Annual Wage Review 2014–15 - [2015] FWCFB 3500

[2015] FWCFB 3500

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.285—Annual wage review

Annual Wage Review 2014–15
(C2015/1)

JUSTICE ROSS, PRESIDENT
SENIOR DEPUTY PRESIDENT WATSON
SENIOR DEPUTY PRESIDENT HARRISON
COMMISSIONER HAMPTON
MR COLE
PROFESSOR RICHARDSON
MR GIBBS

MELBOURNE, 2 JUNE 2015

Contents

Paragraph
1.	The Decision	[1]
2.	The Statutory Framework	[80]
3.	The Parties’ Proposals	[146]
4.	The Economy	[175]
5.	Relative Living Standards and the Needs of the Low Paid	[309]
6.	Promoting Social Inclusion through Increased Workforce Participation	[418]
7.	Encouraging Collective Bargaining	[455]
8.	Equal Remuneration	[474]
9.	Exceptional/Special Circumstances	[494]
10.	Other Matters	[526]
11.	Conclusion	[577]
Appendix 1—Proposed Minimum Wages Adjustments	Appendix 1

Abbreviations

2010–11 Review decision	Annual Wage Review 2010–11 decision
2011–12 Review decision	Annual Wage Review 2011–12 decision
2012–13 Review decision	Annual Wage Review 2012–13 decision
2013-14 Review Decision	Annual Wage Review 2013–14 decision
AAWI	average annualised wage increases
ABI	Australian Business Industrial
ABS	Australian Bureau of Statistics
ACCER	Australian Catholic Council for Employment Relations
ACCI	Australian Chamber of Commerce and Industry
ACOSS	Australian Council of Social Service
Act	Fair Work Act 2009
ACTU	Australian Council of Trade Unions
AFEI	Australian Federation of Employers and Industries
Ai Group	Australian Industry Group
ANRA	Australian National Retailers Association
APCSs	Australian Pay and Classification Scales
ARA	Australian Retailers Association
AWE	average weekly earnings
AWOTE	average weekly ordinary time earnings
AWRS	Australian Workplace Relations Study
C10	Engineering Tradesperson Level I
C14	Engineering/Production Employee Level 1
CCIQ	Chamber of Commerce and Industry Queensland
Commission	Fair Work Commission
CPI	Consumer Price Index
EEBTUM	Employee Earnings, Benefits and Trade Union Membership
EEH	Employee Earnings and Hours
GFC	global financial crisis
GDP	gross domestic product
GVA	Gross Value Added
HES	Household Expenditure Survey
HIA	Housing Industry Association
HILDA	Household Income and Labour Dynamics in Australia
IMF	International Monetary Fund
LRA	Liquor Retailers Australia
MGA	Master Grocers Australia
NES	National Employment Standards
NFF	National Farmers’ Federation
NMW	national minimum wage
NTWS	National Training Wage Schedule
OECD	Organisation for Economic Co-operation and Development
Panel	Expert Panel for annual wage reviews
R&CA	Restaurant and Catering Australia
RBA	Reserve Bank of Australia
Review	Annual Wage Review 2013–14
RNNDI	real net national disposable income
SMEs	small and medium enterprises
Statistical Report	Statistical Report—Annual Wage Review 2014–15
SWSS	Supported Wage System Schedule
Transitional Act	Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
VACC	Victorian Automobile Chamber of Commerce
WPI	Wage Price Index
WR Act	Workplace Relations Act 1996 (Cth)

1. The Decision

Introduction

[1] The Fair Work Act 2009 (the Act) requires the Expert Panel (the Panel) to conduct and complete a review of the national minimum wage (NMW) and of minimum wages in modern awards in each financial year. The Panel must make a national minimum wage order and may set, vary or revoke modern award minimum wages. This decision deals with the 2014–15 Annual Wage Review (the Review) and directly affects over 1.86 million employees in Australia who are award reliant.

[2] The Act sets out some important procedural fairness requirements for the Review. The Panel must ensure that all persons and bodies (referred to collectively as parties) are given a reasonable opportunity to make and reply to written submissions. In this Review, a number of parties took up this opportunity by lodging one or more written submissions, participating in consultations on 19 and 20 May 2015, or both. The timetable for the Review and all of the submissions, transcript, research reports, and some additional economic data were published on the Fair Work Commission’s (the Commission) website to ensure that all parties had a reasonable opportunity to participate. The Panel considered all of the material received from parties and the published research in making its decision.

[3] This chapter summarises the matters we have considered, our reasoning and the increase we have decided upon. A more detailed discussion of these matters is provided in the subsequent chapters.

The Panel’s approach

[4] As part of the Review the Panel considers both the setting of the NMW rate and whether to make any variation determinations in respect of modern award minimum wages. Each of these tasks is undertaken by reference to the particular statutory criteria applicable to each function. As part of its decision making process the Panel first forms a view about the NMW rate it proposes to set in the review and then takes that proposal into account in exercising its powers to set, vary or revoke modern award minimum rates, as it is required to do by s.285(2).

[5] In setting the NMW rate the Panel must take into account the objects of the Act and the minimum wages objective in s.284. In reviewing modern award minimum wages the Panel must also take these matters into account, as well as the modern awards objective in s.134. Chapters 4–9 of this decision deal with the statutory considerations we are required to take into account. We do not repeat all of that material here but the views expressed in this chapter should be seen in the context of our decision as a whole.

[6] A number of parties to the Review submitted that it would be beneficial if additional information could be provided on the factors considered by the Panel in reaching its decision. The Australian Chamber of Commerce and Industry (ACCI) submitted:

“ACCI accepts that simple rules such as real wage maintenance cannot capture the full range of considerations that the Panel must take into account. ACCI also accepts that the Panel’s judgements about the relative importance of particular considerations may be impossible to fully explain. Nonetheless, similar circumstances should lead to similar results, absent any methodological changes.

Given that a broad exercise of judgement guides the determination of the Panel, detailed explanation of the factors that most significantly influenced the Panel’s decision making would assist the parties in approaching future annual wage reviews. To ensure that all statutory considerations are appropriately taken into account, it is very important to justify how these considerations have been interpreted and operationalised and how judgements have been formed about the relationship between these considerations and changes in minimum and award wages, both in general and in relation to prevailing circumstances. ...

To some extent the Panel already discusses the reasoning behind the definition of statutory considerations and judgements about the empirical effects of changes to minimum and award wages. It is harder to expressly explain the reasoning behind the relative weight that the Panel gives to different statutory considerations. However, the fact that some judgements cannot be fully explained should not prevent the Panel from disclosing the factors which were most central, and quantifying how the Panel’s decision would have changed if key variables had been different. Although there is always more than one factor which changes from year to year, this sort of sensitivity analysis would make the Panel’s decisions more transparent and improve the relevance of submissions in subsequent years.” 1

[7] In taking into account available economic and social data, the Panel’s approach is broadly to assess the changes in these data from year to year and determine how they inform the statutory criteria. Put another way, and consistent with ACCI’s submission, if there were no change in the relevant considerations from one year to the next then, all other things being equal, a similar outcome would result.

[8] An example of this approach is the Panel’s consideration of changes in the superannuation guarantee rate (SG rate) set under the Superannuation Guarantee (Administration) Amendment Act 2012. In the 2013–14 Review decision, the Panel took into account a scheduled 0.25 percentage point increase in the SG rate which was a moderating factor in the Panel’s assessment of the adjustment that should be made to minimum wages. As a result, although not quantified, the increase in the NMW and modern award minimum wages determined in that Review was lower than it otherwise would have been in the absence of the SG rate increase. Had that scheduled SG rate increase not existed, the consequence of this approach is that, all other things being equal, the outcome of last year’s review would have been higher than the 3 per cent awarded. We note that there is no scheduled increase in the SG rate this year.

[9] The Panel makes a comparative assessment of both actual and forecast data (particularly in relation to the economy) as part of this approach. For reasons outlined in the 2012–13 Review decision, there is generally a focus on actual data:

“[7] In assessing the various economic considerations the Panel takes into account both actual economic indicators and those that are forecast at the time of each decision. Of these, the actual indicators tend to be the primary consideration, because they are by definition more reliable than forecasts. However, it is also appropriate to have regard to future projections that cast some light on the economic circumstances that are expected to apply during the period when any adjustment will operate.

[8] To the extent that the forecast economic indicators do not ultimately reflect the actual performance of the economy, this forms part of our broad assessment and our consideration of the actual indicators in subsequent reviews. Importantly, when considering both actual and forecast indicators, the Panel pays particular attention to trends, because of the volatility in some of the economic indicators.” 2

[10] To the extent that the “broad assessment” referred to includes a consideration of past forecasts in the context of actual economic indicators, it is important to note that this is not undertaken with the intent of enabling some sort of quantifiable adjustment to minimum wage outcomes. A mechanistic approach such as this would not be consistent with the statutory framework. Rather, the Panel considers all information about the economic and social environment that is available (including forecasts) to inform the conduct and determination of each review.

[11] The Panel is required to conduct each annual wage review within the framework of matters set by the Act, particularly the object in s.3, the modern awards objective in s.134(1) and the minimum wages objective in s.284(1). The Panel’s task is to consider the relevant statutory matters it is required to take into account in the context of the economic and social environment in order to make its decision in the review. 3

[12] The wide range of data and information before the Panel and the often complex interaction between these factors mean that a comparison between reviews will rarely be straightforward. There is not a formulaic relationship between changes in particular indicators or factors over time and the outcome of annual wage reviews. Further, as we have previously identified, there is often a tension between the economic and social matters we must take into account. 4 As a result, while the Panel seeks to explain its view of the circumstances (including forecasts or projections) prevailing in each annual wage review in comparison to previous years, it is not feasible to quantify the weight given to particular factors in balancing the various considerations prescribed by the Act. This also explains why proposals premised on a fixed relationship between the rate of inflation and minimum wages directed towards real wage maintenance are not consistent with the statutory framework.

[13] We now turn to the considerations which we must take into account. The matters of direct relevance to the Review can be grouped into three broad categories: economic; social; and collective bargaining.

Economic considerations

[14] Both the minimum wages objective and the modern awards objective require us to take into account various economic considerations. The underlying intention of these provisions is that the Panel takes into account the effect of its decisions on national economic prosperity and in doing so gives particular emphasis to the economic indicators specifically mentioned in the relevant statutory provisions.

[15] Recent economic performance reflects a continuing transition from an economy driven by the resources investment boom toward more balanced growth, but with real gross domestic product (GDP) growth below trend as mining investment has fallen and there has not yet been a significant improvement in non-mining investment.

[16] The immediate outlook is for improved growth in 2015–16, albeit still below trend, with a return to trend growth in 2016–17, with an increasing contribution from non-mining investment as excess capacity is taken up by continuing growth in consumption, home building and exports.

[17] Real GDP growth remained below trend growth over the past two years, growing by 2.5 per cent over the year to the December quarter 2014, mainly supported by net exports, final household consumption expenditure and private investment in dwellings. New capital expenditure has fallen since late 2011, reflecting declining mining investment with a shift from the investment to the export phase in the resource industry.

[18] Labour productivity, measured by GDP per hour worked, rose by 1.6 per cent over the year to the December quarter 2014, following growth over each of the preceding three years. Productivity at the industry level has grown in the award-reliant industries in excess of the all industries average of 1.5 per cent in 2013–14, other than in the Other services industry. There is no evidence that minimum wage increases arising out of the annual wage review have had an adverse impact upon productivity, at an aggregate level or at an industry level.

[19] Factor shares have settled over the past three years. Company gross operating profits in the non-Mining industries rose by 1.2 per cent over the year to the December quarter 2014. Of the award-reliant industries, company gross operating profits increased significantly in the Accommodation and food services; Retail trade; and Administrative services industries over the year to the December quarter 2014, and fell significantly in the Other services industry.

