PN1

THE COMMISSIONER: Good afternoon, all. Please be seated. Yes, I don't think there's anyone wanting to be heard in Melbourne, so I'll take the appearances in Sydney.

PN2

MS M DAVIS: Davis, initial M, for the Australian Rail, Tram and Bus Industry Union.

PN3

THE COMMISSIONER: Thank you very much, Ms Davis, and look, you can all feel free to remain seated given this is a conference, and that will assist the video link. Thank you.

PN4

MR H HARRINGTON: Thank you, Commissioner. I'll stand because there were some issues with the microphone earlier.

PN5

THE COMMISSIONER: Okay.

PN6

MR HARRINGTON: Harrington, initial H, for the Australian Industry Group.

PN7

THE COMMISSIONER: Thank you.

PN8

MR K VELOSO: Veloso, initial K, for the rail employers, Commissioner.

PN9

THE COMMISSIONER: Thank you. Mr Veloso, when you get a chance to speak in, just be careful and grab your microphone if that's at all feasible.

PN10

MR VELOSO: Yes, Commissioner.

PN11

THE COMMISSIONER: Thanks very much. The purpose of this conference has been set out in the background paper issued by the staff of the Commission on 20 January 2020. Effectively I have convened the conference given the indication by the RTBU that it intends to take up the issue of apprentice rates under the Rail Industry Award 2010. I should confirm the transcript of the conference will be taken and the likelihood is that I'll be preparing a report as a result of this conference for the President and/or the Annual Wage Review expert panel. Following the invitation in the statement, three parties have provided written submissions in advance of the conference from each of the organisations represented at the Bar table. All of those submissions were put on the Commission's website. Perhaps in that context, Ms Davis, I'd like to hear from you particularly in light of the proposition or the issues raised by the employers. As I understood the union's proposition, it's this, is that you propose to adopt the percentages for each of the year levels from the Miscellaneous Award, or the Minimum Wage order number 4, and apply those to the relevant reference rates in the Rail Award for each class of apprentice. So firstly, have I understood that correctly, and secondly, perhaps you might just outline the basis upon which you say that might be done.

PN12

MS DAVIS: Yes, that's correct, Commissioner. We've also got a related kind of submission about the pre‑2014 apprentice rates as well, but I'm sure that you have read that.

PN13

THE COMMISSIONER: Yes.

PN14

MS DAVIS: The RTBU came to the decision to kind of agitate the matter further. That firstly originated in the last wage review with the junior rates, as we saw a problem with that award‑free apprentices were being paid at a higher rate than one that the Commission covered like in the Rail Award. I don't want to delve into the history too much of the creation of the Miscellaneous Award as I don't see the necessity at this point; just to raise kind of as a reference point of why we have considered that there should perhaps be a link between these two, as I note that the Commission has stated that there's no mandated relationship between a national minimum wage - a special national minimum wage and the award. I just want to stress the fact that the use of the word "minimum" has to mean something, and that's why I'd like to take a reference from the historical context of the Miscellaneous Award in that it mentions that - which can be quoted directly in my submissions at about point 10.

PN15

Although the Miscellaneous Award was never intended to create a comprehensive safety net designed for any particular occupational industry, it was intended that it was to only have basic provisions, leaving room for the application of a more minimum safety net in other awards, and the RTBU sees that that has not occurred. These basic conditions have surpassed ones of industry covering apprentices and we would like it rectified. The reason we've come to the conclusion of an approach moving forward of increasing the percentages was kind of the simplest way forward that we could see that would be able to rectify these problems for an already paid lot of workforce. So that was the reasoning the RTBU came to in agitating the matter from the wage review from last year.

PN16

THE COMMISSIONER: Thank you. Ms Davis, you will have seen the employers' proposition that the proper course of action would be for the union to take a section 157 application. Do you have a view about that?

PN17

MS DAVIS: Yes. So although I can see why my friends have mentioned that that perhaps is a better avenue, we have kind of raised this issue with the wage union review as we want to make it clear that there should be a link between a special national minimum wage order for apprentice and rates that are in an award. So we see them as intrinsically linked, and therefore we kind of want it decided in the context that comes with the deliberations and information that comes from a wage review rather than from a separate application, although we are in the Commission's hands. We are here today to discuss it. So we kind of see it as a perfect platform to do so.

PN18

THE COMMISSIONER: Thank you. Is there anything else you wanted to add, bearing in mind obviously your written submissions speak for themselves?

PN19

MS DAVIS: Yes. Just to - we also would like to have a discussion about the pre‑2014 that I mentioned at the beginning as well.

