Toyota Motor Corporation Australia Limited v "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)
[2011] FWA 6268
•12 SEPTEMBER 2011
[2011] FWA 6268
The attached document replaces the document previously issued with the above code on 12 September 2011.
A typographical error throughout the document has been corrected.
Melissa Nassios
Associate to Commissioner Roe
Dated 15 September 2011
[2011] FWA 6268 |
|
DECISION |
Fair Work Act 2009
s.424 - Application to suspend or terminate protected industrial action - endangering life etc.
Toyota Motor Corporation Australia Limited
v
"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU); Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
(B2011/3370)
COMMISSIONER ROE | MELBOURNE, 12 SEPTEMBER 2011 |
s.424 Application for an order that protected industrial action be suspended for a period of two months on the grounds that the protected industrial action is likely to cause significant damage to an important part of the Australian economy and/or endanger the life, the personal safety or health or welfare, of the population or of part of it.
[1] This is an edited and more complete version of the decision given in transcript at the conclusion of the hearing on 12 September 2011.
[2] This is an Application by the Toyota Motor Corporation Australia Limited (TMCA) pursuant to Section 424 of the Fair Work Act 2009 (the Act) for orders that protected industrial action authorized by Protected Action Ballots conducted in matter numbers B2011/3183 and B2011/3195 be suspended for a period of two months. The orders sought are to bind the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) and the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) and all employees of TMCA who are members of the AMWU or the CEPU and who are covered by one of the Agreements. The Agreements are the Toyota Australia Workplace Agreement (Altona) 2010 and the Toyota Motor Corporation Australia (TMCA) Workplace Agreement (Port Melbourne, Sydney and Regions) 2010 (the Agreements).
[3] The Application was made on 5 September 2011. Commissioner Blair conducted a conference on 6 September 2011. I conducted a conference and a hearing on 7 September 2011. Following this on 7 September 2011 I issued an Interim Order (PR514323) that:
“until 5pm on Monday 12 September 2011 (at which time the Application will be determined) the Tribunal orders that the ban on performance of overtime and the 48 hour stoppage of the performance of work from first shift commencing on Thursday 8 September 2011, is hereby suspended.”
I was required to make this Order because pursuant to Section 424(4) I determined that I was unable to determine the application within 5 days. The Applicant had put forward 9 witness statements and the representative for the AMWU advised that he had not had any opportunity at the conclusion of the conference on 7 September to read those statements, to prepare a case in response or to consider what evidence the AMWU may wish to bring in response. I considered that the earliest it would have been fair to commence the hearing would have been the next day, Thursday 8 September and it was impractical to complete the hearing and issue a decision by Friday 9 September.
[4] Section 424 of the Act provides:
“424 FWA must suspend or terminate protected industrial action—endangering life etc.
Suspension or termination of protected industrial action
(1) FWA must make an order suspending or terminating protected industrial action for a proposed enterprise agreement that:
(a) is being engaged in; or
(b) is threatened, impending or probable;
if FWA is satisfied that the protected industrial action has threatened, is threatening, or would threaten:
(c) to endanger the life, the personal safety or health, or the welfare, of the population or of part of it; or
(d) to cause significant damage to the Australian economy or an important part of it.
(2) FWA may make the order:
(a) on its own initiative; or
(b) on application by any of the following:
(i) a bargaining representative for the agreement;
(ii) the Minister;
(iia) if the industrial action is being engaged in, or is threatened, impending or probable, in a State that is a referring State as defined in section 30B or 30L—the Minister of the State who has responsibility for workplace relations matters in the State;
(iib) if the industrial action is being engaged in, or is threatened, impending or probable, in a Territory—the Minister of the Territory who has responsibility for workplace relations matters in the Territory;
(iii) a person prescribed by the regulations.
Application must be determined within 5 days
(3) If an application for an order under this section is made, FWA must, as far as practicable, determine the application within 5 days after it is made.
Interim orders
(4) If FWA is unable to determine the application within that period, FWA must, within that period, make an interim order suspending the protected industrial action to which the application relates until the application is determined.
(5) An interim order continues in operation until the application is determined.”
[5] TMCA was represented by Ms S Caylock and Mr P Nolan of the Australian Industry Group and by Ms H Box and Ms J Romano from the company. The AMWU was represented with leave by Mr K Farouque together with Mr D Smith, Mr P Difelice, Mr A Moore, and Mr I Thomas. The CEPU was represented by Ms J Maloney and Mr G Arnett.
[6] The following witnesses for TMCA provided evidence to the Tribunal and were cross examined.