[20] There is no evidence of particular corporate stress. Business bankruptcy rates fell significantly in 2013–14, to the lowest level since 2008–09. Business entry rates for all industries in 2013–14, at 13.7 per cent, exceeded business exit rates, at 12.7 per cent. Business exit rates were lower in 2013–14 than in 2010–11, in aggregate and for each of the award reliant industries. Real unit labour costs remain at historically low levels. The unit labour cost data shows, in aggregate, an absence of cost pressures from the labour market.

[21] The rate of inflation and wages growth moderated significantly over the past year. The headline Consumer Price Index (CPI) increased by only 1.3 per cent over the year to the March quarter 2015, reflecting a significant fall in the automotive fuel component together with the removal of the price on carbon. Underlying inflation, at 2.4 per cent over the year to the March quarter 2015, remains within the Reserve Bank of Australia (RBA) medium-term target band.

[22] Each measure of wages reflects a continuing fall in aggregate wages growth over the past year, to historically low levels. This is contributing to the process of adjusting to the downturn in the terms of trade, as real net national disposable income (RNNDI) has increased by less than GDP from the second half of 2011.

[23] The very sharp rise in Australia’s terms of trade from 2007 to 2011, followed by an almost equally large fall since then, has had substantial implications for the Australian economy and for wage earners. It has caused a disturbance in several economic relationships that are normally quite settled.

[24] One of these is the relationship between the growth in GDP and the growth in RNNDI. It is RNNDI that best captures the income that is available to distribute to labour and capital. As it grew faster than GDP, from 2007 until 2011, average wage growth accelerated as wage earners gained some of the benefits that came from the increase in the value (as distinct from the volume) of the products that Australia exports. The profit share of national income rose a little, but labour still gained some of the greater income. Prior to the acceleration of RNNDI, the measures of average wages (average weekly ordinary time earnings (AWOTE) and average weekly earnings (AWE)), the Wage Price Index (WPI) and the NMW had all risen at about the same rate. Between 2007 and 2011, as RNNDI rose rapidly, the average wage measures rose substantially faster than did the WPI, the NMW and modern award minimum wages. The gains to labour came in the form of higher utilisation of the labour force and a growth in higher paying jobs, with little of it flowing to the award-reliant workforce. One effect of the growth in nominal average wages was a growth in nominal unit labour costs (although not in real unit labour costs). These high nominal unit labour costs have made it harder for Australian firms outside the resources sector (which was receiving the high prices) to compete internationally.

[25] The subsequent fall in the terms of trade has reversed the relationship between GDP and RNNDI: while GDP has continued to rise, albeit at a somewhat slower pace, RNNDI has grown much more slowly. As mentioned earlier, RNNDI has increased at a slower rate than GDP from the second half of 2011. Between December 2012 and December 2014, GDP grew by 4.7 per cent while RNNDI grew by 2 per cent.

[26] The economy is now in a position where it must absorb the consequences of the slow growth of RNNDI, including the consequences for wages growth.

[27] Reflecting lower than trend GDP growth, employment growth has remained subdued, although it has strengthened over the past year, growing by 1.6 per cent over the year to April 2015. Hours worked grew more rapidly—by 2.6 per cent over the year to April 2015. The unemployment rate has grown steadily from its recent low of 4.9 per cent in March 2011, to 6.1 per cent in April 2015, although the unemployment rate has remained steady since the middle of 2014. The participation rate of people aged 20–64 years in December 2014 was higher, at 79.1 per cent, than in all but one year over the last decade, and rose again to 79.2 per cent in April 2015.

[28] Recent changes in employment and hours worked, the participation rate, the employment-to-population ratio and retrenchments do not suggest particular weakness in the labour market for either males or females over the past year. In contrast, there has been a growth in unemployment, under-employment, long-term unemployment and youth unemployment, all of which are signs of under-utilisation of the workforce. We interpret this to mean that growth in the supply of labour has outstripped growth in the demand for labour—both are growing, but at different rates.

[29] Industry data does not suggest that the most award-reliant industries have faced an economic environment over the past year that was more challenging than that facing the economy generally and provide no basis to conclude that recent minimum wage increases have significantly impacted on the economic performance of the award-reliant industries. There is no evidence to suggest that the economic conditions for small businesses have diverged materially from those of businesses generally within the industries in which they operate, as reflected in aggregate and sectoral economic data.

[30] Stronger economic growth is anticipated by the Australian Government and the RBA in 2015–16 and 2016–17, supported by continuing stronger household consumption, with a modest fall in the household savings ratio, continued strong growth in dwelling investment,a strengthening of non-mining business investment and an improved contribution to growth from net exports.

[31] The stronger GDP growth is expected to support stronger employment growth and a reduction in the unemployment rate in 2016–17 following a peak in unemployment at 6½ per cent in 2015–16.

[32] The CPI is forecast to increase in 2015–16 from its exceptionally low level in 2014–15, to remain at the middle of the RBA’s 2–3 per cent medium term target range. Wages growth is expected to increase slightly in 2016–17 from its historically low current levels. The continuing moderate inflation and aggregate wages growth suggests that the increase in minimum wages we have determined will not bring inflationary consequences.

[33] The outlook for the Australian economy remains generally positive. Global conditions are expected to continue to improve with stronger growth expected in the world economy and within Australia’s major trading partners. The transition to broader growth in the Australian economy is occurring, with household consumption, dwelling investment and exports all lifting. There remains, however, uncertainty as to the timing of the transition from the resources investment boom, and the pace and timing of stronger, more broadly based economic growth. A sustained recovery in non-mining business investment is taking longer than expected and growth in public final demand remains below that of GDP.

Social considerations

[34] Both the minimum wages objective and the modern awards objective require us to take into account relative living standards and the needs of the low paid when setting minimum wage rates. Those matters must be considered, within the range of statutory matters in ss.134(1) and 284(1) of the Act, in the context of the evidence relevant to a particular review. They are different, but related, concepts. 5

[35] The assessment of relative living standards requires a comparison of the living standards of workers reliant on the NMW and modern award minimum rates with those of other groups that are deemed to be relevant.

[36] The assessment of the needs of the low paid requires an examination of the extent to which low-paid workers are able to purchase the essentials for a “decent standard of living” and to engage in community life, assessed in the context of contemporary norms.

[37] When assessing the needs of the low paid, the Panel has accepted that award-reliant employees who receive a rate of pay that (as a full-time equivalent) would place them below two-thirds of median (adult) ordinary time earnings provides a suitable and operational benchmark for identifying who is low paid. Most submissions in the current review have utilised the two-thirds benchmark, although not necessarily the restriction to adults and to ordinary time. The precise definition of earnings makes a substantial difference to the value of the median. While the estimates vary,all suggest that a sizeable proportion—perhaps half—of employees who are award reliant are also low paid.

[38] Several parties addressed the use by the Panel of a single-person adult household as the benchmark for assessing relative living standards and the needs of the low paid. An argument was put that a single-earner household with two dependent children should be the relevant benchmark. We affirm our use of the single-person household as the principal, but not the sole, reference point. We consider the position of many family types and take into account the interaction between wages and the tax-transfer system to produce equivalent household disposable income.

[39] In terms of tax-transfer payments and legislative change, the Australian Government submitted that the Panel should take into account the repeal of the carbon tax and the continuation of compensation for low- and middle-income households.

[40] In its 2012–13 Review decision, the Panel abstracted from the CPI the effect of the introduction of the carbon price for the purpose of adjusting minimum wages because of the compensation provided by the government. As a result, award-reliant employees have received a lesser ongoing wage increase but have enjoyed ongoing compensation by the government. In that circumstance, the Panel has decided to have regard to the CPI effects of the carbon price abolition by considering the published CPI, which reflects the actual price reduction resulting from the removal of the carbon price.

[41] Relative living standards focus on the comparison between award-reliant workers and other employees, especially non-managerial employees, but does not exclude comparison with other groups.6

[42] Since its introduction in 1997, the NMW has increased on average by 0.8 per cent per annum in real terms; it rose by 1.3 per cent over the most recent year, to the December quarter 2014. This increase is consistent with the intention of the Panel in the 2013–14 Review decision to award an increase which would result in a modest improvement in the real value of the NMW and modern award minimum wages.

[43] The NMW and modern award minimum rates have grown more slowly over the past decade than have measures of average pay, although growth in the NMW has remained close to that of the WPI. The divergence between minimum wage rates and average wages has slowed or narrowed over 2013 and 2014, reflecting reduced growth in average wages.

[44] The NMW has fallen from 44.3 per cent to 43.4 per cent of AWOTE over the five year period from November 2009 to November 2014, with somewhat larger falls for the higher modern award minimum rates.

[45] Taxes and transfers appear to have relatively and absolutely improved the disposable incomes of NMW-reliant and C10-reliant families since 2010, other than for some couple families with no dependent children. Over the past five years real disposable household income has risen for all household types, typically by around 3.5 per cent. Both the real value of minimum wages and changes in the tax-transfer system have contributed. For full-time NMW earners without children, all the rise came from the increase to the NMW, whereas for NMW earners with children it came predominantly from changes to the tax-transfer system.

[46] The gradual increase in income inequality over the past two decades appears to have stabilised or even reversed from at least 2007–08, although income inequality remains at relatively high levels compared with the past. Annual wage review decisions have a role to play in ameliorating inequality but this role is limited by the statutory factors that we have to take into account and by the range of factors impacting on income inequality.

[47] We had limited contemporary information before us about the extent to which award-reliant households had equivalent incomes that were below a specific poverty line or displayed some other indicator of need, such as material deprivation. The information that we did have showed that about one-third of households below the 60 per cent of median household disposable income poverty line had wages and salaries as their principle source of income. In 2011–12, 8.1 per cent of those employed full-time and 25.2 per cent of those employed part-time were below this poverty line.

[48] An up to date comparison of poverty rates is possible if the equivalent disposable incomes of hypothetical households are used. This showed that disposable income is less than the 60 per cent median income poverty lines for a single-earner couple, with or without children, earning either the NMW or C10 rate, in circumstances where the non-earning partner is not in the labour force and hence not receiving Newstart Allowance. A comparison of the situation in 2013 with that in 2014 shows that the situation has improved a little: for every type of household modelled, disposable income either rose or stayed the same as a proportion of the 60 per cent poverty line.

[49] Financial stress and deprivation measures provide direct information about the adequacy of income to meet needs. A suite of deprivation and financial stress measures can inform the review process, in combination with other measures of the needs of the low paid, subject to an understanding of what they measure. The level of financial stress reported rose more for low-paid households than for all employee households in the aftermath of the global financial crisis (GFC). The limited data for the most recent years (to 2013) suggests small increases in stress for low-paid households but not for all employee households.

[50] Our overall assessment is that the relative living standards of NMW and award-reliant employees has improved a little over the past year or two. Inequality among all employees has stabilised. Indicators of unmet need among the low paid, while substantially higher than for the higher paid, have if anything also improved.

[51] The Act requires the Panel to take into account “promoting social inclusion through increased workforce participation” (s.284(1)(b)). Consistent with past review decisions, we interpret this to mean increased employment. Higher minimum wages can provide incentives to those not in the labour market to seek paid work, which needs to be balanced against potential negative impacts on the supply of jobs for low-paid workers.

[52] For the purposes of making a determination, we must form a view on the employment impacts of an increase in the NMW and modern award minimum wages of the size that we have in mind and in the economic circumstances that we face. After consideration of the latest research on the employment effects of rises in minimum wages, we remain of the view that modest and regular increases in minimum wages have a small or even zero impact on employment. There is legitimate disagreement about what constitutes a “modest” increase, and we accept that this is a factor supporting a lower increase in times when unemployment is relatively high.

