Crown Employees (Teachers in TAFE and Related Employees, Bradfield College and Teachers in TAFE Children's Centres) Salaries and Conditions Award 2009 [2009] NSWIRComm 169

Industrial Relations Commission of New South Wales

CITATION: Crown Employees (Teachers in TAFE and Related Employees, Bradfield College and Teachers in TAFE Children's Centres) Salaries and Conditions Award 2009 [2009] NSWIRComm 169

PARTIES: Director General, New South Wales Department of Education and Training (Notifier) New South Wales Teachers Federation (Respondent)

FILE NUMBER(S): IRC 513 of 2009

CORAM: Boland J President; Sams DP; Grayson DP

INDUSTRIAL DISPUTE - Award - Award provision committing parties to negotiate over employee related reforms and cost savings to fund salary increases - In the event no agreement was reached parties committed to refer matter to Commission for arbitration - Parties unable to agree - Application by Department of Employment and Training to vary award to increase teaching hours for TAFE Teachers and to introduce other reforms into award in order to achieve cost savings - Opposition by Teachers Federation - Whether proposed variations fair and reasonable - Whether case for variation made out - Award varied. CATCHWORDS: AWARD - Industrial dispute - Award provision committing parties to negotiate over employee related reforms and cost savings to fund salary increases - In the event no agreement was reached parties committed to refer matter to Commission for arbitration - Parties unable to agree - Application by Department of Employment and Training to vary award to increase teaching hours for TAFE Teachers and to introduce other reforms into award in order to achieve cost savings - Opposition by Teachers Federation - Whether proposed variations fair and reasonable - Whether case for variation made out - Award varied.

LEGISLATION CITED: Industrial Relations Act 1996

Coke Works (State) Award, Re [1972] AR 575 Construction, Forestry, Mining and Energy Union (New South Wales Branch) and Macquarie Generation [2009] NSWIRComm 160 Crown Employees (NSW Fire Brigades' Permanent Firefighting Staff) Award 2008 [2008] NSWIRComm 174 Crown Employees (Public Sector - Salaries 2008) Award [2008] NSWIRComm 193 CASES CITED: Crown Employees (Teachers in TAFE and Related Employees) Salaries and Conditions Award and others [2009] NSWIRComm 2 Director General, NSW Department of Education and Training v NSW Teachers Federation [2009] NSWIRComm 147 Notification under section 167 by the Minister for Industrial Relations of a dispute between BHP Billiton and The Australian Workers Union and others re proposed strike action [2002] NSWIRComm 378 Nursing Homes &c., Nurses' (State) Award (No 4), Re [2005] NSWIRComm 88; (2005) 138 IR 409 Operational Ambulance Officers (State) Award, Re [2001] NSWIRComm 331; (2001) 113 IR 384 Operational Ambulance Officers (State) Award [2008] NSWIRComm 168

HEARING DATES: 14/09/09, 15/09/09; 17/09/09

DATE OF JUDGMENT: 15 October 2009

Mr P Kite SC with Ms M Frazer of counsel (Notifier) LEGAL REPRESENTATIVES: Crown Solicitor

Mr S Crawshaw SC with Mr M Gibian of counsel (Respondent)

JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES FULL BENCH

CORAM: BOLAND J, President SAMS DP GRAYSON DP

Thursday 15 October 2009

Matter No IRC 513 of 2009

NOTIFICATION UNDER SECTION 130 BY DIRECTOR-GENERAL, NEW SOUTH WALES DEPARTMENT OF EDUCATION AND TRAINING OF A DISPUTE WITH NEW SOUTH WALES TEACHERS FEDERATION RE CLAUSE 47

DECISION OF THE COMMISSION

[2009] NSWIRComm 169

1 This matter concerns an industrial dispute between the NSW Department of Education and Training ('the Department') and the NSW Teachers Federation ('the Federation') over the application of certain provisions of the Crown Employees (Teachers in TAFE and Related Employees, Bradfield College and Teachers in TAFE Children's Centres) Salaries and Conditions Award 2009 ('the Award'), an award made by consent on 12 August 2009.

2 The dispute has its origins in negotiations for a new TAFE award. Following acceptance by the parties of a Recommendation made by Walton J, Vice-President on 21 January 2009 (Crown Employees (Teachers in TAFE and Related Employees) Salaries and Conditions Award and others [2009] NSWIRComm 2) the Crown Employees (Teachers in TAFE and Related Employees) Salaries and Conditions Award 2009 ('the initial Award') was made by consent. The Recommendation, and subsequently the initial Award, provided for salary increases to the common incremental salary scale therein of 4.4 per cent from 1 January 2009, 3.8 per cent from 1 January 2010 and 3.8 per cent from 1 January 2011. 3 The Recommendation indicated that it did not 'wholly resolve all issues between the parties as to cost measures with respect to TAFE' and that the 'Recommendation provides for a procedure by which any such issues may be resolved' at [14].