PN20

THE COMMISSIONER: Yes. Just on that, so I understand the employers have some reservations about that. We'll hear that from them in a moment. I think your written submission indicates that you're - this is my word, not yours - but you're sceptical as to whether there are any pre‑2014 apprentices left in the system.

PN21

MS DAVIS: Yes, that's correct. Of course there might be a few floating around, but it would be very - in my submission it would be very low, and that I no longer see the relevance of these difference in pay rates being in a rail award when we're now in 2020 and an apprentice would have finished the 2018 - perhaps a few lingering around, and of course because those rates of pay even show a bigger discrepancy between the national minimum wage order and the award, we would really like to see a variation done for them to be removed(?).

PN22

THE COMMISSIONER: And I think the other issue that arises is if your proposal were adopted, it would remove the differential treatment of those that have attained year 12 and those that haven't.

PN23

MS DAVIS: Yes. So there is a difference for level 1 and level 2 for apprentices who haven't finished year 12 and also have completed year 12. I have read my friend's issues of concerns about that there has been a differential in the past. We submit that they do quite similar work, and kind of in this period of apprenticeships people who come to apprenticeships already have done extra qualifications or extra special tasks at a school age that I think wouldn't affect too much about the difference of work or the different ability levels. I don't believe that there's that many - although I'd have to seek further instructions - that there would be that many people that would be coming to these apprenticeships with absolutely no idea about the apprenticeship that they're coming to, due to the nature of high school and how there's TAFE courses and certificates that you can complete before.

PN24

THE COMMISSIONER: Thank you very much, Ms Davis. Mr Harrington?

PN25

MR HARRINGTON: Thank you, Commissioner. I'll just confirm you can hear me?

PN26

THE COMMISSIONER: I can indeed. Thank you very much.

PN27

MR HARRINGTON: These proceedings, while they're distinct from those which were earlier raised in relation to the junior rates applicable under the Vehicles Award, they nevertheless pertain to the same underlying issue, which is whether rates for award‑covered employees may be set lower than those on the special national minimum wage. The view that we communicated to the Commission in those proceedings six months ago is identical to that which we bring today, namely, that the simple statement is that the rates set in the modern award may be lower than those applicable to award or agreement‑free employees. This might be for a number of reasons: penalty rates are applicable for such employees, and there are various allowances to take into account. There are arguments which could be raised one way or the other, but ultimately the Commission has already determined, as the last angle in the wage review, that the Act doesn't mandate that the special national minimum wage act as a floor above which all modern awards have to rise. The past annual wage of the proceedings, 2010 to 2011 and '13 to '14, established that the Miscellaneous Award was to function as the reference instrument with attending national minimum wage 4 for award, agreement‑free apprentices. None of the annual wage review decisions suggest the intent that these act as the bare minimum. It's not apparent from the decision or any of those decisions in the annual wage reviews that any inquiries made into whether the seven(?) awards include rates applicable to apprentices which fall lower than that under minimum wage 4.

PN28

We made clear in the context of the inquiry to junior rates that the Commission expressly rejected Ai Group's proposal to make junior rates in the Graphic Arts Award its model for national minimum wage 3 applicable to juniors. The expert panel was aware of this and no determination was made that the national minimum wage 4 was the lowest rate applicable for award‑covered apprentices. The Miscellaneous Award itself was never intended to include rates that were the lowest across the modern award system. It would be inappropriate (indistinct) the apprentice rates based on the Miscellaneous Award that necessarily provide the lowest possible rates for apprentices. We also note that the necessity of maintaining relativities is at stake. If only the rates in the Rail Award, which fall below national minimum wage 3, are addressed - or 4 - were addressed, this would result in the compression in the wage scales in the Rail Award, sacrificing some of the logic which necessarily underpins the remuneration of the different classifications in the award.

PN29

I don't know whether or not you want to go through question 1, 2, 3, 4 and 5, but I'll just briefly refer - in respect of question 2, the particular circumstances under the Rail Award, whether or not these should be taken into account. Yes, we do think so. We agree the particular circumstances of the Rail Award are relevant to an application such as this one. But if the matter is to be looked at, as it - well it should be looked as a discrete variation application rather than one of general import, and it would be more appropriate if brought under 157. So unless the Commission has any questions, those are our submissions. I'm happy to refer to the other questions as they arise, but unless there was anything else, Commissioner.

PN30

THE COMMISSIONER: No. Mr Harrington, just in relation to the pre‑2014 apprentices, and you may not have any vision of this, but are you aware whether there are in fact any apprentices of that class still in the system?

PN31

MR HARRINGTON: We do have a view on this. We're unable to assist the Commission on the point of how many there would be floating about, but we would note that Ai Group, we have a significant interest in a large number of modern awards. If the Rail Award were to be varied to remove the rates applicable to apprentices commencing prior to 1 January 2014, it would certainly be the odd one out.