[53] In giving effect to both the modern awards objective and the minimum wages objective the Panel must take into account the principle of equal remuneration for work of equal or comparable value (s.134(1)(e) and s.284(1)(d)).

[54] Women are disproportionately represented among both the low paid and the award reliant 7 and hence an increase in minimum wages is likely to promote pay equity, though we accept that moderate increases in minimum award wages would be likely to have only a small effect on the gender pay gap. The principle of equal remuneration is a factor in favour of an increase in the NMW and the minimum wages in modern awards.

Collective Bargaining

[55] As we have mentioned, the modern awards objective applies to the setting, varying or revoking of modern award minimum wages in an annual wage review. The modern awards objective provides that the Panel must ensure that modern awards, together with the National Employment Standards (NES), provide a fair and relevant minimum safety net of terms and conditions. One of the matters the Panel is required to take into account in giving effect to the modern awards objective is “the need to encourage collective bargaining” (s.134(1)(b)).

[56] Since 2012, the proportion of employees whose pay is set by awards has increased (from 16.1 per cent to 18.8 per cent) while the proportion of employees on both collective agreements and individual arrangements/owner-managers has declined. 8 For the reasons given in Chapter 7 we are not persuaded that the recent increase in award reliance is sufficient to support the contention that recent minimum wage increases have acted as a disincentive to collective bargaining. In particular we note that while most of the award-reliant industries experienced increases in award reliance, it increased only slightly in Other services (0.5 percentage points). The Accommodation and food services industry, which has the highest proportion of “award only” employees9 of all industries (42.8 per cent in 2014), had a 2 percentage point fall in award reliance between 2012 and 2014. This tells against the proposition that the form or size of recent minimum wage increases have increased award reliance.

[57] The Panel’s previous conclusions as to the relationship between increases in minimum wages and collective bargaining remain valid, in particular:

whilst the gap between the NMW and modern award minimum wages and bargained wages is likely to increase the incentive for employees to bargain, a large gap may be a disincentive for employers to bargain; and

minimum wages are only one element of the incentive to bargain. 10

[58] The available evidence indicates that the level of increases in minimum award wages over the past decade or so have been compatible with the encouragement of collective bargaining. We are satisfied that the increase awarded in this Review is also compatible with the need to encourage collective bargaining.

The decision

[59] The Panel received submissions from the Australian Government and State governments, the Federal Opposition, collective bodies representing employers and employees and other organisations. Many of the submissions did not advance a specific proposal as to the quantum of any increase to the NMW or modern award minimum wages, including all government submissions. Further, two submissions proposed that there be no increase in minimum wages.

[60] A number of business and industry associations supported flat dollar increases, although views varied as to the appropriate quantum. ACCI and a number of others proposed an increase of not more than $5.70 per week whereas the Australian National Retailers Association (ANRA) supported an increase of $9.00 per week.

[61] Other business and industry associations supported a percentage increase. The Australian Industry Group (Ai Group) proposed a 1.6 per cent increase to both the NMW and modern and minimum wages, which represents a $10.25 per week increase to the NMW.

[62] The Australian Council of Trade Unions (ACTU) proposed a flat dollar increase of $27.00 per week to the NMW and to modern award minimum wages up to and including the C10 level and a 3.6 per cent increase to all modern award minimum wages above that level. ACCER also put forward a tiered approach though with a higher flat dollar increase to the NMW and at the lower end of modern award minimum wages. The range of proposals advanced is set out in more detail in Chapter 3.

[63] A number of submissions contended that the increases awarded in past reviews had overcompensated workers for a projected increase in inflation which did not eventuate. Similar submissions were put in last year’s Review proceedings. These submissions proceed on a false premise.

[64] As the Panel has observed before, there is often a degree of tension between the economic, social and other considerations which the Panel must take into account. It is this complexity which has led the Panel to consistently reject a mechanistic or decision rule approach to wage fixation, such as the adoption of real wage maintenance.

[65] The real wages of award-reliant employees are relevant to our task, but they are not determinative. To adopt real wage maintenance as a decision rule would fail to take into account other considerations including, for example, relative living standards (as we are required to do by s.284(1)(c)) in circumstances where the rate of growth in average earnings and bargained rates of pay have outstripped growth in minimum rates of pay.

[66] The most significant change in economic outcomes since the last Review is the reduction in inflation and aggregate wages growth. We have had particular regard to the lower growth in consumer prices and aggregate wages growth over the past year because they have a direct bearing on relative living standards and the needs of the low paid. The lower inflation and aggregate wages growth favours a more modest increase in minimum wages.

[67] Further, the unemployment rate has grown steadily from its recent low of 4.9 per cent in March 2011, to 6.1 per cent in April 2015 and there are other signs of under-utilisation in the workforce. The 2015–16 Budget Strategy and Outlook reflects a pushing out of the projected timing of a return to trend growth and the peaking of unemployment, with a slower than expected transition to non-mining investment than previously forecast. Uncertainty as to the timing of a stronger non-mining investment contribution to economic growth provides a reason for some caution.

[68] We have not taken into account the proposed small business stimulus package and other measures announced in the 2015–16 Budget. It has been a longstanding practice of the Panel and its predecessors to determine the matters before it on the basis of the existing legislative framework and not otherwise. We have not been persuaded to depart from that practice on this occasion.

[69] A number of parties made submissions raising particular industry or sector circumstances and these have been outlined in Chapters 3 and 9, and in Appendix 1 of this decision. They included the conditions facing small and medium enterprises (SMEs) and businesses operating in the hospitality, restaurant and catering, and retail sectors. The economic circumstances of these sectors have been examined in Chapter 4. The Chamber of Commerce and Industry Queensland (CCIQ) also raised the circumstances of businesses in industry sectors and regions affected by the impacts of natural disasters, such as droughts and cyclones, over the past year. All of these circumstances have been taken into account in making our decision in this Review.

[70] The principle of equal remuneration for work of equal or comparable value is a factor in favour of an increase in the NMW and modern award minimum wages. In terms of the other social considerations we are required to take into account, we note that the relative living standards of NMW and award-reliant employees have improved a little over the past year or two, as have the indicators of unmet need among the low paid. These considerations favour a more modest increase to minimum wages.

[71] The increase we have determined is consistent with the promotion of social inclusion through increased workforce participation and is also compatible with the need to encourage collective bargaining.

[72] While we have determined that it is appropriate to increase the NMW, the factors identified above have led us to award a lower increase than that determined in last year’s Review decision. We consider that an increase of 2.5 per cent is appropriate. The national minimum wage will be $656.90 per week or $17.29 per hour. The hourly rate has been calculated by dividing the weekly rate by 38, on the basis of the 38 hour week for a full-time employee. This constitutes an increase of $16.00 per week to the weekly rate or 42 cents per hour to the hourly rate.

[73] Having regard to the proposed NMW and the other relevant considerations, we also consider that it is appropriate to adjust modern award minimum wages by a moderate amount.

[74] A number of parties advanced submissions in favour of an award-by-award review of minimum wages or a differential wage increase for specific employers or industries. The scheme of the Act is more consistent with establishing adjustments across the range of modern awards, and, in the absence of exceptional circumstances, taking the sectoral variations into account when determining the level and nature of adjustments that will apply to the modern awards generally. Exceptional circumstances can and should be considered on their merits as required by the Act.

[75] For reasons outlined in Chapter 9, no exceptional circumstances so as to warrant a deferral of the increases we have awarded have been demonstrated in this Review.

[76] As to the form of the increase, past flat dollar increases in award minimum rates have compressed award relativities and reduced the gains from skill acquisition. The position of the higher award classifications has reduced relative to market rates and to average earnings and has fallen in terms of real purchasing power. These matters have led us to determine a uniform percentage increase. The considerations to which we have referred have also led us to award an increase in modern award minimum wages that is less than last year. We have decided to also increase modern award minimum wages by 2.5 per cent. Weekly wages will be rounded to the nearest 10 cents.

[77] The determinations and order giving effect to our decision will come into operation on 1 July 2015.

[78] We again draw attention to the practical difficulties which arise from the interaction of ss.157(2), 285(1) and 286 of the Act as it impacts upon claims of incapacity to pay. In particular, there is no mechanism in the Act for revisiting a determination varying modern award minimum wages after an annual wage review has been completed. As a result of this legislative inflexibility, a small or large business; a sector; or a region facing circumstances warranting the deferral of, or exemption from, an annual wage review increase can only make such an application in the context of an annual wage review. So if the adverse circumstances arose in, for example, July, the businesses affected would have to wait until the following year (i.e. the next annual wage review) before they could seek relief. This is a matter which requires legislative amendment to provide parties with an avenue to seek relief from increases flowing from an annual wage review. Such relief could be available to an individual employer or on an industry, sector or geographic basis.

[79] The Panel drew attention to these issues in the 2011–12, 2012–13 and 2013–14 Review decisions but no legislative amendments have been made and, as a consequence, the practical difficulty created by the legislative framework remains.

2. The Statutory Framework

[80] In conducting and completing an annual wage review, the Commission must review the NMW and modern award minimum wages and make a national minimum wage order. 11 The Act requires the Panel to take into account a number of considerations in performing these functions.

[81] The minimum wages objective applies to the exercise of functions and powers under the Parts of the Act concerning the NMW and minimum wages in modern awards as part of an annual wage review. 12

[82] The minimum wages objective is set out in s.284 of the Act:

“284 The minimum wages objective

What is the minimum wages objective?

(1) The FWC must establish and maintain a safety net of fair minimum wages, taking into account:

(a) the performance and competitiveness of the national economy, including productivity, business competitiveness and viability, inflation and employment growth; and

(b) promoting social inclusion through increased workforce participation; and

(d) the principle of equal remuneration for work of equal or comparable value; and

(e) providing a comprehensive range of fair minimum wages to junior employees, employees to whom training arrangements apply and employees with a disability.

This is the minimum wages objective.”

[83] The modern awards objective applies to the exercise of functions and powers in setting, varying or revoking modern award minimum wages as part of an annual wage review. 13

[84] The modern awards objective is set out in s.134 of the Act:

“134 The modern awards objective

What is the modern awards objective?

(1) The FWC must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:

(a) relative living standards and the needs of the low paid; and

(b) the need to encourage collective bargaining; and

(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and

(da) the need to provide additional remuneration for:

(i) employees working overtime; or

(ii) employees working unsocial, irregular or unpredictable hours; or

(iii) employees working on weekends or public holidays; or

(iv) employees working shifts; and

(e) the principle of equal remuneration for work of equal or comparable value; and

(f) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and

(g) the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards; and

(h) the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.

This is the modern awards objective.”

[85] The modern awards objective is directed at ensuring that modern awards, together with the NES, provide a “fair and relevant minimum safety net of terms and conditions” taking into account the particular considerations identified in paragraphs 134(1)(a)–(h). No particular primacy is attached to any of the s.134 considerations. 14 The modern awards objective is very broadly expressed.15 In National Retail Association v Fair Work Commission the Full Court of the Federal Court made the following observation about the modern awards objective:

“[109] It is apparent from the terms of s 134(1) that the factors listed in (a)-(h) are broad considerations which the FWC must take into account in considering whether a modern award meets the objective set by s 134(1), that is to say, whether it provides a fair and relevant minimum safety net of terms and conditions. The listed factors do not, in themselves, however, pose any questions or set any standard against which a modern award could be evaluated. Many of them are broad social objectives. What, for example, was the finding called for in relation to the first factor (“relative living standards and the needs of the low paid”)?” 16

[86] In our view the above observation can also be applied to the minimum wages objective in s.284.

[87] In exercising its power to set, vary or revoke modern award minimum wages, the Panel must take into account the rate of the NMW that it proposes to set in the review. 17 We return to this issue shortly in dealing with a submission put by ACCER.