4 The consent award was a means by which the parties resolved differences in wages in return for a partial satisfaction of any requirement for cost savings, with the balance of such measures being resolved in accordance with the provisions of cl 47 of the initial Award. That clause was in the following terms: 47. Further Employee Related Reform Measures and Cost Savings 47.1 In order to fund the salary increases provided under this award, the parties have committed to the identification and implementation of further employee related reform measures and cost savings to improve TAFE operational efficiency and competitiveness. 47.2 The parties agree to establish immediately a working party to identify and finalise the reforms by 3 April 2009. The working party shall consider a range of initiatives, including direct teaching hours of work of TAFE teachers and time credit hours to fund (to the extent not already achieved by the employee related reform measures already agreed and implemented by the parties as outlined in the Industrial Relations Commission Recommendation [2009] NSWIRComm 2 relating to IRC Matter Numbers 1979 of 2008, 1980 of 2008, 2042 of 2008, 2241 of 2008 and 2242 of 2008) the salary increases beyond 2.5% each year. 47.3 Should the working party not identify the necessary employee related reform measures and cost savings or should any dispute arise during the process, the parties acknowledge and commit to take all necessary steps so that the Industrial Relations Commission shall arbitrate on and determine by June 2009, the employee related cost savings necessary to fund the salary increases under this award. 5 As it may be seen from the terms of the clause, it contemplated further proceedings to resolve the question of employee related reform measures and cost savings. The clause provided an exception to the 'no extra claims' provisions of the initial Award so as to permit parties to that Award to make claims in accordance with its provisions. It was contemplated that the Department may activate the provisions of the clause by filing a Notification of Dispute. This step was, in fact, taken on 14 April 2009 and, subsequently, on 1 July 2009 by the filing (within the dispute proceedings) of an application to vary the initial Award pursuant to s 17 of the Industrial Relations Act 1996 ('the Act'). That application was later amended. 6 Since the initial Award was made, the Commission determined that the terms of two other awards should be incorporated into it, namely, the Bradfield College (Department of Education and Training) Salaries and Conditions Award and the Crown Employees (Teachers in TAFE Children's Centres) Salaries and Conditions Award. Consequently, the award was made on 12 August 2009 entitled 'Crown Employees (Teachers in TAFE and Related Employees, Bradfield College and Teachers in TAFE Children's Centres) Salaries and Conditions Award 2009' ('the Award'). As a result of a dispute about the form of cl 47 of the Award, the Full Bench resolved that cl 47 would be slightly varied and is now in the following form: 6. Further Employee Related Reform Measures and Cost Savings 6.1 In order to fund the salary increases provided under this award, including the salary increases for Bradfield College and TAFE Children's Centres, the parties have committed to the identification and implementation of further employee related reform measures and cost savings to improve operational efficiency and competitiveness. 6.2 The parties agree to consider a range of initiatives, including direct teaching hours of work of TAFE teachers and time credit hours to fund the salary increases beyond 2.5% each year to the extent not already achieved by the employee related reform measures and cost savings already agreed and implemented by the parties. 6.3 Should the parties not identify the necessary employee related reform measures and cost savings or should any dispute arise during the process, the parties acknowledge and commit to take all necessary steps so that the Industrial Relations Commission shall arbitrate on and determine the employee related cost savings to fund the salary increases under this award. 7 Because the parties were unable to identify and agree on the employee related reform measures and cost savings necessary to fund the salary increases the Department, as we have indicated, notified the existence of an industrial dispute in April 2009 and, in accordance with the terms of cl 6 of the Award, the dispute falls to be arbitrated. For that purpose this Full Bench was constituted and sat on 14, 15 and 17 September 2009 to hear the respective cases. 8 We should comment on the strenuous effort by the Commission to resolve this matter by conciliation. In Director General, NSW Department of Education and Training v NSW Teachers Federation [2009] NSWIRComm 147 the Full Bench gave its reasons for the making of dispute orders against the Federation its officers, employees and members employed by the Managing Director of TAFE. Those orders were made on 1 September 2009 pursuant to s 137(1)(a) of the Act and directions under s 136(1) of the Act. The dispute orders were made in the light of industrial action that had been taken and planned by the Federation in opposition to the Department's application to increase teaching hours. Details regarding the industrial action are set out in the Full Bench's reasons. 9 The Full Bench was critical of the Federation. At [29]-[30] of its reasons the Full Bench stated: [29] By its conduct in organising and encouraging industrial action by its members employed at TAFE, the Federation is now undoubtedly attempting to pressure the Department to either forego its right to have the hours issue proceed to arbitration or to have the Department alter its position to the advantage of the Federation, but at the same time the Federation intends that its members should keep the benefits of the Recommendation it accepted in February 2009. It is a clear attempt to subvert the process that the Federation understood would occur from the outset in return for the substantial increase in salaries. [30] The attitude of the Federation in pursuing a course of industrial action in this matter was indefensible, a fact reinforced by the Federation's weak defence of its position to embark on industrial action. That the Premier and/or Minister did not respond to the Federation's demand for them to intervene was to be completely expected given that the matter was proceeding before the Commission in conciliation, with dates having already been set for the matter to go to arbitration before a Full Bench, if conciliation was unsuccessful. 10 The need to arbitrate on the Department's application to, inter alia, increase teaching hours arose because a concerted effort by the Commission to achieve a settlement through conciliation failed. During December 2008 and January 2009 Walton J, Vice-President conciliated the matter and, as we have mentioned, made a Recommendation on 21 January 2009. The Recommendation was accepted by the parties and that resulted in the variation that was cl 47. However, the parties were unable to reach agreement on the matters identified in cl 47. Further conciliation occurred in April 2009, but unsuccessfully. 11 Notwithstanding the filing by the Department of its application to vary the Award in July 2009, Walton J persisted in his attempts to achieve a settlement by conciliation. His Honour had reached the point by 3 August 2009 where he was actively countenancing issuing a recommendation with a view to resolving the matter. It was at this time the Commission was advised of past and planned industrial action by members of the Federation at a number of TAFE campuses in the State. On 4 August 2009, the Full Bench made a direction that the industrial action not proceed and suspended the conciliation proceedings occurring before the Vice-President. 12 Following an indication by senior counsel for the Federation on 25 August 2009 that the Federation accepted 'the Commission's attempts to satisfactorily resolve the dispute should occur in the absence of industrial action', conciliation proceedings before the Vice-President resumed. However, those proceedings were again disrupted by an announcement from the Federation that TAFE teachers intended to take industrial action on 2 September 2009. The industrial action was to be in the form of a 24 hour strike as well as a rally. 13 On 1 September 2009, the Vice-President issued a certificate of attempted conciliation, thereby signalling the end of that process. 14 The Full Bench is not aware of whether conciliation would ultimately have resolved the dispute. But it does seem to us regrettable that it was apparently truncated in the face of industrial action and not able to run its full course. THE APPLICATION