PN32

THE COMMISSIONER: Yes.

PN33

MR HARRINGTON: The vast majority of the exposure draft which has recently been released by the Commission in relation to most of the other modern awards do retain those pre‑1 January 2014 rates, and I understand the rationale behind this is that there could well be apprentices who have suspended their apprenticeship for a period of time and then re‑commenced it and - I'm unable to provide the Commission with what the stop date should be, but we consider it would be premature to remove those rates.

PN34

THE COMMISSIONER: In any event, it's a matter - on your view of the world, it's a matter for the modern awards more generally, not just the Rail Award.

PN35

MR HARRINGTON: That's right. It's an issue of general import.

PN36

THE COMMISSIONER: Yes. Thank you. Mr Veloso?

PN37

MR VELOSO: Commissioner, as you know, we filed some submissions yesterday afternoon. We apologise for the tardiness in filing those, but it appears from your Honour's observations that you're across the points that we raised in our submissions.

PN38

THE COMMISSIONER: Yes.

PN39

MR VELOSO: The only things that we would add are that - arising from my friend's submissions earlier - is just the level of speculation with this application on its current - on the face of it - required as - for instance, the request that there be a link between the special national minimum wage order, the number or the prevalence of apprentices who have commenced prior to 1 January 2014, we say on those grounds the more appropriate avenue for this application to be agitated is through a section 157 application, where all of those issues can be properly explored and properly viewed through the relevant objectives under the Act. And so aside from that we rely on our written submissions, Commissioner.

PN40

THE COMMISSIONER: Thank you very much, Mr Veloso. Well, look, just for the purposes of sort of prompting some discussion about this, in the end how the matter is dealt with is going to be a product of two things: firstly, Ms Davis with the RTBU does in fact sort of file a section 157 application, and secondly, and in any event what view that the Commission takes about it, whether it be in the form of the expert panel and/or the present, or a relevant Full Bench, but it would seem to me that there are a number of issues that arise irrespective of the venue or the context in which the matter is to be considered. I should say that whilst I clearly can't speak for the expert panel more generally, or for the present, it would seem that the fact that there's no general agitation about apprentices or junior rates, as sort of contemplated at the back end of last year's annual wage review, is likely to be a factor which probably militates against it being done through the annual wage review, because in the end if there's one award that has been agitated - look, I suspect it's more consistent to deal with that through the modern award review scheme, or more particularly section 157, but look, I'm not here to determine that. That's just an observation that I might make, or in the issues that are going to arise in any event are - but firstly, I think, particularly in light of the statutory requirements and indeed some of the observations made by the annual wage review bench last time when it sort of left this in the leave reserved list, was there are a number of factual matters that would have to be address, in particular the number of apprentices, their classifications, their year level, whether there are any pre‑2014 apprentices left, but I do appreciate that that latter issue is one that applies more generally, not just to this award; secondly, the basis of how the rates in the Rail Award were set, so some view about historically how they were set and why the particular percentages and approaches that are now present in the award were landed upon, and also issues of relativities, relativities within the award, and relativities across the modern award system, to the extent to which that's relevant.

PN41

It would also seem to me that there are a series of considerations in whatever venue or context this might be considered that arise from the modern award's objective, and in particular, you know, the impact of the rates or any review on the apprentices and the relative living standards, the impact of increases, proposed increases upon employers and employment costs, of the impact on employment levels in the economy more generally. You would all recognise those are amongst the - they're not the only ones, but they're amongst the considerations arising under section 134. If 157 is engaged then, as I'm sure everyone at the Bar table would be aware, 157(2) requires any changes to minimum award wages to be justified on the basis of work value reasons, and you would also be aware no doubt that the meaning of "work value reasons" is now defined in section 157(2)(a). So that might be an issue which is different, depending on the context in which the application is considered. Section 135, the minimum wage objective is, under section 284, however is engaged irrespective of what avenue is taken. So it would seem to me that with the possible exception of the work value reasons, and even that is not clear to me that the annual wage review would not have regard to that - that's not for me to decide - most of the issues are relevant, whether it be dealt with by the annual wage review or through a section 157 application. Irrespective of, again, the venue or the context, some evidence would need to be led about those factual matters, in particular what is actually happening on the ground at the moment with the premises, as well as the historical basis.