[88] We would also observe that there is a degree of inconsistency in the expression of the economic considerations that the Panel is required to take into account under either s.284 or s.134. As ACCI pointed out in its submissions:

employment growth and inflation are mentioned as separate considerations under the modern awards objective (s.134(1)(h)), but in the minimum wages objectives these factors appear to be subsidiary to the performance and competitiveness of the national economy (s.284(1)(a)); and

the modern awards objective requires the Panel to take into account “the likely impact of any exercise of modern award powers on...the sustainability, performance and competitiveness of the national economy” (s.134(1)(h)), whereas the “sustainability” of the national economy is not mentioned in the minimum wages objective. 18

[89] Despite these textual differences, we accept the thrust of ACCI’s submission, that the underlying intention of the various economic considerations referred to in ss.284 and 134 is that the Panel take into account the effect of its decisions on national economic prosperity and in so doing give particular emphasis to the economic indicators specifically mentioned in the relevant statutory provisions. 19 Such an approach is supported by the object of the Act.

[90] The object of the Act is as follows:

3 Object of this Act

The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:

(a) providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia’s future economic prosperity and take into account Australia’s international labour obligations; and

(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and

(c) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and

(d) assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and

(e) enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and

(f) achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and

(g) acknowledging the special circumstances of small and medium-sized businesses. [emphasis added]

[91] Section 578(a) provides, relevantly, that the Panel must take into account the objects of the Act in performing its functions or exercising its powers in an annual wage review. 20

[92] Sections 284, 134 and 578 of the Act each direct the Panel to “take into account” certain specified considerations in conducting and completing an annual wage review. A matter which the Panel is directed to “take into account” is any relevant consideration in the Peko-Wallsend 21 sense; which is those matters which the decision maker is bound to take into account and treat as a matter of significance in the decision making process.22

[93] We note that there are some significant differences between the matters we are required to take into account and the statutory parameters which guided wage reviews conducted by the Australian Fair Pay Commission (AFPC) under the Workplace Relations Act 1996 (Cth) (the WR Act), between 2006 and 2009. Section 23 of the WR Act provided that the objective of the AFPC in performing its wage setting function was “to promote the economic prosperity of the people of Australia”, taking into account specific criteria. As was noted in the 2009–10 Review decision there are some important considerations which we are required to take into account but which the AFPC was not specifically required to take into account—including relative living standards and the needs of the low paid. 23

[94] The minimum wages objective, the modern awards objective and the general matters the Panel must take into account in performing its functions contain some common elements. The matters of direct relevance to an annual wage review can be conveniently grouped into three broad categories:

economic; 24

social; 25 and

collective bargaining. 26

[95] We have considered these matters in making our decision and specifically address them in Chapters 4–9 of this decision. Chapter 3 discusses the proposals of the parties to this Review.

[96] As the Panel has noted in previous wage reviews, there is often a degree of tension between the economic, social and other considerations which it must take into account. This tension and the complexity of the matters involved means that the task of setting minimum wages requires exercise of broad judgment, rather than a mechanistic approach. 27

[97] The submissions have raised four discrete issues which relate to the statutory framework:

(i) a proposal that the Commission consider increasing superannuation contributions from employers through the 4 yearly review of modern awards process;

(ii) proposals that the Panel should consider award, industry or regional variations;

(iii) whether the Act requires that the NMW be set independently of the setting of wage rates prescribed by modern awards; and

(iv) whether the adoption of a single-person benchmark is consistent with the Act.

(i) Superannuation

[98] The ACTU seeks a direction under either s.615 or s.582 of the Act that a Full Bench be constituted as part of the current 4 yearly review of modern awards to consider a claim to vary the model superannuation term in modern awards. 28

[99] The ACTU claim provides for increases in superannuation contributions from employers above the rate prescribed in the Superannuation Guarantee (Administration) Act 1992, as amended by the Minerals Resource Rent Tax Repeal and Other Measures Act 2014.

[100] The model superannuation term in modern awards currently provides as follows:

“S.2 Employer contributions

An employer must make such superannuation contributions to a superannuation fund for the benefit of an employee as will avoid the employer being required to pay the superannuation guarantee charge under superannuation legislation with respect to that employee.” 29

[101] The ACTU seeks to replace the current model term with a term which specifies the quantum of superannuation contributions to be paid to employees, as follows: 30

“S.2 Employer contributions

An employer must make such superannuation contributions to a superannuation fund for the benefit of an employee at the level specified in (a) or (b) below, whichever is the higher:

(a) the level as will avoid the employer being required to pay the superannuation guarantee charge under superannuation legislation with respect to that employee.

(b) the level that would apply if the charge percentage as specified in section 19 of the Superannuation Guarantee (Administration) Act 1992 was instead:

Year starting on 1 July 2015:	10
Year starting on 1 July 2016:	10.5
Year starting on 1 July 2017:	11
Year starting on 1 July 2018:	11.5
Year starting on 1 July 2019:	12

[102] Ai Group, ACCI, ABI and others submitted that the Panel has no jurisdiction to entertain the ACTU’s superannuation claim. We agree. The ACTU is not seeking to have its superannuation claim dealt with in these Review proceedings, rather it seeks a direction, under either s.615 or s.582, that a Full Bench be convened to hear and determine its claim.

[103] Section 582 provides, relevantly, that the President may give a direction that a particular matter be dealt with by a Full Bench. Similarly, s.615(2) provides that the President may direct that a function or power be exercised by a Full Bench. Importantly, the power conferred by these provisions to direct that a matter be heard by a Full Bench is only exercisable by the President, not by the Panel. This point was conceded by the ACTU during the course of the public consultations. 31

[104] If the ACTU wishes to pursue its superannuation claim the appropriate course is to file applications to vary the relevant modern awards and then to seek to have those applications referred to a Full Bench pursuant to ss.582, 615 or 615A.

(ii) Consideration of award, industry and regional variations

[105] As noted in Chapter 9, a number of parties submitted that no increases in minimum wages should be made in respect of certain modern awards. The MGA/LRA submitted that the Panel may grant a differential increase for one or more modern awards which “would consequently allow those industry sectors, such as retail, which will be most affected by an increase to the minimum award wage, to be granted an exemption from any increase to the designated modern award.” 32 However the MGA/LRA did not advance any particular claim for an exemption in respect of a particular modern award.

[106] Further, the ARA advanced the following submission:

“The FWC should consider any increase on an award-by-award basis and provide an interim decision or statement prior to handing down a final decision.” 33

[107] Two observations may be made about these submissions.

[108] The first is that the Panel has previously considered submissions to the effect that it should conduct a modern award-by-modern award review of minimum wages and that this should result in a different, lower, increase or no increase at all in specific industries or modern awards. These matters were fully canvassed in the 2011–12, 2012–13 and 2013–14 Review proceedings. In the 2012–13 Review decision the Panel said:

“[12] In Chapter 2 we deal with the statutory framework in more detail and confirm a number of general observations made by the Panel in the Annual Wage Review 2011–12 decision (2011–12 Review decision). 34 In particular we endorse the following observations:

“the legislative framework reveals a preference for consistent variation determinations across all modern awards…[t]he notion of a fair safety net of minimum wages embodies the concepts of uniformity and consistency of treatment.” 35

[13] The award-by-award approach to minimum wage fixation, based on sectoral considerations, advocated by some parties in these proceedings is inimicable to the safety net nature of modern award minimum wages. Enterprise level collective bargaining is the primary means by which the statutory framework envisages differential treatment based on the circumstances in particular enterprises, which would be influenced by relevant sectoral considerations. That the system does function in this way is evidenced by the sectoral variation in actual wage outcomes.” 36

[109] In the 2013–14 Review decision the Panel concluded as follows:

“[517] The scheme of the Act is more consistent with establishing adjustments across the range of modern awards, and in the absence of exceptional circumstances, taking the sectoral variations into account when determining the level and nature of adjustments that will apply to the modern awards generally. Exceptional circumstances can and should be considered on their merits as required by the Act.

[518] We also note that any decision to provide different wage outcomes based upon the particular circumstances in each industry, as they might vary from time to time, would inevitably lead to the loss of any relativity between the wages specified in modern awards. This would not sit comfortably with the principle of equal remuneration for work of equal or comparable value, which forms part of the minimum wages objective.” 37

[110] In the present proceedings ACCI disagreed 38 with the Panel’s conclusion in the 2011–12 Review decision that “the legislative framework reveals a preference for consistent variation determinations across all modern awards ... the notion of a fair safety net of minimum wages embodies the concepts of uniformity and consistency of treatment.”39 But ACCI did not advance a merit argument in favour of an alternative construction of the relevant provisions of the Act.

[111] The Panel is not persuaded to depart from the conclusions reached in past review decisions in respect of this issue.

[112] The second observation we would make is that the Panel has previously dealt with the proposition, advanced by the ARA in the present proceedings, that the Panel should hand down an interim decision or statement prior to handing down a final decision. We infer from the ARA’s submission that such an interim decision process is intended to allow individual employers or their representatives to then seek differential treatment on an award, sectoral or some other basis.

[113] The Panel has repeatedly noted the practical difficulties associated with such an approach having regard to the requirements in the Act regarding the time for completion of each annual wage review, commencement of the minimum wage determinations and the national minimum wage order and publication of any variation to modern award minimum wages. 40 The ARA has made no attempt to address any of these difficulties in its submission.

[114] The Panel is not persuaded to depart from the conclusion reached in the 2013–14 Review decision that an interim decision mechanism is not necessary or practical. 41

[115] In this context we would also endorse the Panel’s previous observations about the practical difficulties arising from the absence of any mechanism in the Act to revisit a determination varying modern award minimum wages after an annual wage review has been completed. In the 2012–13 Review decision the Panel said:

“[96] The current legislative framework ensures that annual wage reviews are conducted in a timely way and provides certainty for businesses and employees, by nominating the operative date of any wage increases flowing from such reviews. But the interaction of ss.157(2), 285(1) and 286 does give rise to a practical difficulty in that there is no mechanism in the Act for revisiting a determination varying modern award minimum wages after an annual wage review has been completed.

[97] Apart from the context of an annual wage review, or the system of 4 yearly reviews of modern awards, the Commission may only vary modern award minimum wages if it is satisfied, among other things, that the variation is justified on work value grounds (s.157(2)). As a result of this legislative inflexibility, a small or large business; a sector; or a region facing circumstances warranting the deferral of, or exemption from, an annual wage review increase; can only make such an application in the context of an annual wage review. So if the adverse circumstances arose in, for example, July, the businesses affected would have to wait until the following year (i.e. the next annual wage review) before they could seek relief.” 42

[116] The practical difficulty created by the present legislative framework remains and it adversely impacts on the ability of parties to seek an exemption or deferral from a variation in modern award minimum wages on the basis of exceptional circumstances which arise after an annual wage review has been completed. This is an issue for the Parliament.

[117] We now turn to consider a submission in relation to regional differentials.

[118] Business SA contended that in adjusting minimum wages the Panel should have regard to any regional impacts and submitted that:

“While acknowledging that the minimum wage provides a safety net for employees, the Fair Work Commission also needs to account for the fact that its decision has varying impacts across industries and regions. Consequently, the Fair Work Commission should consider regional variations in accordance with the recommendation put forward by the recent National Commission of Audit.” 43

[119] The reference to the National Commission of Audit refers to the report of the National Commission of Audit Towards Responsible Government, which makes the following observation:

“Having a single national minimum wage disadvantages workers attempting to gain a job in states like Tasmania and South Australia where wages and the costs of living are generally lower than in other States.

There are wide differences in wage rates between States. While the minimum wage is around 45 per cent of the Australian Capital Territory Average Weekly Earnings, it is around 65 per cent of Average Weekly Earnings in Tasmania.