15 The employee related reform measures and cost savings that the Department considered necessary to fund the salary increases were identified in the further amended application to vary filed in the Commission on 17 September 2009. The application is in the alternative. The variations in Schedule A to the application are the Department's 'preferred package of employee related reforms and covers the cost of salary increases above 2.5% under the award consistent with the provisions of clause 6…' If the Full Bench did not find favour with Schedule A, the alternative position is set out in Schedule B. Schedules A and B are annexed to this decision. 16 In making the application the Department submitted that the savings made from the measures earlier agreed, and which constituted the basis for the consent variation to the initial Award, amounted to $6.103 M. The Department submitted the savings required to fund the salary increases above 2.5 per cent was $55.12 M over the three year period of the Award, leaving a shortfall of $49.017 M. The figure of $55.12 M was based on 5318 full time equivalent ('FTE') employees. The Federation contended that on the basis of 5390 FTE employees (which was its estimate of the number of employees subject to the Award), the total cost of salaries over the life of the Award was $53.66m. As it will be explained, however, the Federation did not accept there was any shortfall to be made up in order to fund the salary increases. Schedule A

17 It is presently the case that TAFE teachers are required to attend for 30 hours per week: cl 13.1. Direct teaching hours are 20 per week for 36 teaching weeks, a total of 720 hours per annum: cl 15. Teachers are entitled to a reduction in direct teaching time by the requisite amount of professional development time: proviso to cl 15.1. For new teachers the requisite amount of professional development time is two hours per week. For other teachers it is one hour per week: cl 20.3. 18 Teachers are also entitled to 10 hours per week to perform related duties (e.g., preparation, marking, etc) which is included in their 30 hours per week attendance time: cl 15. Presently, the related duties to be performed by each teacher is determined in consultation with their supervisor: cl 16.5. 19 Although teachers are required to teach for 36 weeks they are required to be in attendance for 41 weeks per annum: cl 15. In addition, there are seven weeks where teachers are not required to attend and which are deemed to be leave in lieu of overtime: cl 30.4.1. 20 Schedule A proposed that TAFE teachers engage in direct teaching for an additional 47 hours in 2010 and 71 hours in 2011. That is, for 731 hours (being 767 less 36 hours of professional development) in 2010 and 755 hours (being 791 less 36 hours for professional development) in 2011. The Award would also be varied (cl 13.1.1) to provide a minimum attendance of 30 hours per week. Under this proposal the entitlement to professional development time deducted from direct teaching time would remain unaffected. 21 The second material change proposed in Schedule A related to the averaging of teaching hours and the payment of an excess teaching hours loading when the average is exceeded: cll 18 and 25. The proposal was to remove the cap on the number of average hours that may be worked in any one week (presently 24) above which the excess teaching hours loading is paid. A reasonable hours test would be inserted to ensure that the removal of the averaging cap did not detrimentally affect teachers. 22 The third material change proposed was the removal of 10 days professional development for related employees. Related employees are defined in cl 29 to include permanent and temporary education officers, counsellors, cluster managers, managers education and training resource centre, principal education officers, program managers, curriculum managers, quality assurance coordinators, chief education officers and senior education officers. But the removal of the present minimum of 10 days would not mean the end of professional development. The proposed new clause provides that Institute Directors are to ensure that all related employees undertake professional development related to their current and medium term individual development needs as identified in consultation with their line manager. It is further proposed that related employees employed at the time of the making of the variation with an existing balance of professional development time may utilise that time with the approval of their line manager. 23 It was submitted the cost savings of the foregoing variations would be as follows: Increased teaching hours $40.14m Removal of averaging cap $2.59m Removal of 10 days professional development time for related employees $5.0m Previously agreed reforms $6.103m Total $53.833m Shortfall on total cost of salaries of $55.12m $1.287m