- Mr David Cadzow, Operations Manager Procurement, for TMCA. 1
Mr Mark Curnow, Director and Executive Manager, Toyota Boshoku Australia Pty Ltd. 2
Ms Naomi Ann Bryant, Corporate Manager, Strategic Planning and Dealer Services, National Parts and Accessory Division for TMCA. 3
Mr Craig Charter, Director Manufacturing, Bosch Chassis Systems Australia. 4
Mr Ellison Mouncey, Chief Executive Officer of MGH Glass Pty Ltd and MGH Plastic Industries (Vic) Pty Ltd. 5
Mr Russell Jopson, Vice President Operations, Denso Automotive Systems Australia. 6
Mr Philip Chindamo, Chief Economist, Australian Industry Group. 7
Mr John Mark Hobbs, Divisional Manager Manufacturing Number 3 (Powertrain) for TMCA. 8
Mr Boris Petkovic, Manager Production and Strategic Planning, Production Control Division, TMCA. 9
[7] The Australian Industry Group on behalf of TMCA presented a thorough and well argued case and I have considered the evidence and their submissions. The AMWU presented an equally thorough and well argued submission in reply which I have considered.
[8] Intensive bargaining for new Agreements has been underway for some time. It is not in contention that the AMWU and the CEPU took protected industrial action in the form of a 24 hour stoppage on Friday 2 September and that they gave notice on 2 September of further industrial action in the form of an overtime ban commencing from Thursday 8 September 2011 and three separate 48 stoppages from the first shift commending on Thursday 8, 15 and 22 September. The interim order I have issued stopped the proposed bans and stoppages on Thursday 8 and Friday 9 September. I am satisfied that protected industrial action is threatened and probable in the form of an overtime ban and four days of stoppage on 15, 16, 22 and 23 September 2011.
Evidence in respect to possible harm
[9] I have carefully examined the evidence. The evidence suggests that harm as a consequence of the notified industrial action is possible to TMCA, to suppliers to TMCA and to the automotive manufacturing sector of the economy. I deal with each of these in turn.
[10] The evidence suggested the following possible harm to TMCA:
- Economic loss due to lost production and costs in overtime and other materials to make up that lost production and lost profits as a consequence of these actions.
- Economic loss caused by delays in the commencement of works on the refit of the plant to commence the new model due to the need to complete the run out of the existing model and delays in Government assistance payments for the new model project.
- Loss of reputation and damage to customer satisfaction due to delays in delivering orders of vehicles and parts to customers. Possible loss of customers due to these delays.
- Loss of confidence at Toyota Head Office which might lead to future failure of bids by TMCA for capital investment.
[11] An examination of the evidence and the cross examination satisfied me that there are some options available to TMCA to reduce the impact on its reputation and on customer satisfaction including by utilisation of overtime and adjustments to speed up the line. I am satisfied that these adjustments are more readily available in the engine plant than in the vehicle assembly area. I am satisfied that adjustments to line speed may be able to be achieved more quickly than suggested by Mr Petkovic. The plant is not operating at full capacity and hence it is clear that over time any production lost due to industrial action can be made up. Toyota managers gave evidence that following the industrial action it may be difficult to get sufficient workers to work overtime. I am not convinced by this evidence. I consider it likely that following industrial action workers will be keen to perform overtime to make up lost income. However, I accept the evidence that the capacity to make up production in a short period of time is limited. I am satisfied, particularly after considering the evidence of Mr Hobbs and Mr Petkovic, that if the planned protected industrial action proceeds it is quite likely that the finish date for the run out of the current model will have to be delayed and this would cause delays to the work on refit of the plant for the new model and could potentially delay the commencement of production of the new model. I am satisfied that there are some strategies available to TMCA to reduce this impact but that those strategies will probably not be sufficient to prevent some delays. I accept that this would cause significant costs and other problems for TMCA.
[12] I accept the evidence of Mr Petkovic that TMCA has an enviable reputation and record of meeting its promised deliveries particularly for the export market and that this reputation is important to its business. However, the evidence of Mr Petkovic and the other TMCA witnesses did not establish in my view that shipments to the Gulf or to Indonesia would in fact be likely to be missed as a consequence of the notified industrial action.
[13] The evidence suggests that there are likely to be some increased delays in the delivery of vehicles and parts to customers as a result of the notified protected industrial action. However, the evidence does not satisfy me that the overtime ban and the four days of stoppage spread over a number of weeks will lead to delays of such significance that there will be significant permanent damage to customer reputation and or significant permanent loss of sales. In the case of the delays in delivery of parts I did not find the evidence of Ms Bryant as sufficient to establish that significant loss of customers was likely. The evidence is not sufficient to conclude that there is a significant risk to future investment by Toyota Head Office as a result of the notified protected industrial action.
[14] The evidence suggests the following possible harm to TMCA suppliers:
- Economic loss due to lost production and costs in overtime and other materials to make up that lost production and lost profits as a consequence of these actions.
- Possible failure of supplier companies due to these losses.
- Loss of income by workers at the supplier companies due to stand downs.
- Loss of skilled workers due to workers leaving the supplier companies due to stand downs and uncertainty.
[15] There are two suppliers to TMCA which manufacture and deliver to TMCA in sequence. That is they produce to direct order from the production line. These two suppliers have very limited capacity to keep operating when production at TMCA stops. I am satisfied from the evidence that there is some limited capacity for these two suppliers to reduce the impact on them and their employees including by the use of time for training and alternative days off.