The Commission recommends that a different minimum wage apply in each jurisdiction, with a transition period over the next 10 years. In particular, the Commission proposes the minimum wage in each jurisdiction be equal to the lower of the Minimum Wage Benchmark described above, or 44 per cent of Average Weekly Earnings in that jurisdiction by 2023. The wage would then increase in line with growth in that jurisdiction’s Average Weekly Earnings.” 44

[120] This observation is reflected in Recommendation 28: The minimum wage, which recommends, among other things:

“transitioning the minimum wage in each State and Territory to the lower of the ‘Minimum Wage Benchmark’ or 44 per cent of Average Weekly Earnings in that jurisdiction by 2023.” 45

[121] To the extent that Business SA is advocating different modern award minimum wage rates by reference to State boundaries, such an approach is proscribed by the Act. The Act constrains the extent to which modern awards may include regional variations based on State or Territory boundaries. Section 154(1) provides as follows:

“General rule—State-based difference terms must not be included

(1) A modern award must not include terms and conditions of employment (State-based difference terms)that:

(a) are determined by reference to State or Territory boundaries; or

(b) are expressed to operate in one or more, but not every, State and Territory.” 46

[122] In a different context, the Panel previously expressed doubts about whether it had the power to defer the operation of a variation determination by reference to State or Territory boundaries. 47

[123] The Panel takes into account the circumstances of different regions, industries and sectors as part of its broader consideration of the national economy. In addition, the Panel has scope to consider whether exceptional circumstances should result in delaying or deferring the operation of a variation to a modern award or adjustment of the NMW and has outlined the process for such considerations in previous reviews. 48

(iii) Setting the national minimum wage independently of wage rates in modern awards

[124] ACCER seeks a ruling from the Panel that “the Act requires that the national minimum wage be set independently of the setting of wage rates prescribed by awards made under the legislation.” 49 ACCER contends that:

“[t]he award classification system has operated to constrain the adjustment of the NMW. Since 1997 the NMW and the C14 award rate appear to have been tied together by a Gordian Knot. The provisions of the current legislation, properly applied, cut that knot.” 50

[125] As we have mentioned, the Panel must conduct and complete an annual wage review in each financial year. The Panel’s task is set out in s.285(2) of the Act:

“In an annual wage review, the FWC:

(a) must review:

(i) modern award minimum wages; and

(ii) the national minimum wage order; and

(b) may make one or more determinationsvarying modern awards to set, vary or revoke modern award minimum wages; and

[126] National minimum wage orders are dealt with in Division 4 of Part 2–6 of the Act (ss.293–299). A national minimum wage order sets the NMW (s.194(1)(a)) and special national minimum wages (s.294(1)(b)) for employees in the following classes:

(i) junior employees

(ii) employees to whom training arrangements apply

(iii) employees with disability.

[127] A national minimum wage order must also set the casual loading for award/agreement free employees (s.294(1)(c)).

[128] The national minimum wage order applies to award/agreement free employees. 51 An award/agreement free employee cannot be paid less than the rate of pay specified in the national minimum wage order. Further, if an enterprise agreement applies to an employee and the employee is not covered by a modern award then the employee’s base rate of pay under the enterprise agreement must not be less than the rate specified in the national minimum wage order (s.206(3)).

[129] The minimum wages objective applies to the review and making of a national minimum wage order. This follows from the fact that the minimum wages objective applies to the performance or exercise of the Commission’s functions under Part 2–6 of the Act (s.284(2)(a)) and the review and making of a national minimum wage order is one of the Commission’s functions under Part 2–6. The objects of the Act are also relevant to the performance or exercise of this function (s.578), a point to which we shall return shortly.

[130] The review and variation of modern award minimum wages is a separate function to that of reviewing and making a national minimum wage order, though the two functions are related. We accept the proposition that there is no legislative requirement to set the NMW rate at the same level as the lowest modern award minimum wage rate. The setting of the NMW rate is a discretionary decision which takes into account the statutory considerations relevant to that discrete task.

[131] As we have mentioned, the modern awards objective applies to the exercise of functions and powers in setting, varying or revoking modern award minimum wages as part of an annual wage review. The modern awards objective is not relevant to the review and making of a national minimum wage order. Section 134(2) deals with the application of the modern awards objective:

“(2) The modern awards objective applies to the performance or exercise of the FWC’s modern award powers, which are:

(a) the FWC’s functions or powers under this Part; and

(b) the FWC’s functions or powers under Part 2–6, so far as they relate to modern award minimum wages.

Note: The FWC must also take into account the objects of this Act and any other applicable provisions. For example, if the FWC is setting, varying or revoking modern award minimum wages, the minimum wages objective also applies (see section 284).”

[132] The review and making of a national minimum wage order does not involve the performance or exercise of the Commission’s modern award powers and hence the modern awards objective has no application to that function.

[133] There is considerable overlap between the considerations the Panel is required to take into account under the minimum wages objective and the modern awards objective, though as we have noted some of these considerations are not expressed in the same terms. In particular, both the minimum wages objective and the modern awards objective require the Panel to take into account:

promoting social inclusion through increased workforce participation (s.284(1)(b) and s.134(1)(c));

relative living standards and the needs of the low paid (s.284(1)(c) and s.134(1)(a));

the principle of equal remuneration for work of equal or comparable value (s.284(1)(d) and s.134(1)(e)); and

various economic considerations (s.284(1)(a) and s.134(1)(d), (f) and (h)).

[134] However the modern awards objective also requires the Panel to take into account “the need to encourage collective bargaining” (s.134(1)(b)). The minimum wages objective makes no express reference to any such consideration. As we have mentioned it is the minimum wages objective, not the modern awards objective, which is relevant to setting the NMW rate.

[135] The real issue is: what practical difference does this point make? The answer is: not much. While the minimum wages objective does not direct the Panel to take into account the need to encourage collective bargaining in setting the NMW rate, the Panel is required to take the objects of the Act into account in performing that task. As we have set out earlier (see paragraph [90]above) one of the means by which the object of the Act is given effect is “through an emphasis on enterprise level collective bargaining” (s.3(f)). While not expressed in the same terms as in the modern awards objective it is plain from s.3(f) and a reading of the Act as a whole that one of the purposes of the Act is to encourage collective bargaining. It is appropriate that we take that legislative purpose into account in setting the NMW rate.

[136] As mentioned earlier, the making of a national minimum wage order and the review and variation of modern award minimum wages are separate but related functions. They are related because s.285(2) provides that in exercising its powers to set, vary or revoke modern award minimum wages, the Panel “must take into account the rate of the national minimum wage that it proposes to set in the Review.”

[137] It follows that as part of the decision making process in an annual wage review the Panel must first form a view about the rate of the NMW it proposes to set in the review (taking into account the statutory considerations relevant to that discrete task) and then take that proposed NMW rate into account (along with the other relevant statutory considerations) in exercising its powers to set, vary or revoke modern award minimum wage rates.

[138] No party contended that the Act precluded the Panel from continuing to conduct annual wage reviews in a manner that involves a concurrent assessment of the NMW and modern award minimum wages. Nor does the Act suggest some sort of bifurcated process whereby the Panel first makes a national minimum wage order (which includes setting the NMW), before turning its mind to exercising its review powers to set, vary or revoke modern award minimum wage rates. So much is clear from s.285(2), which suggests that the two tasks take place in the context of a single annual wage review; s.285(3), which refers to the NMW rate the Panel proposes to set in the review (as opposed to the NMW rate as currently set in a national minimum wage order (see s.135(2)); and the statutory direction that both the national minimum wage order and annual wage review variation determinations come into operation on 1 July in the next financial year (absent exceptional circumstances (ss.286 and 287)).

[139] Accordingly, as part of the annual wage review the Panel considers both the setting of the NMW rate and whether to make any variation determinations in respect of modern award minimum wages. Each of these tasks is undertaken by reference to the particular statutory criteria applicable to each function. As part of its decision making process the Panel first forms a view about the NMW rate it proposes to set in the review and then takes that proposal into account in exercising its powers to set, vary or revoke modern award minimum rates.

(iv) Reference household for setting minimum wages

[140] ACCER made submissions in relation to the single-person reference household, and characterised this as “an issue of law”. 52 It submitted that, upon the proper construction of s.284(1), the Panel is required to take into account the living standards and needs of the low paid with family responsibilities and that not to do so would be contrary to law:

“… upon a proper construction of the terms of the Fair Work Act 2009:

(a) the establishing and maintaining of a safety net minimum wage under section 284(1) of the Fair Work Act requires the FWC to take into account the living standards and needs of the low paid with family responsibilities; and

(b) the establishing and maintaining of a safety net minimum wage under section 284(1) of the Fair Work Act without taking into account the living standards and the needs of the low paid with family responsibilities would be contrary to law.” 53

[141] ACCER presented a number of arguments in support of its position on the reference household for setting minimum wages, including: a proper construction of s.284(1) of the Act; 54 accounting for the objects of the Act in the setting of minimum wages;55 the intention of Parliament in the exercise of powers under the Act;56 and consideration of international obligations.57

[142] ACCER submitted that the rulings on the construction of the statutory provisions concerning the single-person benchmark are required because “[t]here can be no living wage if the single-person benchmark is applied to wage setting under the Fair Work Act.”58

[143] The Panel is bound to take into account relative living standards and the needs of the low paid, as prescribed by the Act, without limitation.

[144] In this year’s review, as with previous reviews, the Panel’s decision reflects a range of considerations in taking into account relative living standards and the needs of the low paid. These considerations include (but are not limited to) single-person households.

[145] The Panel has received a number of other submissions in relation to the single-person reference household and the role of household circumstances in considering relative living standards and needs of the low paid. ACCER’s submission and those other submissions are addressed in Chapter 5.

3. The Parties’ Proposals

[146] The Panel received submissions from the Australian Government and State governments, the Federal Opposition, collective bodies representing employers and employees and other organisations. The proposals advanced varied significantly, in terms of both the quantum and form of any proposed increase to the NMW and modern award minimum wages. A number of submissions identified issues for consideration without proposing a particular outcome. Some submissions recommended that there should be no increase in the NMW or to modern award minimum wages, 59 while the CCIQ proposed a flat dollar increase with exemptions for certain sectors.60 A summary of proposed minimum wages adjustments as well as claims for any exemptions or deferrals is set out at Appendix 1 and the claims for exemptions and differential outcomes are addressed in Chapter 9. This chapter summarises the parties’ proposals in respect of adjustments to the NMW and modern award minimum wages.

Proposals for a flat dollar increase

[147] A number of business and industry associations supported flat dollar increases, although views varied as to the appropriate quantum. ACCI, Australian Federation of Employers and Industries (AFEI), Australian Retailers Association (ARA), CCIQ, and Victorian Automobile Chamber of Commerce (VACC) proposed an increase to the NMW and modern award minimum wages of not more than $5.70 per week. 61 ACCI recommended a “cautious and constrained approach” given current economic conditions “including continued softening in the labour market”62 and submitted that:

“Participation in paid work is critical to maintaining adequate living standards and to prevent poverty and social exclusion. Structural changes in the economy have the potential to magnify the consequences of unemployment with many people finding they no longer have skills in line with demand. This heightens the risk of people being unemployed for longer periods of time or vacating the labour market entirely. The minimum wage function must not exacerbate the risk of unemployment for those most vulnerable in the labour market.” 63

[148] The ANRA supported an increase to the NMW and modern award minimum wages of $9.00 per week, 64 submitting that such an increase would be “affordable for retail employers and will avoid putting retail jobs at risk.”65

[149] The South Australian Wine Industry Association recommended no increase to the NMW and modern award minimum wages, but in the event the Panel decided to award an increase, “it should be a flat increase that is fair to all employees and capped no higher than the rate of inflation.” 66

Proposals for a percentage increase

[150] Three submissions put forward proposals for a percentage increase. Ai Group proposed a 1.6 per cent increase be applied to both the NMW and modern award minimum wages, which represents an increase of $10.25 per week in the NMW and an increase of $12.00 per week in the C10 rate. 67 Ai Group submitted that it based its proposal on a number of factors, in particular:

“The best that can be said for the Australian economy in 2015 is that it is underperforming. This underperformance is evident across a range of key economic measures including GDP growth, business profitability, real incomes, productivity, inflation, employment and investment. ...