Schedule B

24 Under the Schedule B proposal there would be five substantive variations. The first was that TAFE teachers engage in direct teaching for an additional 36 hours in 2010 and 2011, that is, for 720 hours per annum. In the case of new teachers their direct teaching hours would be reduced by half of the requisite professional development time. For other teachers there would be no reduction. 25 The second proposal was the removal of the averaging cap of 24 hours. 26 The third proposal was increased attendance time. It was proposed that TAFE teachers be required to attend for 35 hours per week (presently 30) and that the additional five hours be devoted to related duties work. 27 The fourth proposed variation was a reduction in professional development time to 20 hours per annum for related employees. 28 The fifth proposed variation relates to extended leave spanning vacation periods. Presently, where a teacher takes extended leave that spans student vacation periods, that leave is, in effect, extended by the period of the student vacation without the student vacation being debited against extended leave entitlements. The proposed variation would remove the benefit by deeming any student vacation within a period of extended leave to form part of the extended leave. 29 The cost savings, according to the Department, that would be achieved under the Schedule B variations are as follows: Increased teaching hours $27.15m Removal of averaging cap $2.59m Increased attendance time $5.69m Reduced professional development time for related employees $5.0m Extended leave over vacation periods $3.32m Previously agreed reforms $6.103m Total $49.853m Shortfall on total cost of salaries of $55.12m $5.267m

EVIDENCE

30 The principal evidence for the Department consisted of affidavits of Kevin James Harris, Institute Director, TAFE NSW Northern Sydney Institute, Dennis McNeilly, Senior Budget Officer, Planning and Review, Department of Education and Training, Melinda Savvides, Assistant Director, Superannuation, Executive and Legal Services Division, Public Sector Workforce Office, Department of Premier and Cabinet. Only Mr Harris was required for cross-examination.

Evidence of Mr Harris

31 Mr Harris' evidence in support of the application of very extensive. It dealt with the following matters: · Profile of TAFE. · TAFE historical background. · Current Commonwealth and State Government Policy impact on TAFE NSW Institute funding. · The competitive training market. · The proposed reforms and their impact including cost savings. Some of the figures in Mr Harris' affidavit relating to cost savings were subsequently revised. The figures at [23] and [29] of this decision represent the revised and final estimates of cost savings. 32 In his affidavit, Mr Harris relevantly deposed as follows: PROFILE OF TAFE NSW

· Across the ten TAFE NSW Institutes there are 135 campuses. · In 2008 there were 504,009 students enrolled in TAFE NSW of which 408,095 were new enrolments. In 2008 209,831 students graduated from TAFE NSW. · TAFE NSW offered 16,781 modules and there were 908 nationally recognised training package qualifications available for delivery in TAFE NSW in 2008. NSW State Plan · The NSW State Plan commits to: o increasing the proportion of students completing Year 12 or recognised vocational training from 82.7 per cent in 2005 to 90 per cent by 2016; o increasing the proportion of the population aged 15–64 participating in vocational education and training from 11.7 per cent in 2005 to 16 per cent by 2016; o increasing to 250,000 the number of people in regional areas participating in VET by 2012, with an aim of 300,000 by 2016; o further investing in TAFE to adopt a stronger workforce development approach and deliver the training places necessary to meet industry demands; o increasing the proportion of training delivered in the workplace, in times and ways that are convenient, including workforce development; assisting firms to innovate and adapt to new technology; and improving employment outcomes for graduates; o increasing engagement with the existing workforce to assist mature age workers to keep their skills up to date, including through recognition; customised and personalised learning; and mature age apprenticeships.

CURRENT COMMONWEALTH AND STATE GOVERNMENT POLICY IMPACT ON TAFE NSW INSTITUTE FUNDING · The total revenue received by TAFE NSW Institutes is comprised of: o Commonwealth and State government sourced revenue allocated through purchasing agreements; o Contestable revenue through programs at a national, state, regional, enterprise, and individual student level. · Contestable revenue is comprised of but not limited to the following programs : o Commercial courses provided to individual full fee paying students; o Courses for full fee paying international students; o Commercial training programs for enterprises and government agencies; o Government contestably funded programs include User Choice apprenticeships, traineeships, Productivity Places Program, language literacy and numeracy programs, and adult migrant English programs etc. · The objective of User Choice is to increase the responsiveness of the vocational education and training system to the needs of clients through the encouragement of a direct and market relationship between individual providers and clients. User Choice governs the flow of public funds to registered training organisations (RTOs). · In NSW, the Registered Training Organisations apply to be included on an Approved Provider List to deliver training for apprentices and trainees in NSW. The funding of RTOs for training delivered under User Choice arrangements in NSW is administered through the NSW Apprenticeship and Traineeship Training Program (ATTP) which is run by State Training Services, an arm of the NSW Department of Education and Training. · Employers, together with trainees and/or apprentices are able to select an RTO from that list which meets their specific needs. RTOs contracted to deliver apprenticeship and traineeship training under the ATTP are paid a set price for each apprentice and/or trainee who selects them as their RTO. · Currently there are 10 apprenticeship areas open to User Choice in Wollongong, Newcastle and Sydney affecting six of the ten TAFE NSW Institutes. From 2009, this number will increase to twenty four apprenticeship areas, further expanding the level of contestable funding. · In addition to the contestable funding available through the User Choice program, TAFE Institutes tender for competitive contracts to Commonwealth and State government agencies. · Commonwealth government programs such as the Language, Literacy and Numeracy Program (LLNP) and the Productivity Places Program (PPP) are provided on a contestable basis. The PPP from 2009 will expand significantly to include training places for those who are in existing employment in addition to those who are seeking employment. Following agreement through the Council of Australian Governments (COAG), the States have signed up to deliver an additional 506,750 PPP qualifications commencements for job seekers and existing workers over the four years, 2009-2012. This is indicative of the increasing proportion of resources that will be available through contestable rather than guaranteed revenue. · In 2009 all states have signed up to a COAG Agreement to provide a guarantee of training placements for young people aged 15-24 years and to retrenched workers who are 25 years and over. The only source of additional funding to honour this entitlement to training is the contestably allocated Productivity Places Program. · A number of State government agencies such as the Health Department also call for tenders to run education programs. The NSW Government Procurement Policy establishes a rigorous process that providers must participate in to be successful in winning state government service contracts. · Institutes engage on a commercial basis with enterprises such as Accor, and Optus and community organisations such as Catholic Health Care to deliver workforce development services. · In the period, July 2008 to June 2009, all of Northern Sydney Institute activities were funded from Revenues derived directly from the Government Funded Core Recurrent Allocation plus Revenues from Contestable Business. In 2008/2009 the proportion of all activity funded by other than the Recurrent Core Allocation was 29.21% which has increased from a proportion of 28.1% in 2007/2008. This revenue is uncertain and not guaranteed from year to year. · The proportion of revenue derived from contestable and commercial services of the total revenue for the whole of TAFE NSW has increased from 20.76% ($299,916,059) in the 2005-06 financial year to 21.85% ($396,139,257) in the 2008-09 financial year. · The sustainability of employment for employees engaged on commercial programs is wholly dependent on the ability of TAFE NSW to successfully tender for the contracts and to market and sell its commercial courses and services at a competitive course fee cost.