[16] Many of the other suppliers are dependent upon TMCA and produce for TMCA on a just in time basis. I accept the evidence of Mr Cadzow that 20 of the 65 first tier suppliers to TMCA are reliant on TMCA for more than 50% of their business. I am satisfied that there are strategies available to these suppliers to reduce the impact on them and their employees including by the use of time for training, shifting production to service Holden and Ford where possible, alternative days off, and increase in storage of finished parts. The capacity to increase storage of finished parts is limited by the supply and cost of appropriate packaging where the appearance of the part is important and the cost of alternative warehousing space. The capacity to shift production and use alternative days off is limited by the depressed state of the industry and the fact that these companies may already have had a number of down days. For example, I accept the evidence of Mr Charter that Bosch Chassis Systems may find ways to work around one day of stoppage but that two days of stoppage leads to much more significant costs and a high likelihood of stand downs.
[17] I am satisfied that available mitigation strategies will not be able to completely eliminate the need for stand downs of some employees at the supplier companies if the notified protected industrial action goes ahead. I am also satisfied that these mitigation strategies will not be able to eliminate the economic loss to the supplier companies. I am satisfied that the position of many of the supplier companies is precarious due to factors such as the GFC, the earthquake in Japan, the high Australian dollar and the decrease in total production of Australian made vehicles. I am not satisfied that there is any significant risk of the loss of skilled workers as a consequence of the notified protected industrial action. I am not satisfied that the notified protected industrial action is of such significance that failure of supplier companies is a likely result. However, a prolonged period of industrial action at TMCA beyond that notified by the unions could change that situation.
[18] The evidence in respect to the possible harm to the automotive manufacturing sector of the Australian economy was patchy. There are only three large automotive manufacturers in Australia; Ford, Holden and Toyota. I am satisfied that permanent closure of Toyota would cause significant harm to the automotive manufacturing sector of the Australian economy. Many supplier companies would not survive if Toyota were to close. There would be very significant employment consequences. However, there is no evidence that the notified industrial action will lead to the closure of Toyota manufacturing in Australia. The notified industrial action will lead to some economic loss for Toyota and for suppliers to Toyota. Mr Petkovic gave evidence that gross daily sales were worth approximately $10 million to TMCA. Mr Cadzow gave evidence that gross value of the parts purchased from suppliers was $5.5 million per day. Due to the capacity to eventually make up production the actual losses will not be as great as this but they will be significant. There will also be some losses in the spare parts sector. Ms Bryant gave evidence that $3.2 million in parts are ordered each day. However, the total losses from four days of stoppage and overtime bans will only be a small proportion of total annual sales for both TMCA and the suppliers.
[19] Mr Philip Chindamo, Australian Industry Group Chief Economist, gave evidence which I accept that:
“The Australian industry plays a vital role in employment, exports and innovation in the Australian economy. As a percentage of manufacturing value added and employment it represents around 5% and 6%, respectively. The automotive industry represents around 0.5% of the national economy in terms of industry value added and employment.
The automotive industry is a significant contributor to business expenditure on research and development. In 2008-09, the transport equipment industry (of which the automotive industry is the dominant part) contributed 20% of total business expenditure on research and development in the manufacturing industry. In turn, this represented 5% of total business expenditure on research and development across the Australian economy.” 10
[20] I also accept the evidence of Mr Chindamo that the trading conditions for the sector are currently very difficult and that sales are still 13% below what they were in March 2008 before the onset of the Global Financial Crisis.
[21] Mr Chindamo says that:
“In my view there is a real concern that the proposed industrial action at TMCA will have significant consequences on economic and commercial confidence in this sector at a time when recovery in the economy is uneven and the automotive sector specifically is still fragile.” 11
Mr Chindamo and TMCA did not provide sufficient evidence in my view to support this conclusion. It is possible that lengthy stoppages over a prolonged period would have significant consequences on economic and commercial confidence in this sector particularly given the fragile conditions. However, I am not satisfied that there is sufficient evidence to support the conclusion that four days of stoppage and an overtime ban over the next few weeks will be likely to have this consequence.
[22] Mr Chindamo and the other witnesses did not provide any other quantitative evidence of the overall impact in the short and longer term that the proposed industrial action is likely to have on the income, profitability, investment, or employment in the Australian economy or in the automotive industry sector of the economy.
Legislative test.
[23] The approach to Section 424 of the Act has been set out in National Tertiary Education Industry Union v University of South Australia. 12 In that case a Full Bench was concerned with an appeal against a decision suspending protected industrial action pursuant to s.424 of the FW Act. The Full Bench observed:
“[8] Within the scheme of the Act, the powers in relation to the suspension or termination of protected industrial action are intended to be used in exceptional circumstances and where significant harm is being caused by the action. This is clear from the Explanatory Memorandum to the Fair Work Bill 2008:
The Bill recognises that employees have a right to take protected industrial action during bargaining. These measures recognise that, while protected industrial action is legitimate during bargaining for an enterprise agreement, there may be cases where the impact of that action on the parties or on third parties is so severe that it is in the public interest, or even potentially the interests of those engaging in the action, that the industrial action cease — at least temporarily.