Raising Australian minimum wages beyond a modest amount would further damage Australian competitiveness.” 68

[151] Master Grocers Australia and Liquor Retailers Australia (MGA/LRA) recommended an increase of not more than 1.2 per cent (or $8.40 rounded to the nearest 10 cents) to the NMW and modern award minimum wages and submitted that an increase in excess of this amount would “adversely affect independent supermarkets and liquor stores.” 69

[152] The National Farmers’ Federation (NFF) submitted that “the softening in Australia’s economy suggest that restraint is warranted” and that a 1.1 per cent increase in modern award minimum wages and the NMW “is appropriate in the current environment.” 70

25 For example, the establishment and maintenance of a safety net of fair, relevant and enforceable minimum wages within the context of an easy to understand, stable and sustainable modern award system (ss.3(b), 134(1), 134(1)(g) and 284(1)); the promotion of social inclusion through increased workforce participation (ss.134(1)(c) and 284(1)(b)); relative living standards and the needs of the low paid (ss.134(1)(a) and 284(1)(c)); the principle of equal remuneration for work of equal or comparable value (ss.134(1)(e) and 284(1)(d)); and providing a comprehensive range of fair minimum wages to junior employees, employees to whom training arrangements apply and employees with a disability (s.284(1)(e)).

26 For example, the need to encourage collective bargaining (s.134(1)(b); see also s.3(f)).

27 [2014] FWCFB 3500 at para. 72; [2013] FWCFB 4000 at para. 10.

28 ACTU submission, pp. 4–6 at paras 12–21.

29 [2008] AIRCFB 1000 at 91.

30 ACTU submission, p. 5 at para 14.

31 Transcript, 19 May 2015 at para 15.

32 MGA/LRA submission at p.5

33 ARA submission at p.6.

34 [2013] FWCFB 4000.

35 [2012] FWAFB 5000 at paras 257 and 258.

36 [2013] FWCFB 4000 at paras 12–13.

37 [2014] FWCFB 3500 at paras 517–518.

38 ACCI submission at para. 9.

39 [2012] FWAFB 5000 at paras 257–258.

40 See [2014] FWCFB 3500 at paras 493–515; [2013] FWCFB 4000 at para 98, citing [2012] FWAFB 5000 at paras 280–282.

41 [2014] FWCFB 3500 at paras 515–516.

42 [2013] FWCFB 4000 at paras 96–97.

43 Business SA submission at p. 3.

44 National Commission of Audit, Towards Responsible Government, February 2014 at p.148.

45 National Commission of Audit, Towards Responsible Government, February 2014 at p. 149.

46 Fair Work Act, s.154(1).

47 [2012] FWCFB 5000 at para. 246.

48 Fair Work Act, s.286; [2014] FWCFB 3500 at paras 492–562; [2013] FWCFB 4000 at paras 486–549.

49 ACCER submission at p. 3, para. 8.

50 ACCER submission at p. 68, para. 95.

51 Fair Work Act s.294(3) and (4). While a special national minimum wage may apply to a “specific class of employees,” that has not been the practice to date.

52 ACCER submission, pp. 9–12, at paras. 39–53.

53 ACCER submission, p. 3 at para. 6.

54 ACCER submission, p. 9 at paras 39–42.

55 ACCER submission, p. 10 at para. 44.

56 ACCER submission, p. 11 at para. 45.

57 ACCER submission, p. 10-11 at paras 46–49.

58 ACCER submission, p. 4 at para. 16.

59 AHA, TAA & AAoA submission at p. 3; South Australian Wine Industry Incorporated Association submission at p. 9.

60 See CCIQ submission, pp. 5–6 at paras 20–25.

61 ACCI submission, p. 2 at para. 1; AFEI submission, pp. 19–20 at para. 55; ARA submission at pp. 3-4; CCIQ submission, p. 2 at para. 4; p. 6 at para. 26; VACC submission at p. 2.

62 ACCI submission, p. 2, at para. 1.

63 ACCI submission, p. 2, at para. 1.

64 ANRA submission at p. 4.

65 ANRA submission at p. 4.

66 South Australian Wine Industry Incorporated Association submission at p. 8.

67 Ai Group submission at pp. 5, 37.

68 Ai Group submission at p. 5.

69 MGA/LRA submission at pp. 3–4.

70 NFF submission, p. 15 at paras 35–36.

71 ACTU submission, p. 3 at para. 1; ACCER submission, p. 2 at paras 1–3; United Voice submission, p. 5 at para. 16.

72 The C10 level refers to the rate of pay for an employee classified as an Engineering/ Manufacturing Tradesperson—Level I under the Manufacturing Award, and equivalent levels within other modern awards.

73 ACTU submission, p. 3 at para. 1.

74 ACTU submission at p. 3, para. 4; “Projection based on the assumption that average weekly ordinary time earnings (AWOTE) of full-time adults will increase by 2.8% over the year to November 2015, as it did in the year to November 2014. This is not a forecast, merely a projection assumption.”

75 United Voice submission, p. 5 at para. 16.

76 ACTU submission, pp. 4–6 at paras 10–21.

77 United Voice submission, p. 6 at para. 17.

78 ACCER submission, p. 2 at para. 1.

79 ACCER submission, p. 2 at para. 1.

80 Transcript 20 May 2015 at para 586.

81 Business SA submission at p. 4.

82 AHA, TAA & AAoA submission at p. 3.

83 Australian Government submission, p. 3 at para. 10.

84 Western Australian Government submission, p. 2 at para. 7.

85 Western Australian Government submission, p. 7 at para. 27.

86 New South Wales Government submission, p. 26 at para.101.

87 Victorian Government submission, p. 4 at para. 6; Queensland Government submission at pp. 13–14; South Australian Government submission, p. 20 at para. 89.

88 Victorian Government submission, p. 4 at para. 6.

89 Queensland Government submission at p. 2.

90 South Australian Government submission, p. 9 at para. 29.

91 South Australian Government submission, p. 20 at para. 89.

92 Federal Opposition submission, p. 4 at para. 9; p. 13 at para. 69.

93 ACOSS submission at p. 6.

94 ABI submission in reply at p. 3.

95 ABI submission at p. 9.

96 HIA submission at p. 3.

97 HIA submission at pp. 3 and 9.

98 R&CA submission at p. 12.

99 ABS, Catalogue no 8501.0. Retail Trade, Australia, March 2015.

100 Fair Work Commission (2015), Statistical Report - Annual Wage Review 2014-15, Chart 1.3:Real net national disposable income, real GDP and the terms of trade, indexes—Dec-04 = 100.

101 ABS, Catalogue no 5625.0 - Private New Capital Expenditure and Expected Expenditure, Australia, Dec 2014. Trend data, Chain volume.

102 Other selected industries includes Electricity, gas, water and waste services; Construction; Wholesale trade; Retail trade; Transport, postal and warehousing; Information media and telecommunications; Finance and insurance (excluding Superannuation funds); Rental, hiring and real estate services; Professional, scientific and technical services; Accommodation and food services; Administrative and support services; Arts and recreation services; and Other services.

103 ABS Catalogue no 5206.0- Australian National Accounts: National Income, Expenditure and Product, Dec 2014.

104 [2013] FWCFB 4000 at paras 147-160.

105 ACTU submission, p.83 at para 248.

106 Australian Government submission, p.20 at para.100.

107 Australian Government submission, p.20 at para. 203.

108 ACTU submission, p.48 at Figure 49.

109 ACTU submission, p.52 at para 160.

110 [2014] FWCFB 3500 at paras 160-169.

111 [2014] FWCFB 3500 at para. 169.

112 [2013] FWCFB 4000, at para 175.

113 Rizov M and Croucher R (2011), The impact of the UK national minimum wage on productivity by low-paying sectors and firm-size groups, Report to the Low Pay Commission, London, March 2011.

114 OECD Employment Outlook, Chapter 3, Labour Losing to Capital: What Explains the Declining Share?

115 Australian Government submission, p. 49, at para 216.

116 Australian Government response to questions for consultations, at p. 2

117 Australian Government submission, p. 49 at para. 221.

118 Zelenska T (2011) Channels of Adjustment in Labor Markets: The 2007-2009 Federal Minimum Wage Increase, dissertation, Georgia State University.

119 ACTU response to questions for consultations, at pp. 2–5.

120 ACTU response to questions for consultations, at p 4.

121 [2014] FWCFB 3500, at para 173.

122 Bickerdyke I, Lattimore R, and Madge A (2000), Business Failure and Change: An Australian Perspective, Productivity Commission Staff Research Paper, Ausinfo, Canberra

123 Fair Work Commission (2015) Statistical Report–Annual Wage Review 2014–15, p. 9 at Table 3.2.

124 ABS, Catalogue No. 6401.0 - Consumer Price Index, Australia, Mar 2015.

125 Reproduced from Figure 67 “Measures of wages growth”, ACTU submission at p. 96.

126 Ai Group submission, p. 25 at Chart 22.

127 ACTU submission at p. 97.

128 ACTU submission, p. 97 at para. 289.

129 RBA, Statement on Monetary Policy, February 2015, at pp. 67–68.

130 Kent C (2014), Cyclical and Structural Changes in the Labour Market, Address on Labour Market developments, Sydney, 16 June 2014.

131 Australian Government submission, p. 11 at para. 58.

132 Buchanan J, Bretherton T, Frino B, Jakubauskas M, Schutz J, Verma G & Yu S (2013), Minimum wages and their role in the process and incentives to bargain, Research Report 7/2013, Fair Work Commission, December, Melbourne.

133 ABS, Catalogue No. 5206.0. - Australian National Accounts: National Income, Expenditure and Product, Dec 2014.

134 Fair Work Commission (2015), Statistical Report–Annual Wage Review 2014–15, p. 14 at Table 6.1.

136 ABS, Catalogue No. 6291.0.55.001. - Labour Force, Australia, Detailed—Electronic Delivery, Apr 2015.

137 RCA submission at pp. 6-7.

138 MA000009

139 ABS, Catalogue no 6291.0.55.003 - Labour Force, Australia, Detailed, Quarterly, Feb 2015.

140 Note that within the working age population there are variations in the propensity to work for different age groups: older and younger age groups have lower participation and employment rates than do those aged 25-54 years and women’s paid employment drops a little during their prime child bearing and caring years. For this reason, the use of the age range 20-64 years does not fully account for the effects of the changing age structure on the employment-to-population ratio, or on the participation rate: it is a short hand method to account for ageing. Note also that there is a rise in the proportion of people over the age of 64 who are in paid employment. This rise is not captured in the data presented here.

141 Fair Work Commission (2015), Statistical Report–Annual Wage Review 2014–15, p. 21–22 at Tables 6.9 and 6.10.

142 ABS, Catalogue No. 6265.0: - Underemployed Workers, Australia, September 2013; ABS, Catalogue, No 6202.0. - Labour Force, Australia, Sept, 2013.

143 ABS, Catalogue No. 6291.0.55.001. - Labour Force, Australia, Detailed—Electronic Delivery, Apr 2015.

144 ACTU submission, pp.102 at para. 303.

145 ACTU submission pp.102-103 at paras. 305-306.

146 Australian Government submission at p. 24.

147 Australian Government submission, p. 24 at para. 119.

148 Australian Government, Budget Paper No. 1: Budget Strategy and Outlook 2015–16, Canberra, 2015, Statement 2: Economic Outlook, at p. 2-17.