· Indications from the Commonwealth government foreshadow a greater proportion of funding will be contestable in the future.

THE COMPETITIVE TRAINING MARKET · TAFE NSW is one of many providers of vocational education and training services in NSW.

· According to the 2007-2008 Annual Report of the NSW Vocational Education and Training Board, the body responsible for granting Registered Training Organisation (RTO) status in NSW, there were 966 RTOs in NSW in 2008. This represented an increase of 14 from the number of RTOs in 2006-2007. Of those 966 RTOs, 360 are located in the Northern Sydney region. In Table B on page 24 of the report, it is noted that 71.4% of the RTOs in NSW are private providers....

· The high hourly cost of a full time teacher affects the capacity for TAFE NSW to compete with other RTOs on the basis of price. This impact is felt in a number of areas. In the case of the Commonwealth Government's Productivity Places Program, a standard unit cost is set. It is not possible for the TAFE NSW Northern Sydney Institute to deliver many of these courses without a net cost to the Institute. This is primarily due to comparatively high cost of putting a fulltime TAFE teacher in front of a class to deliver these programs. · For example, to award a Statement of Attainment in Drawing takes 24 hours at Northern Sydney Institute and costs a student $360 (or $15 per hour) whereas the same qualification at Macquarie Community College is delivered over 16 hours at a cost of $150 (or $9.40 per hour). For full fee paying international students the cost of the Diploma of Accounting is $15,090 (1080 hours and $13.97 cost per hour to the student) at Northern Sydney Institute but at the Australian Institute and Commerce and Language it would cost the same student $7,000 (1040 hours and $6.73 per hour cost to the student).

· In the increasingly competitive vocational education and training market, the ability to offer quality educational services that are cost effective is essential to the ongoing viability of TAFE NSW.

· According to Tourism Australia, Australia has the third largest number of international students in the English-speaking world behind the US and UK. The number of international students studying in Australia has demonstrated the highest growth in the Vocational Education and Training (VET) and English Language Intensive Courses for Overseas Students (ELICOS) sectors, both of which are serviced by TAFE NSW Institutes. Australian Education International monthly data released in May 2008 demonstrates a 45.5% growth of international students in the VET sector and 31.4% in ELICOS. · Australian Education International data demonstrates that the majority of all VET enrolments across Australia in 2007 were with non-government providers. In New South Wales more than nine in ten students enrolled with a non-government provider. Non-government providers increased their national market share of commencements to 80% from 78% in 2006. In this market, TAFE NSW is not only competing with RTOs in NSW, but in all other states and territories. This is demonstrated through the 65% growth in commencements between 2006 and 2007 in Victoria and 59% in Queensland compared to only 44% growth in commencements for New South Wales. · The capacity for TAFE NSW Institutes to be competitive in the growing international student market is essential to the long term future of TAFE NSW. · Increasingly TAFE NSW is competing with interstate TAFE Institutes and private RTOs for the revenue from international business both on and off shore. · From 2008, under the Skilling Australia for the Future policy, the Commonwealth is funding the Productivity Places Program to deliver 701,000 training places over 5 years in areas of skills shortage. These training places will be delivered in an industry-driven system, ensuring that training is more responsive to the needs of businesses and participants. Of the places, 392,000 training places will be allocated to existing workers wanting to gain or upgrade their skills, and 309,000 (including 10,000 structural adjustment places) will be allocated to job seekers. · This commitment represents the only source of new vocational education and training funding however, the places and funding are fully contestable between Registered Training Organisations, including TAFE NSW Institutes.