It is not intended that these mechanisms be capable of being triggered where the industrial action is merely causing an inconvenience. Nor is it intended that these mechanisms be used generally to prevent legitimate protected industrial action in the course of bargaining.”
...
[15] Whether in a particular case the exceptional circumstances for the making of an order suspending or terminating protected industrial action under s.424 of the Act have arisen will be a matter to be determined on a consideration of all the circumstances and having regard to the evidence and submissions before FWA....
(emphasis added)
[24] This approach has been reaffirmed by at least two subsequent Full Bench decisions; Construction, Forestry, Mining and Energy Union V Woodside Burrup Pty Ltd and Kenz E & C Pty Ltd, 13 and Tyco Australia Pty Ltd T/A Wormald v CEPU.14
[25] The legislative context was outlined in more detail in the Woodside Full Bench decision at paragraphs 25 to 47. 15 This case related to an Application pursuant to Section 426 not Section 424. However, the findings in respect to the statutory interpretation of the provisions concerning the suspension of industrial action under the Fair Work Act generally and the meaning of terms such as significant harm or damage are relevant to this case. After setting out the legislative scheme and the Objects of the Act and Part 2-4 in particular, the Full Bench drew the following conclusions.
- may suspend or terminate protected industrial action if the action is causing (or threatening to cause) significant economic harm to the employer and/or employees (clause 423);
- must suspend or terminate protected industrial action if the action has threatened, is threatening or would threaten to endanger life, personal safety or the health of the population or cause significant damage to the economy (clause 424);
- must suspend protected industrial action to provide for a cooling-off period (clause 425); and
- must suspend protected industrial action if the action is adversely affecting the employer and its employees and is threatening to cause significant harm to a third party (clause 426).”
“[37] The objective to “facilitate good faith bargaining and the making of enterprise agreements” is of particular relevance. Like the Workplace Relations Act 1996 before it, the FW Act creates what the Explanatory Memorandum justifiably describes as a “right” in employees to take protected industrial action in support of claims for an enterprise agreement. That legislation may properly be seen as the means by which Australia has given effect to its important obligations under the International Labour Organisation Conventions particularly Convention no. 87 Freedom of Association and Protection of the Right to Organise 1948 and Convention No, 98 Right to Organise and Collective Bargaining 1949, both ratified by Australia in 1973.
[38] Viewed in the context of the Act as a whole, and having regard to the legislative purpose behind the regime in the FW Act for the taking of protected industrial action as a means of advancing claims for an enterprise agreement as the vehicle through which employees are able to seek to achieve improvement in their terms and conditions of employment, the precise meaning intended by the Parliament in using the expression “significant harm” in s.426(3) is unclear. The ordinary meaning provides insufficient guide to distinguish what harm is significant for the purposes of Section 426 since most industrial action threatens harm which is “important” or “of consequence” to the bargaining parties and also often to third parties. This ambiguity activates an entitlement to have regard to the Explanatory Memorandum pursuant to s.15AB(1)(b)(i) of the Acts Interpretation Act 1901.
[39] The Explanatory Memorandum for the FW Act includes the following in the introductory remarks in relation to Part 3-3 which deals with “Industrial Action”:
“Division 6 – Suspension or termination of protected industrial action by FWA
1706. Division 6 sets out the grounds upon which FWA may suspend or terminate protected industrial action organised, or engaged in, in relation to a proposed enterprise agreement.
1707. Suspension or termination of protected industrial action brings to an end the right to take protected industrial action. Protected industrial action may be resumed after any period of suspension, but will be subject to any requirements for the giving of notice before any action may be taken. A termination of protected industrial action may lead to FWA making a workplace determination under Part 2-5.
1708. The Bill recognises that employees have a right to take protected industrial action during bargaining. These measures recognise that, while protected industrial action is legitimate during bargaining for an enterprise agreement, there may be cases where the impact of that action on the parties or on third parties is so severe that it is in the public interest, or even potentially the interests of those engaging in the action, that the industrial action cease — at least temporarily.
1709. It is not intended that these mechanisms be capable of being triggered where the industrial action is merely causing an inconvenience. Nor is it intended that these mechanisms be used generally to prevent legitimate protected industrial action in the course of bargaining.
1710. Under the Bill, FWA:
(emphasis added)
....
[44] When regard is had to context of the FW Act as a whole and to the explanatory memorandum, the expression “significant harm” in s.426(3) should be construed as having a meaning that refers to harm that has an importance or is of such consequence that it is harm above and beyond the sort of loss, inconvenience or delay that is commonly a consequence of industrial action. In this context, the word “significant” indicates harm that is exceptional in its character or magnitude when viewed against the sort of harm that might ordinarily be expected to flow from industrial action in a similar context. In this way, an order will only be available under s.426 in very rare cases, as contemplated by the Explanatory Memorandum. It follows that it will not, of itself, be sufficient that the harm, viewed in isolation, can be characterised as “substantial”. Substantial harm to third parties is a common consequence of effective industrial action. Unless the harm is out of the ordinary then suspension would contrary to the legislative intention that suspension should not be able to used generally to prevent legitimate protected industrial action in the course of bargaining. In assessing whether there is “significant harm” context is also important. A particular quantum of financial loss may constitute “significant harm” in one context but not in another.
