

Then there's - and for the benefit of the Bench, I'm now turning the page to page 12 of the document. There is a heading in the document I'm referring to called Competency Based Assessment, and I'm going to read this to you, Mr Fraser.

PN4234

Workers are also assessed against five core competencies and each of these have a weighting applied.

PN4235

The first competency is Occupational Health and Safety and Work Area Safety. Understanding the safety rules for your work area and that attracts a weighting of 8.33 per cent. Is that correct?‑‑‑That's correct.

PN4236

Then the second task is ability to multitask in the given work area, i.e. do more than one task and that's given the same weighting. Is that correct?‑‑‑That is.

PN4237

Apply quality standards, do work correctly, make mistakes. Presumably don't make mistakes - 8.33 per cent, same as the other tasks?‑‑‑That's correct.

PN4238

The fourth point is ability to work with minimal direction, ability to communicate and work with others or work with supervision and that's 8.33 per cent. Is that right?‑‑‑That's correct.

PN4239

Then the fifth point is the flexibility of work across the laundry, do more than one task in another work area and that's 16.66 per cent. Is that right?‑‑‑That is correct. That is where people if they were shifted or moved around the laundry, that would be reflected in that score.

PN4240

Most of your employees don't move around the laundry I think is your evidence?‑‑‑That's correct.

***�� ROBERT GORDON FRASER�� XXN MR HARDING

PN4241

In which case, point five is applied to assess the work of those employees who don't move, work that they wouldn't ordinarily do?‑‑‑I think production does vary, so that's an important part to have in your wage assessment, but also certain - I suppose the nature of some people's disability, they get very - a lot of comfort and security from staying in the one area. So, we do move people around to undertake training and to give them a bit of a break, but there'd be a predominant area where people would also prefer to work.

PN4242

But let's take away the disability for a moment, if someone prefers to work on one task and you, as the employer, were content for them to work on that one task, then they would still achieve a lower score under point five of flexibility, than if they were prepared to work on more than one task?‑‑‑That is correct.

PN4243

Also the case, isn't it, that even if you as the employer did not require an employee to work on more than one task, that worker would still be assessed on a lower score under the flexibility element of the competency score. Is that right?‑‑‑That is correct.

PN4244

It's also correct to say, isn't it, that the summation of all those weightings, after having applied items one to five, constitutes 50 per cent of the wage?‑‑‑Theoretically, yes that's correct.

PN4245

Isn't it the case that productivity score represents 50 per cent of the wage?‑‑‑It is.

PN4246

The competency score forms the other 50 per cent?‑‑‑Yes, it does.

PN4247

The competency score is derived from a mathematical calculation of your assessments under one to eight applying the weightings that we've discussed?‑‑‑That's correct, but it's important to have that in there. For example, with the theatre prepack. High productivity but low quality would increase the rejection rate.

PN4248

Yes. You don't utilise the SWS, do you, at all?‑‑‑No, we don't.

PN4249

Are you aware how the SWS operates?‑‑‑Yes, I do.

PN4250

You're aware then the SWS takes account of the quality of the work as well as the time it takes to perform it, in its assessment productivity?‑‑‑Yes, I do.

PN4251

There's a paragraph here that has - its starts with the suggested assessment questions are, and then there's a number of questions and I won't bother you with those. Then the next paragraph starts:

***�� ROBERT GORDON FRASER�� XXN MR HARDING

PN4252

Each core competency is scored on a scale of zero to 10 with 10 being the standard of competency expected from a fully trained, able and motivated employee. The score for each core competency is multiplied by the allocated weight and the total of those scores forms the 50 per cent competency contribution of the total score for the employee in that work area.

PN4253

Is that an accurate statement of how competency operates under the Blueline Laundry tool?‑‑‑Yes, it is.

PN4254

How do you assess a person's motivation?‑‑‑Their application to the task is evidence or not evident by the observation of them at work.

PN4255

Do they get a lower score if your subjective assessment is that they're not as motivated as someone else?‑‑‑I disagree that it would be subjective, but if somebody wasn't motivated in a task, compared to someone that was, that would be reflected.

PN4256

How would you say that motivation isn't subjective. Essentially, motivation is a statement of someone's observation of another person, isn't it?‑‑‑I'm not a motivational expert, but motivation also encompasses, for example, people with a disability, if their content in their work area. They might be unmotivated for that area, but we might move them to another area and they would be motivated.

PN4257

That describes, doesn't it, what you might do as an employer to assist that employee to work better. But it seems from the description that you would take into account the level of motivation in assessing the competency for the purposes of working out their wage?‑‑‑That's correct.

PN4258

Will you agree with me then, the assessment by you as the employer of a person's motivation is a subjective judgment that's made which then feeds into how you assess their wage?‑‑‑I don't say I would agree with it because we're actually getting into assessment and validity of assessment is probably another area that we would need to look at, I suppose, because what are you trying to get with your question? What's your - are you comparing somebody that's motivated and somebody that's not motivated. Or, are you comparing a motivated person without disability compared to a person that doesn't have a disability that's also unmotivated?