PN42

I do note, and whilst this is not decisive I do note that there may be some parallels, although this actually impacts on more awards than just the Rail Award, but the representatives would be aware of the review of certain C14 rates in modern awards that effectively arose from last year's annual wage review decision where the panel indicated there to be some value in reviewing the C14 rates, and as you would no doubt be aware, the President subsequently acting on the Commission's own motion effectively sort of pushed out a review of those rates. That review, at least according to the statements issued by the President, has been done within the framework of section 157 of the Act. So notwithstanding that, it effectively - the genesis of the review was an annual wage review decision that the Commission proposed at least initially to treat it under section 157, and secondly, and probably just as importantly, again I'm sure you're across this, is that subsequently having conducted a couple of conferences with parties along the same lines as this, ultimately the ACTU and the affiliates have - or those that are pressing for the review at least - are going to file separate or combined 157 applications and the President is proposing to convene a Full Bench to deal with the 157 applications.

PN43

So look, the only potential significance of this is that it would seem to me, at least by analogy, whenever the Commission comes to consider the appropriate vehicle for this, you can expect there will be serious consideration as to whether section 157 is the right vehicle, and I make those comments to assist all parties, not to indicate any interim or preliminary view of myself or indeed the Commission more generally, but just my own observations based on what looks to be a somewhat analogous situation.

PN44

Ms Davis, I suspect in that context the ball is going to be in the union's court to initially make in effect the in‑principle decision as to whether you want to push ahead with the annual wage review to consider the matter, or alternatively to take the 157 route and make an application sort of largely in the terms that you foreshadowed here, and it would seem to me, depending on your timeframe for doing so, it might be prudent for me to wait in terms of my report to the President to await your decision on that. If the timeframes that you indicate about that are going to be more than a few weeks then I suspect I'll need to do the report in any event given that everyone will be aware that the time clock is ticking on this year's annual wage review, so in order to keep that option open I would have to at least provide some interim or other report to the President. But if you were able to make a - or indicate if the union is able to make a decision about which course of action you want to apply within the next couple of weeks, my inclination would be to hold the report until I've heard from you about that and include that in the report.

PN45

MS DAVIS: Yes, Commissioner. I think the union can have some internal discussions about which avenue to pursue. The only thing I would note after listening to your comments on the matter is I can see what you're saying about potentially a 157 application could be beneficial. It's just that the pre‑2014 rates, the union won't exactly be in a position to be able to present evidence about pre‑2014 apprentices due to the fact that we only have access to our membership. That's why of course I think that element is definitely something we're going to be wanting to pursue within the annual wage review, as that's something that the panel can get access to in making an informed decision, while the union wouldn't be able to present evidence in that aspect of our current position on apprenticeships.

PN46

THE COMMISSIONER: Ms Davis, that may be a challenge you face whichever form it is. I appreciate that the annual wage review is more inquisitorial, but nevertheless to the extent of which a party wants to advance a proposition, generally speaking there's some onus on the party advancing the proposition to provide the justification. But I understand precisely what you say about the fact that the union doesn't have access, unless there's some external source for this that I'm not aware of at least. Unless there's some external source for information about the status of apprentices, I think that's going to be a bit of an issue for parties more generally. But it also affects awards more generally, so look, to be frank, that aspect I suspect is unlikely to be dealt with on a case‑by‑case basis, because it will affect, not every award - most modern awards, at least those modern awards that have that distinction in them, which is a reasonable number of those that have apprenticeship rates.

PN47

MS DAVIS: Yes, Commissioner. Yes, I agree with what you've just said. I do think that I'll need to have some internal discussions before deciding on what avenue. You've just mentioned that you would prefer to wait to put through a proposal depending on the union's decision, is that correct?

PN48

THE COMMISSIONER: Yes. My obligation is effectively to hear from parties and obviously gain some understanding about it, but ultimately I need to do a report for the President. It would seem to me the report would be more useful if it included the ultimate position of the union about how it proposed to advance this.

PN49

MS DAVIS: Yes. Well, the union could be in a position to give you an indication of what avenue in maybe a week and a half. I don't believe the internal discussions will take too long to decide which avenue to progress the matter.

PN50

THE COMMISSIONER: All right. Unless the employer representatives see any issues with that, it would seem to me prudent to await that position and then for me to finalise the report based on the written submissions and the helpful submissions that have been made today. Any concerns about that, Mr Harrington?

PN51

MR HARRINGTON: No concerns from us, thank you, your Honour.

PN52

THE COMMISSIONER: Mr Veloso?

PN53

MR VELOSO: None from us, Commissioner.

PN54

THE COMMISSIONER: All right. So does anyone else wish to put anything on the record for the purpose of this conference?

PN55

MR HARRINGTON: Not from Ai Group.

PN56

THE COMMISSIONER: Well, thank you all for your participation in the conference and for the helpful submissions in advance. I will prepare a report based on that, but I will hold the report until I hear from yourself, Ms Davis, about the RTBU's position and I will include that in the report for the President. Thank you, all. The Commission will be adjourned.

ADJOURNED INDEFINITELY [2.31 PM]