[45] In Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission the High Court was concerned with whether a decision of a Full Bench of the AIRC allowing an appeal against a decision of Boulton J making an order pursuant to s.170MW of the Workplace Relations Act 1996, as it then stood, suspending a bargaining period. Pursuant to s.170MW(1) the AIRC had a discretion to suspend or terminate a bargaining period (which necessarily involved a suspension or termination of industrial action) if, but only if, it was satisfied as to one of the circumstances set out in subsections (2) to (7) of s.170MW. Section 170MW(3) provided:
“A circumstance for the purposes of subsection (1) is that industrial action that is being taken to support or advance claims in respect of [a] proposed agreement is threatening:
(a) to endanger the life, the personal safety or health, or the welfare, of the population or of part of it; or
(b) to cause significant damage to the Australian economy or an important part of it.”
[46] Gleeson CJ and Gaudron and Hayne JJ held:
“[27] For reasons that will be given shortly, it is not necessary to decide whether the Full Bench of the Commission was correct in ascribing error to Boulton J. However, it may conveniently be noted that the process by which the Full Court concluded that Giudice J "[identified] errors that, in truth, were not errors" is not beyond criticism. For example, the Full Court considered that Giudice J mistook the nature of the exercise involved in forming the satisfaction that industrial action is threatening "to cause significant damage to the Australian economy" for the purposes of s 170MW(3)(b) of the Act because he implied "that a measurable likely effect on the economy must be identified and then an assessment made whether that was 'threatening ... to cause significant damage'." In the view of the Full Court, Giudice J was in error because all that was necessary was that "there [be] some material that might reasonably found that satisfaction".
[28] As already explained, the nature of the threat as to which a decision-maker must be satisfied under s 170MW(3) of the Act involves a measure of subjectivity or value judgment. A decision under that sub-section would involve appealable error if, for example, regard was had to irrelevant material, relevant material was disregarded, or, although there was some factual material by reference to which the decision-maker might be satisfied, he or she mistook those facts. If the Full Court intended to suggest otherwise, it was wrong. More to the point, however, is that a decision under s 170MW(3)(b) that industrial action is "threatening ... to cause significant damage to the Australian economy or an important part of it" (emphasis added) is not simply a matter of impression or value judgment. The presence of the words "significant" and "important" in s 170MW(3)(b) indicate that the decision-maker must have some basis for his or her satisfaction over and above generalised predictions as to the likely consequences of the industrial action in question. That was the point of the observations of Giudice J with respect to the absence of economic data.”
(footnotes omitted)
In the same way, the presence of the word “significant” in the expression “significant harm” s.426(3) of the FW Act, and the attention that s.426(4) directs to the “extent” of harm of the kind expressly identified in s.426(4), means that a member at first instance must have some basis for his or her satisfaction over and above generalised predictions as to the likely consequences of the industrial action in question. That is not to say that, in relation to financial loss, the evidence must precisely quantify the amount of a loss. Rather, there must be evidence that allows for an assessment of the order of magnitude of any financial harm relied upon by an applicant. Contrary to the submissions of the CFMEU, we accept that there was some evidence of that sort in this case. The decision in Coal and Allied reinforces our view that the expression “significant harm” when properly construed has a meaning that in truth accords with the Explanatory Memorandum.”
[26] It should be noted that Section 170MW(3) of the WR Act which was the subject of the Coal and Allied decisions is in relatively similar terms to Section 424 of the Act. The Full Bench in Woodside also endorsed the approach of the Full Bench in the NTEU case cited earlier and that the power in Section 424 is “only to be used in exceptional circumstances”. 16
[27] As noted in the passage quoted above the majority of the High Court in Coal and Allied approved of the approach taken by Giudice J to the construction of the words in Section 170MW(3).
[28] Commissioner Asbury in dealing with a recent Application under Section 424 of the Act 17 observed:
“Relevantly it has also been held that the word “welfare” is not read ejusdem generis with the preceding words “life...personal safety or health” and that the term “population” refers to the total number or the body of the inhabitants of Australia. Similarly, the term “part of the population” has a more collective meaning than individuals. Further, the use of the term “threatening...to endanger” with respect to the welfare of the population imports a requirement for there to be a danger or peril to welfare. As a Full Bench of the AIRC said in Coal & Allied Operations Pty Ltd v Construction, Forestry Mining and Energy Union in relation to very similar provisions in the Workplace Relations Act 1996:
“Danger to the life, or to the personal safety or health, of “a part of the population”, instead of to individuals, appears a cumbersome form of expression. But that awkwardness is no barrier to giving the reference to the part of the population its more collective meaning when it is found in the expression ‘welfare of the population’. Moreover, despite the generality of the concept ‘welfare of the population’ the phrase ‘is threatening to endanger’ imports a requirement for there to be a danger or peril to welfare. There needs to be a basis upon which it is reasonable to conclude, on an assessment of matters of fact and degree, that the collective welfare is in peril or danger.”