***�� ROBERT GORDON FRASER�� XXN MR HARDING

PN4259

I don't know. I'm just asking you about how your tool works, Mr Fraser, and the language that I've put to you, you've accepted as accurate. What that statement says is the standard of competency that reflects in the scale of zero to 10, includes an assessment of an employee's motivation. I'm just asking how you assess a person's motivation unless it's subjective?‑‑‑The assessments that are undertaken are generally - well they are, they're done over a long period. So, if somebody is unmotivated for a long period of time, that's a performance issue for any employer.

PN4260

It is a performance issue, but you've made it a wages issue under this tool, haven't you?‑‑‑It is an element of the assessment, that is correct.

PN4261

In paragraph 14 of your statement Mr Fraser, you've given some evidence about a report received from Synergy Group Australia?‑‑‑Yes.

PN4262

But you offered that report up into evidence, have you? I'm just quoting from it?‑‑‑That is available if that is required.

PN4263

Not here at the moment?‑‑‑That's correct; it's not in front of you.

PN4264

Are you able to explain how it is Synergy Group made its assessment that led to an increase in wages of $390,856 per year?‑‑‑They were a consultancy group that were tasked with assessing the difference between our current wage system and the supported wage system. So, it would have.

PN4265

But you don't know the methodology that was utilised by Synergy Group to make that assessment, do you?‑‑‑Unfortunately, I'm not an accountant, so no I don't.

PN4266

Thank you. No further questions, your Honour.

PN4267

VICE PRESIDENT HATCHER: Any re-examination, Mr Hodgson?

RE-EXAMINATION BY MR HODGSON�� [12.20 PM]

PN4268

MR HODGSON: Yes, thank you, your Honour. We discussed previously about the assessment of the motivation. Who in the business is involved in the assessment of a worker?‑‑‑The assessment for each supported employee, there's a panel of two supervisors. There's also the Services Co-ordinator who is tasked with supporting people with a disability and then there's the Operations Manager. There's at least four people.

PN4269

Thank you. No further questions.

***�� ROBERT GORDON FRASER�� RXN MR HODGSON

PN4270

VICE PRESIDENT HATCHER: Thank you for your evidence Mr Fraser. You're excused. You're now free to leave. Mr Hodgson, do you wish to be excused at this point?

<THE WITNESS WITHDREW�� [12.20 PM]

PN4271

MR HODGSON: Yes, please, your Honour.

PN4272

VICE PRESIDENT HATCHER: You're excused Mr Hodgson.

PN4273

MR HODGSON: Thank you.

PN4274

VICE PRESIDENT HATCHER: Is that all the witnesses for today?

PN4275

MR HARDING: It appears to be.

PN4276

VICE PRESIDENT HATCHER: Anything else useful we can do today?

PN4277

MR HARDING: I don't have anything to offer. I'd love to, your Honour, but I don't.

PN4278

VICE PRESIDENT HATCHER: Can we just check who we've got for tomorrow. It's Kristian Dauncey, Nicole Fitz and Mark Brantingham. Is that right?

PN4279

MR HARDING: That's right.

PN4280

VICE PRESIDENT HATCHER: We'll now adjourn and we'll resume at 10 am tomorrow.

ADJOURNED UNTIL WEDNESDAY, 14 FEBRUARY 2018 �� [12.21 PM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #38 DEPARTMENT OF SOCIAL SERVICES DOCUMENT DISABILITY MAINTENANCE INSTRUMENT PROFORMA.......................................... PN3896

MICHAEL SMITH, SWORN............................................................................ PN3900

EXAMINATION-IN-CHIEF BY MR ZEVARI.............................................. PN3900

EXHIBIT #39 WITNESS STATEMENT OF MICHAEL SMITH DATED 20/11/2017............................................................................................................................... PN3908

CROSS-EXAMINATION BY MR HARDING............................................... PN3910

THE WITNESS WITHDREW.......................................................................... PN4024

ANDREW JOHN DONNE, AFFIRMED......................................................... PN4038

EXAMINATION-IN-CHIEF BY MS BRATTEY........................................... PN4038

EXHIBIT #40 WITNESS STATEMENT OF ANDREW DONNE DATED 02/02/2018............................................................................................................................... PN4045

CROSS-EXAMINATION BY MR HARDING............................................... PN4047

RE-EXAMINATION BY MS BRATTEY....................................................... PN4178

THE WITNESS WITHDREW.......................................................................... PN4194

ROBERT GORDON FRASER, AFFIRMED................................................. PN4204

EXAMINATION-IN-CHIEF BY MR HODGSON......................................... PN4204

EXHIBIT #41 STATEMENT OF ROBERT FRASER DATED 21/11/2017 PN4210

CROSS-EXAMINATION BY MR HARDING............................................... PN4212

RE-EXAMINATION BY MR HODGSON...................................................... PN4267

THE WITNESS WITHDREW.......................................................................... PN4270