149 ABS, Catalogue no 6202 - Labour Force Australia, April 2015.

150 Australian Government submission, p.24 at Chart 4.2.

151 Ai Group, at p. 24 of its submission, provided a chart based on the ABS Labour Force data that shows about 21 per cent of men worked 50 or more hours per week in 2014. They note that the proportion of the workforce working these very long hours has fallen since 2000.

152 ABS Catalogue no 6265.0 - Underemployed Workers, Australia, September 2013.

153 See ABS, Catalogue no 6202 - Labour Force Australia, April 2015, Table 20.

154 Ai Group submission, at p. 17.

155 ACOSS submission at pp. 39-40.

156 ABS, Catalogue no 6202.0. - Labour Force, Australia, Apr 2015.

157 ABS, Catalogue no 6291.0.55.001. - Labour Force, Australia, Detailed—Electronic Delivery, Apr 2015.

158 ABS, Catalogue no 6291.0.55.001. - Labour Force, Australia, Detailed—Electronic Delivery, Apr 2015.

159 Australian Government submission, p. 27 at para. 128.

160 ACTU submission, p.108 at para.319.

161 ABS, Catalogue no 6306.0. - Employee Earnings and Hours, Australia, May 2014. In 2008, the survey was conducted in August.

162 An alternative approach to identifying the award-reliant industries is to select the industries in which the highest number of award-reliant employees are employed. The two approaches are legitimate and show slightly different perspectives. See [2013] FWCFB 4000 at paras 281–284.

163 [2014] FWCFB 3500 at para. 225.

164 Australian Government submission, pp. 34–42, at paras 152–188.

165 ACCI Submission 2013, Annexure C; Connolly E, Norman D and West T, (2012) "Small Businesses: An Economic Overview, RBA Small Business Finance Roundtable, May 2012.

166 Australian Government submission at paras 168 and 169.

167 Australian Government submission at para. 187.

168 ACCI Business Expectation Survey - December Quarter 2014.

169 NAB Group Economics, NAB Quarterly SME Survey, December Quarter 2014.

170 NAB Group Economics, NAB Quarterly SME Survey, March Quarter 2015.

171 Australian Government, Budget Paper No. 2: Budget Measures, 2015–16, at p.19.

172 ACTU post-Budget submission at p. 16.

173 ACTU post-Budget submission at p. 17.

174 [2014] FWAFB 3500, at paras 299-301.

175 Australian Government, Budget Paper No. 2: Budget Measures 2015-16 at p.19.

176 AHA, TAA & AAA joint submission at p. 3.

177 AHA, TAA & AAA joint submission at p. 3.

178 [2014] FWCFB 1846.

179 MGA/LRA submission at pp. 10–11.

180 HIA submission at p. 4; NFF submission, p. 6 at para. 4; VACC submission at p. 6-7.

181 [2013] FWCFB 5411.

182 [2014] FWCFB 3500, at paras 548,- 549, 561.

183 [2014] FWCFB 3500 at paras 559–60.

184 [2014] FWCFB 3500 at paras 226–228; [2014] FWCFB 3500 at paras 265– 266 and 438– 440.

185 Ai Group, Australian Performance of Manufacturing Index (PMI), April 2015; Australian Performance of Services Index (PSI), April 2015; Australian Performance of Construction Index (PCI), April 2015.

186 Ai Group response to questions on notice from the Expert Panel, May 2014.

187 Link : What does the Australian PSI tell us about ABS Data? at Park A (2011), ‘Business surveys and economic activity’, RBA Bulletin, December quarter; Aylmer C & Gill T (2003), Business Surveys and Economic Activity, RBA Research Discussion Paper 2003-01, February.

189 VACC submission, p.13 at Appendix 1.

190 MGA/LRA submission at page 12.

191 R&CA submission at page 11; R&CA 2015 Industry Benchmarking Survey

192 R&CA submission 2014, at p. 9.

193 Fair Work Commission (2015) Statistical Report–Annual Wage Review 2014–15, p.18 at Table 6.4.

194 ABSCatalogue no 6291.0.55.003 – Labour Force, Australia, Detailed, Quarterly, Feb 2015.

195 Ai Group, Australian Performance of Manufacturing Index (PMI), April 2015; Australian Performance of Services Index (PSI), April 2015; Australian Performance of Construction Index (PCI), April 2015.

196 Australian Government, Budget Paper No. 1: Budget Strategy and Outlook 2015–16, Canberra, 2015 at pp. 1-6..

197 Australian Government, Budget Paper No. 1: Budget Strategy and Outlook 2015–16, Canberra, 2015 at pp. 1-6.

198 Australian Government, Budget Paper No. 1: Budget Strategy and Outlook 2015–16, Canberra, 2015 at pp. 2-10.

199 Australian Government, Budget Paper No. 1: Budget Strategy and Outlook 2015–16, Canberra, 2015 at pp.2-17.

200 Australian Government, Budget Paper No. 1: Budget Strategy and Outlook 2015–16, Canberra, 2015, Statement 2: Economic Outlook, at pp. 2-17.

201 Australian Government, Budget Paper No. 1: Budget Strategy and Outlook 2015–16, Canberra, 2015 at pp. 1-7; pp. 2-4.

202 Australian Government, Budget Paper No. 1: Budget Strategy and Outlook 2015–16, Canberra, 2015, Statement 2: Economic Outlook, at pp. 2-16.

203 Australian Government, Budget Paper No. 1: Budget Strategy and Outlook 2015–16, Canberra, 2015, Statement 2: Economic Outlook, at pp. 2-17.

204 [2013] FWCFB 4000 at para 361.

205 Australian Government submission, pp. 10–11 at para. 57.

206 Australian Government submission, pp. 10–11 at para. 57.

207 Australian Government submission, pp. 10–11 at para. 57.

208 Australian Government submission, pp. 10–11 at para. 57.

209 ACTU submission, p. 14 at para. 48.

210 Australian Government submission, p. 2 at para 7.

211 Australian Government submission, p. 55 at para. 260.

212 Australian Government submission, p. 9 at Chart 2.1.

213 Australian Government submission, p. 55 at para. 263 and pp. 57–60 at paras 271–279.

214 Australian Government submission , p. 5, at para. 36; p. 59 at para. 276.

215 ACTU submission, p. 20 at para. 61. The ACTU has deflated casual employees’ hourly earnings by one-fifth to remove an assumed casual loading of 25 per cent.

216 Wright S and Buchanan J (2013), Award reliance, Research Report 6/2013, Fair Work Commission, December, Melbourne p. 67.

217 [2014] FWCFB 3500 at para. 21.

218 [2014] FWCFB 3500 at para. 365.

219 ACTU post-Budget submission at pp. 7-8.

220 ACCI submission, pp.43-44, at paras 152-153.

221 Ex parte McKay (1907) 2 CAR 1.

222 ACOSS submission at p. 6.

223 ACOSS submission at p.22.

224 ACCER submission, p.8 at para.33.

225 Transcript at 570.

226 ACCER submission, p. 36 at para 157.

227 Transcript, at 509-510.

228 [2014] FWCFB 3500 at para 323.

229 See for example tables 8.2 and 8.3 of the Statistical Report.

230 ACCI submission, p. 43 at para 152.

231 ACCER submission, p. 35-36 at paras 155-156.

²³² HILDA Survey, release 13.

233 [2014] FWCFB 3500 at para. 325.

234 [2014] FWCFB 3500 at para. 396.

235 [2014] FWCFB 3500 at para. 85.

236 [2014] FWCFB 3500 at para. 349; [2013] FWCFB 4000at paras 269 and 275.

237 Australian Government submission, p. 13 at para. 60.

238 [2014] FWCFB 3500 at para. 59.

239 Australian Government submission, pp.73-4 at para 345; p. 74 at Table 10.1.

240 Australian Government submission, pp.73-4 at para 345; p. 74 at Table 10.1.

241 Federal Opposition submission, p.11, at para 55.

242 ACTU submission, p. 42, at para. 123.

243 ACTU submission, p. 43 at para. 125.

244 Australian Government submission, p. 81, at para. 386.

245 Australian Government submission, p. 14-15 at paras. 66-67; Ai Group submission at p.30.

246 ACTU submission, p. 37-38, para. 114; Federal Opposition submission, p. 11 at para. 57; Queensland Government submission at p. 11.

247 [2014] FWCFB 3500 at para. 356.

248 [2014] FWCFB 3500, at para 357.

249 Australian Government submission, p. 70, at Table 9.5.

250 Australian Government submission, p.69, at para. 326.

251 ACCER submission, Attachment, p. 172 at Table 19, p. 174 at Table 20.

252 ACCER submission, Attachment, p. 174 at Table 20.

253 ACCER submission p. 26 at para. 113.

254 Australian Government submission, pp.65-66 at paras 303-310.

255 ACTU post-Budget submission at p. 16-17.

256 ACCER post-Budget submission at pp. 3-5.

257 Federal Opposition post-Budget submission at pp.3-7.

258 [2014] FWAFB 3500 at paras 299-301.

259 [2012] FWAFB 5000 at para. 166.

260 [2013] FWCFB 4000 at paras 27–28.

261 Clean Energy Legislation (Carbon Tax Repeal) Act 2014.

262 Australian Government submission, p. 75 at para. 361.

263 Australian Government submission, p. 76 at para. 363 and p. 77 at Table 10.2.

264 [2014] FWCFB 3500 at para. 374.

265 ACTU submission, p. 45 at para. 130.

266 ACTU submission, p. 45, at para. 131.

267 ACTU submission, p.47 at Table 16.

268 [2013] FWCFB 4000 at para. 102.

269 [2014] FWCFB 3500 at paras 323and 370; [2013] FWCFB 4000 at paras 33and 367.

270 Fair Work Australia (2011) Relative living standards and needs of low-paid employees: definition and measurement, Research Report 2/2011, January, 2011.

271 Saunders P (2015), Poverty and social disadvantage: Measurement, evidence and action, inCEDA (2015) “Addressing entrenched disadvantage in Australia” April 2015, Melbourne at p.23.

272 Australian Government submission, p. 29 at para. 137.

273 ACTU submission, p. 49 at para. 146.

274 ACTU submission, p. 49 at para. 147.

275 Cassells R, Dockery M and Duncan A (2014) ‘Falling through the cracks: Poverty and disadvantage in Australia’, Focus on the States, Issue no 1, October 2014 at p. 21.

276 ACTU submission, p. 49 at para. 147.

277 ACOSS submission at p.25.

278 ACOSS submission at p. 25.

279 ACOSS (2014) Poverty in Australia 2014, ACOSS, Sydney.

280 ACOSS submission at p.8, (2014) Poverty in Australia 2014, ACOSS, Sydney at p. 14.

281 ACOSS submission at p.27, (2012) Poverty in Australia 2012, ACOSS, Sydney at p. 8.

282 Fair Work Commission (2015), Statistical Report—Annual Wage Review 2014–15 at Table 11.2.

283 Fair Work Commission (2015), Statistical Report—Annual Wage Review 2014–15 at pp. 35-39.

284 Fair Work Commission (2015), Statistical Report—Annual Wage Review 2014–15 at Table 11.2.

285 Fair Work Commission (2015), Statistical Report—Annual Wage Review 2014–15 at Table 11.1.

286 Australian Government submission, p. 62 at Table 8.6.

287 ACOSS (2014) Poverty in Australia 2014, ACOSS, Sydney at p.26.

288 ABI submission at p. 3.

289 Queensland Government submission at p. 7.

290 ACTU reply submission, p. 1 at para. 4.

291 ACTU reply submission, p. 10 at paras 66–70.

292 ACTU reply submission, pp. 13–14 at paras 99–112.

293 [2014] FWCFB 3500 at para. 427.

294 [2014] ACTU submission, p. 23 at para. 88.