[29] The President Giudice J in Coal and Allied analysed the other key terms as follows:
“6.4 Causative of Harm to Specified Public Interests: ". . . is threatening to . . . endanger . . . or to cause damage to . . ."
In the context, the verb "is threatening to" may be given its ordinary meaning in the sense of giving an ominous indication of being the source or cause of a relevant danger or damage. The industrial action must itself be giving ominous indication of being the direct or reasonably proximate cause of effects that are productive of, or are likely to be productive of a relevant danger, peril or damage to welfare or the economy. The phrase imports the temporal element of the circumstance by using the present continuous to require satisfaction as to there being a threatening situation contemporaneous with the exercise of jurisdiction.
In the context, the words "to endanger" and "to cause" each import a direct relationship, and a relatively high degree of causative impact in producing the specified danger or damage. Construction of the phrases in this manner is consistent with the constructions applied in a number of cases to similar expressions used in Commonwealth anti-dumping legislation19.
6.6 ". . . Significant damage to the Australian economy, or an important part of it"
Damage to the economy is separated out as a criterion by which to identify a circumstance for purposes of subsection 170MW(1). As with the social interests endangered by industrial action, the circumstance is dependent on both the degree of damage and the field on which it impacts. There is perhaps a greater emphasis on matters of degree imported by the words "significant damage". Similarly, the impact must be on the whole, or an "important part" of the Australian economy. Neither of those expressions is a term of art. Each requires application through an assessment of the facts and circumstances as a matter of fact and degree. However, as already noted, similar expressions have long been the subject of judicial construction in application to matters arising under Commonwealth anti-dumping legislation. The view that there should be a relatively rigorous causative relationship between the industrial action and significant damage is consistent with that line of authority.”
[30] Giudice J in Coal and Allied (first Full Bench decision) then went on to comment on the evidence of harm and damage which was before Boulton J following the strike at the Coal and Allied Hunter Valley mine which had continued for some 14 weeks.
- produces 3% of the national black coal exports;
- exports around 7.9% of the annual loading capacity of Port Waratah;
- produces between 7% and 8% of the coal exported from New South Wales.
“In identifying some of the evidence upon which his conclusion was based, Boulton J set out the statement made by Mr Davies on 19 June 1997. Mr Davies' evidence and other evidence concerning loss of revenue is canvassed earlier. It is a fair assumption that the loss in revenue resulting from the strike was in the vicinity of $1 million per day. The statement indicates that "most" of the revenue would have gone to employees, suppliers and contractors who live locally. These were economic effects. There is no connection established between the economic loss to the region, whatever that might actually be, and the welfare of the population of the region.” Boulton J went on to consider the effects of the conduct associated with the strike, in addition to the effect of the strike itself - the broad view.”
“..... In addition to those matters it is patent that there was a critical lack of evidence linking the effects of the strike to any perceived threat to the welfare of the population of the region. There is no evidence of the geographical area His Honour had in mind, the size of its population, the size of its workforce, the number of contractors the mine regularly engaged compared with the number of contractors in the region, the number of businesses effected compared with the number of businesses within the region, or the size of the regional economy. With great respect to His Honour, I have concluded that the finding was not firmly based on evidence of the requisite kind. Whether the error be characterized as an error in approach or in weighing the evidence, the finding was wrong in the sense that it was not reasonably open on the evidence.”
“The evidence concerning the place of the Hunter Valley No. 1 Mine in the broader economy was scant. There was evidence that the mine:
As indicated in section 7.2 of this decision, it is likely that the effect of the strike in aggregate to the date of hearing was a potential reduction of 2% in the amount of coal exported annually from the region. That fact must be weighed against the evidence that Port Waratah was operating to capacity and 30 to 40 ships were in the queue to load. Mr Davies estimated, and it was not contested, that stockpiles contained between 5 and 10 million tonnes. That amount of coal would take approximately 4 to 8 weeks to clear through the port without taking account of continuing production, assuming the port continued to operate at full capacity. There was no evidence to suggest that the port would in the foreseeable future be operating under capacity, the indications are to the contrary. In these circumstances it was not reasonably open to His Honour to conclude that at the time of the hearing the strike was threatening to cause significant damage to the Australian economy, the New South Wales economy, the economy of the Hunter Valley region or the coal industry.”
[31] Subsequently Commissioner Bacon utilised the approach suggested by Giudice J in BHP Coal Pty Ltd, Hay Point Services Pty Ltd v CFMEU, CEPU and AMWU 18toconclude that the coal export industry was not an important part of the Australian economy as follows:
- The export coal sector constitutes 8.3% of all of Australia's exports.