Hours of Work and Salaries of Teachers Employed in the TAFE System Interstate § NSW TAFE teachers at the top of the salary scale are currently the highest paid TAFE teachers in Australia. The current ordinary working hours for a NSW TAFE teacher are 30 hours. Of those 30 hours, the teaching allocation of TAFE teachers is 20 hours per week, with a weekly deduction of 1 hour per week for professional development. There are 36 teaching weeks in each year resulting in 684 hours teaching per annum by a teacher. § In the Australian Capital Territory the ordinary weekly hours of work for a TAFE teacher are 30 hours. Of those 30 hours, the teaching allocation of TAFE teachers is 20 hours per week, with a weekly deduction of 1 hour per week for professional development. There are 36 teaching weeks in each year. § In Queensland, the ordinary weekly hours of work for a TAFE teacher are 36.25 hours. The weekly effective teaching time is negotiable between 21 and 25 hours per week giving an annual teaching load of 819-975 hours per annum which are worked over 39 teaching weeks.

§ In South Australia the ordinary weekly hours of work for a TAFE teacher are 35 hours. The weekly effective teaching time is an annualised amount varying between 720 and 960 (which is an average of 18 to 24 hours per week). These hours are worked over 40 teaching weeks. § In Tasmania the ordinary weekly hours of work for a TAFE teacher are 35 hours. The full time teaching load for a TAFE teacher is 760 hours per annum which is an average of 19 hours per week. These hours are worked over 41 teaching weeks. § In Victoria the ordinary weekly hours of work for a TAFE teacher are a minimum of 38 hours. Teachers teach up to 800 hours a year which is equivalent to a weekly effective teaching time of 21 hours per week. These hours are worked over 42 teaching weeks. § In Western Australia the ordinary weekly hours of work for a TAFE teacher are 37.5 hours. The weekly effective teaching time is 21 hours per week. These hours are worked over 40 teaching weeks. § The following rates of pay contained in the table below are those paid to entry level TAFE teachers in the following States and Territories.

State/Territory Salary rates NSW $66,332 Australian Capital Territory $55,719 Western Australia $53,725 Queensland $53,399 South Australia $49,605 Tasmania $48,577 Victoria $45,077

· The following rates of pay contained in the table below are those paid to TAFE teachers at the top of the incremental scale in the following States and Territories.

State/Territory Salary rates NSW $78,667 Tasmania $75,323 Australian Capital Territory $74,969 Victoria $70,000 Western Australia $69,992 Queensland $68,610 South Australia $68,422

VET FEE-Help · VET FEE-HELP, introduced in 2008, provides loans for fee paying students undertaking Diploma and Advanced Diploma courses that are accredited as vocational education and training awards, and have significant credit transfer arrangements to higher education · TAFE NSW is not able to qualify for access to VET FEE-HELP loans for government funded students as is possible in TAFE Institutes in other states, such as Victoria. New South Wales is unable to fulfil the requirements that would enable it to be classified as a "Reform State" for a range of reasons, one of which is that existing industrial arrangements are not flexible enough to enable TAFE NSW to survive in an environment where 100% of public funding is contestable. THE AWARD

· TAFE NSW has analysed areas under the current award where existing provisions could be modified to provide TAFE NSW with the means to more effectively respond to the education and training needs of TAFE customers and clients both in terms of effectiveness and cost. · Factors which informed this analysis include the fact that the majority of TAFE students (60%) are employed on a full time, part time or self employed basis. Also the majority of TAFE students study on a part time basis (91%). Students expect to be able to study at their time of choice as their employment and other personal circumstances dictate. · Enterprises require TAFE to provide workforce development services at times suitable to their business. Institutes are increasingly being required to meet these needs and expectations through offering services at times across the week including evenings and across the year outside the standard educational year. · The current award assumes education services are institutionalised, classroom based and programmed around an academic year. This is not the case. If TAFE is to be able to continue to grow and indeed maintain its current level of activity it is required to provide greater personalised education and training services and workplace delivery. · The current award should be varied to reflect the need for Institutes to be more responsive and have greater flexibility in providing their services at a cost that the government, enterprise, community and students can afford. 33 On the impact of the proposal in Schedule A to increase direct teaching hours Mr Harris stated: The award variation proposed by the Department provides increased flexibility in the scheduling of hours for employees, customers and the business. In effect the proposed clauses 15 and 16 work together to deliver annualised hours in TAFE NSW therefore providing greater utilisation of the existing TAFE workforce and significantly boosting operational efficiency.

The implementation of clause 15 of the Department's proposed variation from 1 January 2010 will lead to savings in the first year of $15.73 million and savings in the second year of $23.76 million, delivering total savings of $39.49 million over the life of the award.

The implementation of clause 16 of the Department's proposed variation from 1 January 2010 will lead to savings in the first year of $1.38 million and savings in the second year of $1.43 million, delivering total savings of $2.81 million over the life of the award.

Due to the nature of the TAFE student profile, where a majority balance employment with part time study, increasingly TAFE NSW customers have an expectation that classes will be available outside the traditional hours of Monday to Friday, 9am to 5pm.

TAFE NSW students and clients require courses to be scheduled to meet their educational and business needs. The inflexibility of the current award with respect to the delivery of direct teaching activities restricts TAFE NSW's ability to competitively respond to this expectation and need.

The current award provisions are inconsistent with individual student, enterprise, and community expectations and demands with respect to services delivery. The Department's proposal addresses these expectations and customer needs.