295 Australian Government submission, pp.52–3 at paras 240–244.

296 ACCI submission, pp. 17–19 at paras 46–52.

297 ABI submission, at pp. 6–7.

298 Fidrmuc J and Horrillo T (2011), The impact of the national minimum wage on the labour market outcomes of young workers, Report to the Low Pay Commission, London, March 2011.

299 Doucouliagos H and Stanley TD (2009), “Publication Selection Bias in Minimum-Wage Research? A Meta-Regression Analysis”, British Journal of Industrial Relations, vol. 47, issue 2, pp. 406–428; Belman D and Wolfson PJ (2014), What Does the Minimum Wage Do?, W.E. Upjohn Institute for Employment Research, Upjohn Press.

300 Australian Government submission, p. 53 at para. 245.

301 Australian Government submission, p. 53 at para. 246.

302 ACCI submission, p. 17 at para. 51.

303 ACCI submission, p. 19 at para. 52.

304 ACCI submission, p. 19 at paras 53–54.

305 ACCI submission, p. 20 at para. 55.

306 ACTU reply submission, pp.11–12 at paras 79–90.

307 Sorkin I (2014), “Are There Long-term Effects of the Minimum Wage?”, Review of Economic Dynamics, vol. 18, issue 2, p. 2.

308 ACCI submission, p. 20 at para. 58.

309 ABI submission at p. 6.

310 ACTU reply submission, p. 13 at paras 94–95.

311 ACCI submission in reply, p. 18 at para. 45.

312 Australian Government submission, p. 71 at para. 330.

313 Australian Government submission, p. 71 at para. 333.

314 Australian Government submission, p. 72 at Table 9.6.

315 Fair Work Commission (2015), Statistical Report –Annual Wage Review 2014–2015, p. 47 at Table 15.1.

316 Fair Work Commission (2015), Statistical Report –Annual Wage Review 2014–2015, p. 44 at Table 14.1.

317 Ai Group submission at pp. 31–32; ABS, Labour Force, Australia, February 2015, Catalogue No. 6202.0.

318 Australian Government submission, p. 60 at para. 280

319 Australian Government submission, p. 5 at para 29 and p. 56 at para. 262 and p. 61 at para. 282; South Australian Government submission, p. 10 at para, 31; Federal Opposition submission, p. 8 at para. 36.

320 Australian Government submission at p. 61.

321 Australian government submission, p. 60 at para. 282.

322 South Australian Government submission, p. 60 at para. 31.

323 Federal Opposition submission, p. 8 at para. 31.

324 Ai Group submission at p. 33.

325 ACCI submission, p. 47 at para. 167.

326 Ai Group submission at pp. 33–34; ACCI submission, p. 47 at paras 165–166; ABI submission at p. 8; AFEI submission, p. 17 at para. 50.

327 ACCI submission, p. 47 at para. 166.

328 ABI submission at p. 8.

329 ACTU submission, p 25 at para. 71.

330 ACTU submission, p. 25 at paras71– 72.

331 Queensland Government submission at p. 12.

332 The difference between the 2.7 percentage point rise and the sum of the falls in employees paid under an individual arrangement or collective agreement (2.1 and 0.9 percentage points respectively) is accounted for by an increase in the residual category (owner managers of incorporated enterprises) and rounding.

333 Employees classified as ”award only” had their rate of pay specified by an award and were not paid more than that rate of pay.

334 ACTU submission, p. 25 at para. 72.

335 South Australian Government submission, p. 12 at paras 44–45; ACTU submission, p. 24 at paras 68–70; Ai Group submission at p. 34.

336 [2014] FWCFB 3500 at para. 45.

337 ACTU submission, p. 24 at para. 70.

338 South Australian Government submission, p. 12 at para. 45.

339 Ai Group submission at p. 34.

340 [2010] FWAFB 4000 at para. 302; [2011] FWAFB 3400 at para. 281 and [2012] FWAFB 5000 at para. 222.

341 ACTU submission, p. 60 at para. 188.

342 South Australian Government submission, p. 10 at para. 32; ACTU submission, p. 60 at para. 190; Federal Opposition submission, p. 7 at para. 30.

343 ACTU submission, p. 61 at para. 190.

344 ACOSS submission at pp. 20–21.

345 [2014] FWCFB 3500 at paras 476–484.

346 Pointon M, Wheatley T, Ellis G and MacDermott K (2012) Award Reliance and Differences in Earnings by Gender,Research Report 3/2012, Fair Work Commission, February, Melbourne at p. 7.

347 [2014] FWCFB 3500 at para. 490.

348 Ai Group submission 27 March 2015 at p. 35

349 Australian Government submission, pp. 5–6 at para. 37.

350 Victorian Government submission, p. 7 at para. 27.

351 Queensland Government submission at p. 14.

352 Queensland Government submission at p. 5.

353 South Australian Government submission, p. 10 at para. 32.

354 Federal Opposition submission, p. 7 at paras 31–32.

355 ACTU submission, p. 63 at para. 194.

356 ACOSS submission at p. 8.

357 21.4 per cent of females and 16.1 per cent of males were award reliant as at May 2014: ABS, Employee Earnings and Hours, Australia, May 2014, Catalogue No. 6306.0.

358 CCIQ submission, pp. 5–6 at paras 20–25.

359 CCIQ submission, pp. 5–6 at paras 21–25.

360 CCIQ submission, at p. 6.

361 ACTU submission at p. 7, paras 25–26.

362 [2012] FWAFB 5000 at para. 254.

363 [2014] FWCFB 3500 at para. 512; [2013] FWCFB 4000 at paras 543–544.

364 [2014] FWCFB 3500 at para. 513; [2013] FWCFB 4000 at para.526.

365 [2013] FWCFB 4000 at para. 493 citing [2012] FWAFB 5000 at para. 245.

366 [2014] FWCFB 3500 at para. 528 citing [2012] FWAFB 5000 at paras 266–268.

367 CCIQ submission, p.6, at para. 25.

368 CCIQ submission at p. 6.

369 Some transitional APCSs may still operate. This includes (but is not limited to) instruments which cover employees also covered by enterprise awards for which an application to modernise has been made; employees also covered by State reference public sector awards for which an application to modernise has been made; or cover employees also covered by the Social, Community, Home Care and Disability Industry Services Award 2010.

370 Some Division 2A State reference transitional awards may still operate such as where they are related to awards that have not been terminated under the termination of instruments process, or if they cover Queensland apprentices/trainees.

371 Some Division 2B State reference transitional awards may still operate such as where they are related to awards that have not been terminated under the termination of instruments process, or if they cover Queensland apprentices/trainees.

372 Some Division 2B State awards may still operate such as where they cover: employees also covered by enterprise instruments; employees also covered by State reference public sector awards; or Queensland apprentices/trainees.

373 Two transitional pay equity orders currently operate, created under sch 3, item 43 and Sch 3A, item 30A of the Transitional Act respectively. The Panel must review and may make a determination varying the transitional pay equity order created under sch 3A, sub item 30D(1) to the extent that it is derived from the Queensland Community Services and Crisis Assistance Award – State 2008.

374 [2010] FWAFB 4000 at paras 370–396.

375 Fair Work Australia (2010), Minimum wage transitional instruments under the Fair Work Act 2009 and the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, Research Report 6/2010, June.

376 [2013] FWCFB 4000 at paras 550–561.

377 Fair Work (Transitional Provisions & Consequential Amendments) Act 2009, item 3 of Sch. 5. Further, Fair Work Commission (2009), Award Reliance, Research Report 6/2013, December, also showed that few employees in non-public sector award-reliant organisations were reliant on transitional instruments.

378 See items 10(1) and 20(1) of Sch. 9 and item 12A(5) of Sch. 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009,

379 For example, certain instruments that covered employees who were also covered by the Social, Community, Home Care and Disability Services Industry Award 2010 were preserved by the Award Modernisation – Termination of Modernisable Instruments decision, [2010] FWAFB 9916 at para. 44. As at the date of this decision, they have not yet been terminated.

380 See [2013] FWCFB 4000 at paras 553–559for a more detailed outline of these instruments.

381 Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009, items 10 and 20 of Sch. 9, item 12A(6) of Sch. 3 and item 30D of Sch. 3A.

382 The Fair Work (Transfer of Business) Amendment Act 2012, which commenced on 4 December 2012, introduced Part 6.3 into the Act. A copied State award continues to operate under the national system for a period of five years, unless terminated or extended by regulation. See s.768AO of the Fair Work Act.

383 The provisions of the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 dealing with the variation of Division 2B State awards in annual wage reviews also apply to copied State awards. See ss.768BY and 768AW(b) of the Fair Work Act.

384 Queensland Government submission at p. 4 and pp. 12–14.

385 ABI submission at p. 10.

386 Fair Work (Transitional Provisions & Consequential Amendments) Act 2009, item 12A of Sch. 3 and items 10 and 20 of Sch. 9.

387 Fair Work Act, s.284(3).

388 ACTU submission, p. 123, at paras 360–361.

389 Ai Group submission at p. 39.

390 ACTU submission, p. 123 at paras 360–361.

391 Ai Group submission at p. 39.

392 [2013] FWCFB 5411.

393 ACTU submission, p. 124 at para. 367.

394 Ai Group submission at p. 39.

395 MA000103.

396 [2012] FCAFC 192.

397 ACTU submission, pp. 123–124, at paras 364–367.

398 Ai Group submission at p. 39.

399 ACOSS submission at p. 53.

400 ACTU submission, p. 124 at para. 371.

401 Ai Group submission at p. 39.

402 Fair Work Act, s.295(1)(b).

403 [2010] FWAFB 4000 at para. 403.

404 [2014] FWCFB 3500 at para. 606.

405 ACTU submission p. 124 at para. 370; Ai Group submission at p. 41; ABI submission at p. 9.

406 ACTU submission, p. 124 at para. 370; Ai Group submission at p. 41.

407 Australian Government submission, p. 11 at para. 57; Victorian Government submission, p. 6 at para. 17; ACTU submission, p. 14 at para. 49; ACCER submission , p. 117 at paras 287–288.

408 Australian Government submission, p.90 at Appendix A.

409 ACOSS submission at p. 39.

410 MGA/LRA submission at p. 8; ABS, Labour Force, Australia, Detailed, Quarterly, Nov 2014, Catalogue No. 6291.0.55.003.

411 R&CA submission, p. 3 at para. 3.

412 NFF submission at p. 4.

413 Victorian Government submission at Attachment 2, p. 16; ABS, Employee Earnings and Hours, Australia, May 2014, Catalogue. no. 6306.0; ACTU submission, p. 22 at Table 10; ACCER submission at p. 117, para. 290; ABS, Employee Earnings and Hours, Australia, May 2014, Catalogue. no. 6306.0.

414 ACCI submission, p. 3 at para. 6; ARA submission at p. 7; ACCER submission, p. 116 at para. 282.; MGA/LRA submission at p. 11 and, Appendix A at p. 3/22; South Australian Wine Industry Association submission, p. 3 at para. 1.

415 [2008] AIRCFB 1000 at para 50.

416 Business Equipment Award 2010 [MA000021], cl. 13.2.

417 ACTU response to questions for consultation at p. 14.

418 AMWU response to questions for consultation at para. 2.

419 [2011] FWAFB 3400 at paras 396 and 408.

420 [2011] FWAFB 3400 at para. 408.

421 [2014] FWCFB 3500 at paras 613–614.

422 Ai Group submission at p. 40; ABI submission at p. 10.

423 Ai Group submission at p. 41.

424 PR551832.

425 ABI submission at p. 10.

426 [2014] FWCFB 3500 at paras 617, 622.

427 ACTU submission, p. 124 at paras 368–369; Ai Group submission at p. 39; ABI submission at pp. 9–10.

428 ACOSS submission at p. 53.

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