- The revenue generated by the export coal sector is approximately $8.3 billion.
- Professor Norman believes that roughly 120 million tonnes of coal were exported last year.
- Mr Tuck values the production lost for a one week strike at the five mines to be $33.65m based on a loss of 478300 tonnes.
- Mr Tuck advises that the annual budgetted production for the five mines is 20.8 million tonnes.
- The revenue generated by the export coal industry for last year was 1.3% of Australia's GDP ($8.3b/$640b).
- The export coal sector is a relatively small employer. The exact number of direct employees was not provided but it is likely to be about 10,000 to 12,000 employees if the ratio of exports (120 million tonnes) to total production (243 million tonnes) is correct.
“[51] What is before the Commission on this submission is:
[52] I turn to consider whether or not the coal export industry is an important part of the Australian economy. Australian annual GDP is $640b of which the export coal industry comprises $8.3b or 1.3%. I was not provided with any reason why the export coal industry should be considered as a separate part of the economy to the domestic coal industry. There is no need to resolve this question because it is only the export coal sector that is advanced as an important part of the Australian economy.
[53] Professor Norman's evidence is that the Australian export coal sector constitutes an important part of the Australian economy. This was not directly contested by CFMEU. However, CFMEU in its material relies on production figures for the entire black coal industry.
[54] It must be said that this point was not specifically dealt with in the submissions. The parties appeared to approach the point as though it should be taken that the export coal sector is an important part of the Australian economy. I have a predisposition to that point of view, however when scrutinised some of the material caused me to have some reservations. The industry is a relatively small employer and is 1.3% of GDP. It constitutes 8.3% of export income but that is not relevant to the subsection because the test is not that it be an important part of an important part of the Australian economy. At some point using the economic data required by Coal and Allied the point needs to be fully debated (or made out if the parties agree on it). It must be said however that as a matter of degree 1.3% of GDP on its face is not immediately suggestive of an "important" part of the Australian economy.
...
[65] I have concluded that the evidence does not establish that the entire export coal sector is threatened in the way advanced by BHP. More likely BHP may come under pressure on price or volume in future negotiations with customers. The extent of that pressure will be dependent on a number of things including the supply and demand balance at the time of the negotiation. Even if BHP did lose some volume it is not automatic that the customer will source that supply from another country.
[66] There is little hard economic data before me which could support a conclusion that the outcomes predicted by BHP threaten to cause significant damage to the whole of the export coal sector (if that sector is an important part of the Australian economy). What may happen in contract negotiations at some time in the future is in my view quite speculative and considerable caution would need to be exercised if any reliance was placed in these predictions in order to terminate these bargaining periods. The High Court requires more than general predictions when determining the existence of the s.170MW(3) circumstances.
...
[72] For the foregoing reasons I am not satisfied that the circumstances of s.170MW(3) exist or have existed. Accordingly, the Commission lacks the jurisdiction to terminate the bargaining periods that are the subject of these applications. It is my conclusion that the detailed economic analysis that is required by Coal and Allied in order to establish the existence of the s.170MW(3) circumstances results in a much higher jurisdictional bar than earlier Commission decisions concerning the subsection might have suggested.”
[32] It is not necessary for me to make any comment as to the correctness of the conclusion drawn by Commissioner Bacon but I do find the approach taken to be a useful one which is consistent with the authorities to which I have referred.
[33] The Australian Industry Group on behalf of TMCA drew my attention to two cases where single members of the Tribunal had pursuant to the provisions of the earlier legislation terminated or suspended protected industrial action on the grounds of threatened harm to the welfare of the population or the economy or part of them. 19 In the Tristar matter the industrial dispute was long standing and the action indefinite and the reasons for decision are not published. I am bound by the principles and approach of the Full Bench and Court decisions to which I have earlier referred.
Conclusions
[34] I am satisfied that the condition required by Section 424(1)(b) is met in that there is threatened, impending or probable protected industrial action. There is no suggestion that the threatened, impending or probable protected industrial action is anything other than the threatened four days of stoppage over the next three weeks and the ban on overtime. It is relevant in making an assessment of the impact of the threatened action to take into account the impact of the industrial action which has already been taken in pursuit of the new agreement. That action amounts to one 24 hour stoppage on 2 September.
[35] I am satisfied that the Application is properly made in accordance with Section 424(2) in that the Application is made by TMCA which is a bargaining representative for the proposed agreement.
[36] I find that there is insufficient evidence to support a finding that “collective welfare is in peril or danger” as a consequence of the threatened, impending or probable protected industrial action. I cannot be satisfied that the threatened action meets the requirements of Section 424(1)(c) namely that the action threatens “to endanger the life, the personal safety or health, or the welfare, of the population or of part of it.” There was no evidence of threat to personal safety or health and the threatened impacts on collective welfare could only be described at this stage as temporary and confined. Australian Industry Group on behalf of Toyota submitted that the losses to employee in the parts sector due to four days of stoppage met this requirement. However, even the individual companies who gave evidence did not suggest that all employees would be stood down without pay for the entire period.