Technology is also expanding the options for both employees and students to schedule their interaction. At Northern Sydney Institute blended courses are offered which combine a mixture of online and face to face delivery. Teachers can nominate times during which students can be online at the same time or alternatively students can email material and questions which the teacher responds to at a later time. These developments allow teachers and students to have a more flexible approach to the scheduling of lesson delivery, but the current award conditions restrict the number of direct teaching hours performed each week making it difficult for TAFE NSW to capitalise on this flexibility.

In a significant number of industry areas, specialist training facilities are required. For example the large number of commercial training kitchens at Ryde College is not feasible to replicate at all colleges creating a high demand for these facilities. Given the demand for these types of courses it is necessary for TAFE NSW to be able to maximise the utilisation of these facilities.

Having regard for my knowledge of other Institutes it would be my expectation that this would be the case in other Institutes, that is, that similar specialised facilities for particular trades and vocations would be subject to great demand. Increased direct teaching component and greater flexibility of delivery would result in an ability to offer more places to students and a better utilisation of TAFE NSW's specialist training facilities and workforce. 34 On the impact of the proposal in Schedule A to remove the requirement that 10 working days per annum must be set aside as professional development time, Mr Harris stated: TAFE NSW's core business is education and training and as such, staff training and development is critical to its success. The proposed changes enable professional development to move from a time based approach towards a more flexible system based on the needs of the organisation and the individual.

The proposed variation will enable TAFE NSW Institutes to better provide for timely professional development of staff through a range of strategies that reflect global best practice, for example, mentoring, coaching, focused workshops, work based projects and online programs.

The Department's proposal will ensure that related employees continue to have access to professional development as required.

The implementation of clause 29 of the Department's proposed variation from 1 January 2010 will lead to savings in the first year of $2.62 million and savings in the second year of $2.72 million, delivering total savings of $5.34 million over the life of the award. 35 On the impact of the proposal in Schedule B to increase the existing hours of attendance requirement by five additional hours to 35 hours per week attendance for all classifications listed under cl 14 of the Award, Mr Harris stated: Increasing the existing hours of attendance will result in an increase in the number of hours that teachers are available to engage in duties other than teaching and will therefore increase productivity.

The combination of the increase in hours of attendance under the Department's proposed clause 15 and the ability of managers to determine what duties related to teaching are part of an approved program under the Department's proposed clause 16... will deliver TAFE NSW this productivity gain.

Productivity will be gained through the increase in teacher availability to undertake duties related to teaching, beyond preparation and marking....

The implementation of clause 15 of the Department's proposed variation from 1 January 2010 will lead to savings in the first year of $2.8 million and savings in the second year of $2.87 million, delivering total savings of $5.67 million over the life of the award. 36 Mr Harris asserted that the proposal in Schedule B effectively restores, under the proposed cl 15, the direct teaching component of teachers to 20 hours a week. He deposed that the impact of the changes relating to working hours in Schedule B would be as follows: [I]ncreasing the direct teaching component of all teaching classifications, and freeing up the way in which these direct teaching activities can be delivered is critical to TAFE NSW's operational efficiency and competitiveness.

The proposed increase in attendance will also contribute to TAFE NSW's productivity and will offset the lesser increase in direct teaching hours proposed under the variation set out in Schedule B.

The implementation of clause 15 of the Department's proposed variation from 1 January 2010 will lead to savings in the first year of $13.39 million and savings in the second year of $13.72 million, delivering total savings of $27.11 million over the life of the award.

The implementation of clause 16 of the Department's proposed variation from 1 January 2010 will lead to savings in the first year of $1.38 million and savings in the second year of $1.43 million, delivering total savings of $2.81 million over the life of the award.

The savings which are to be derived from the implementation of clause 20 of the Department's proposed variation from 1 January 2010 are captured by the figures provided in relation to clause 16 Allocation of duties. The proposed clause 20 enables the restoration of 36 hours per annum of direct teaching where these hours were previously discounted from direct teaching to provide for professional development.

The combined impact of the variations proposed under Schedule B... will not be dissimilar from that set out in relation to the proposal under Schedule A, except that a lesser overall increase in direct teaching hours is delivered under this package of reforms and therefore the benefit to the organisation will not be as great. 37 The Department proposed changes to the professional development provisions of the Award for related employees. It was proposed to remove the existing allocation for related employees of 10 working days per annum professional development time and replace it with a guarantee of 20 hours professional development per annum, the same as that proposed for teaching classifications.

38 According to Mr Harris, the impact of the proposed variation to cl 29 would be similar to that already described in relation to Schedule A regarding professional development.

39 The implementation of the Department's proposed variation from 1 January 2010 would, according to Mr Harris, lead to savings in the first year of $1.87 M and savings in the second year of $1.94 M, delivering total savings of $3.81 M over the life of the Award.

40 The Department's proposal regarding extended leave would have the effect of deeming any vacation period which falls within a period of approved extended leave to form part of that extended leave period. According to Mr Harris the impact of this proposal would be a reduced liability to pay vacation pay to TAFE teachers where they take extended leave that spans a vacation period. This would result in an accelerated rate of reduction in the extended leave liability for TAFE teachers.

41 The implementation of the Department's proposed variation from 1 January 2010 would lead to savings in the first year of $1.61 M and savings in the second year of $ 1.67 M, delivering total savings of $3.28 M over the life of the Award.