[37] The evidence and submissions of TMCA was also directed at establishing that the protected industrial action has threatened, is threatening, or would threaten to cause significant damage to the Australian economy or an important part of it as required by Section 424(1)(d). If I am satisfied that this is established then I must issue the orders sought, if I am not satisfied that this is established then I cannot issue the orders sought.
[38] I accept the evidence of Mr Philip Chindamo, Australian Industry Group Chief Economist that the automotive industry represents around 0.5% of the national economy in terms of industry value added and employment. It is clear from this that the threatened action could not cause significant damage to the Australian economy as a whole. Attention must therefore turn to the threatened impact on the automotive industry.
[39] I concluded earlier that it is possible that lengthy stoppages over a prolonged period would have significant consequences on economic and commercial confidence in the automotive industry sector particularly given the fragile conditions. However, I am not satisfied that there is any evidence to support the conclusion that four days of stoppage and an overtime ban over the next few weeks in the context of a one day stoppage which has occurred to date, will have this consequence.
[40] I was satisfied that the threatened industrial action would cause economic harm to TMCA and to a number of suppliers to TMCA and some of the employees of those suppliers. That harm may run into the millions of dollars and I do not underestimate the importance of this to the individual companies and their employees affected. However, I was not satisfied that the harm was significant to the extent that it would threaten the viability of TMCA or its suppliers, let alone the viability of the automotive industry sector.
[41] The evidence suggested that there may be some delays in the delivery of parts and vehicles to customers as a result of the threatened action. TMCA is understandably concerned about the potential damage to its reputation and the potential loss of customers and investment. However, this is a natural consequence of industrial action aimed at pressuring TMCA to change its bargaining position. There was no evidence that would enable me to be satisfied that the threatened action would cause or would be likely to cause significant loss of customers or reputation. I make this assessment taking into account that the extent of industrial action to date has been one 24 hour stoppage. I also make this assessment taking into account the capacity, at some economic cost, for TMCA and its suppliers to make up lost production over time and the capacity, admittedly limited, to take some measures to mitigate the disruption and the losses in advance of the proposed action and subsequent to it.
[42] The evidence did establish the character of the threatened short and medium term consequences of the threatened protected industrial action on TMCA and a number of suppliers. However, Mr Chindamo and the other witnesses did not provide any other quantitative evidence of the overall impact in the short and longer term that the proposed industrial action is likely to have on the income, profitability, investment, or employment in the Australian economy or in the automotive industry sector of the economy. I agree with Justice Giudice that significant damage or harm needs to be measured over a period of time. For example, by looking at the threatened losses as a proportion of annual production. It is possible to deduce from the data provided that the losses will in the end be somewhat less than five days of total annual production (the four threatened days plus the one day which had occurred prior to the action plus the effect of the overtime ban) given the capacity to make up lost production. There was clear evidence that neither TMCA nor its suppliers are operating at full capacity due to the depressed market conditions. Using the approach to “significant damage” I have set out earlier, the loss of something less than five days production by one manufacturer in a year could not be significant damage to the automotive industry. The degree and nature of the threatened harm is not exceptional. It does not go sufficiently beyond the common inconvenience and common consequence of industrial action.
[43] Adopting the approach to “significant damage” or harm taken in the authorities to which I have referred, I cannot be satisfied that the threatened industrial action threatens to cause significant damage to the automotive industry. It is therefore unnecessary for me to determine whether or not the automotive industry is “an important part of the Australian economy” for the purposes of Section 424.
[44] The Application is dismissed and pursuant to Section 424(5) the Interim Order no longer has effect.
COMMISSIONER
Appearances:
Ms S Caylock and Mr P Nolan of the Australian Industry Group and by Ms H Box and Ms J Romano from the company represented Toyota Motor Corporation Australia Limited.
Mr K Farouque together with Mr D Smith, Mr P Difelice, Mr A Moore, and Mr I Thomas represented the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU).
Ms J Maloney and Mr G Arnett represented the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia.
Hearing details:
2011
Melbourne
September 8, 12
1 Exhibit T1.
2 Exhibit T2.
3 Exhibit T3.
4 Exhibit T4.
5 Exhibit T5.
6 Exhibit T6.
7 Exhibit T7.
8 Exhibit T8.
9 Exhibit T9.
10 Exhibit T7, paras 4 and 5.
11 Ibid at para 19.
12 [2010] FWAFB 1014.
13 (2010) FWAFB 6021.
14 (20110 FWAFB 1598.
15 (2010) FWAFB 6021.
16 (2010) FWAFB 6021 at paras 42 and 43.
17 Transit Australia Pty Ltd v Transport Workers Union of Australia (2011) FWA 341031 at para 9.
18 PR903492.
19 Tirstar Steering and Suspension Australia Limited vs AMWU and CEPU and NUW [Print 907392] and Budny Tubing Company (Australia) Pty Ltd v AMWU and AWU [Print 93733].
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