42 In his conclusion, Mr Harris stated: It was a requirement of clause 47 of the current award that the additional salary increases above 2.5% granted to permanent and temporary TAFE teachers and related employees were to be offset by employee related reforms and cost saving measures. To achieve this Department has proposed two alternative award variations which are set out in Schedule A and Schedule B of the Department's application.

The preferred award variation proposed by the Department set out in Schedule A will deliver the employee related reforms and cost savings required to fund the additional salary increases above 2.5% per annum that were granted to permanent and temporary TAFE teachers and related employees under the current award.

The increases to the direct teaching component of teacher duties and the flexibility of an annualised teaching program under the Department's proposal will place TAFE NSW from January 2010 in a stronger position to face the challenges posed by an increasingly competitive vocational education and training sector.

The alternative award variation proposed by the Department and set out in Schedule B will also deliver the employee related reforms and in part the cost savings required to fund the additional salary increases above 2.5% per annum that were granted to permanent and temporary TAFE teachers and related employees under the current award.

The mix of reforms sought under Schedule B will provide some immediate returns in terms of increased direct teaching component, but ultimately the reforms in this package are geared to delivering productivity gains for TAFE NSW which may or may not result in an overall improvement in the organisation's operational efficiency and competitiveness.

The primary award variation set out in Schedule A is designed to optimally position TAFE NSW to respond to the increasingly competitive vocational education and training market and to ensure that the organisation is best placed to continue to provide high quality education and training services to meet the workforce development needs of enterprises, the vocational aspirations of individuals and capacity development goals of communities.

The number of competitor Registered Training Organisations is steadily increasing each year. If TAFE NSW is not able to address the cost effectiveness of delivering vocational education and training services, TAFE NSW Institutes will be forced to make business decisions regarding the qualifications, services and courses that are available to students. The increasing proportion of potential revenue that is fully contestable means that the ability of TAFE NSW to secure that revenue is not guaranteed. 43 Mr McNeilly's affidavit went to various costings relied upon by the Department. Ms Savvides' affidavit was prepared in relation to the Federation's 2008 claim for a Crown Employees (Education Employees Death and Invalidity) Award 2008. That application was not proceeded with. However, the relevance of the material referred to in the affidavit will be explained later in this decision.

Evidence of the Federation 44 For the Federation, Phillip John Bradley and Robert James McVicar gave evidence. Mr Bradley is the Assistant General Secretary, Post Schools Unit of the Federation. Mr McVicar is the Principal of McVicar Pty Ltd. Mr McVicar has a management, accounting and auditing background. Evidence of Mr McVicar 45 Mr McVicar's affidavit contained costings based on various assumptions of: the cost of additional salary increases above 2.5% that would be paid to permanent and temporary TAFE teachers and related employees in 2009, 2010 and 2011. These were calculated to be $10.29 m, $17.64 m and $25.27 m respectively. The calculations were based on 4,746 full time equivalent (FTE) employees in teaching classifications and 644 full time equivalent related employees. the cost of the proposed reforms in Schedule A; the cost of the proposed reforms in Schedule B. 46 Mr McVicar deposed that: A comparison of my calculations with the Department's shows that the Department has under costed the savings in: Schedule A by: · $46.46 m being; - $43.91 m - additional teaching hours per teaching year for all permanent and temporary teaching classifications with direct teaching duties is costed on a basis of saving Equivalent FTE; and - $2.55 m - removal of provision for 10 days professional development time per annum for related employees, costed on hourly rate per classification. Schedule B by: · $27.86 m being; - $26.03 m - additional 36 teaching hours per teaching year for all permanent and temporary teaching classification with direct teaching duties - cost saving Equivalent FTE; and - $1.83 m - reduction in Related Employees PD by 50 hours per annum, costed on hourly rate per classification. Evidence of Mr Bradley 47 In an extensive affidavit Mr Bradley addressed the following matters: 1. History of TAFE Awards since 1952 . This included:

· the 1969 Excess Hours case where the Commission heard and determined a claim seeking overtime rates for technical teachers working in excess of or outside their ordinary working hours. The decision reviewed the working year of a full time technical teacher and the appropriate mechanism for compensation for work performed outside ordinary hours; · the 1988 Hours Award case where the Full Bench determined 18 hours direct teaching and 12 hours related duties per week for general studies teachers and technician teachers and 20 hours direct teaching and 10 hours related duties per week for trade and other related teachers;

· the 1991 Hours and Conditions case where the Full Bench determined that the appropriate workload was 20 hours direct teaching and 10 hours related duties per week for all permanent/temporary teachers. 2. The impact of the reform measures recommended in January 2009 . In relation to these measures Mr Bradley stated: The changes to the Award in relation to direct teaching hours for permanent teachers, excess teaching hours, time credit and part time casual teacher salaries will allow the Department to change the way in which teaching hours are scheduled in the future to maximise the use of teaching times that previously would have attracted penalties and/or to allocate teaching loads to teachers who can be engaged at a lower cost. As the changes will increase direct teaching hours, reduce salary payments and reduce the span of time credit hours, the use of teachers at the affected times will increase over subsequent years and therefore provide greater savings than 2007/2008 statistics would suggest. Mr Bradley estimated the savings to be as follows: · time credit: $4.4m over the life of the Award; · excess hours: $7.0m over the life of the Award; · discontinuance of Death and Invalidity Award claim: $14.86 million of over the life of the Award. 3. Costing of Department's application (both Schedule A and Schedule B) . In respect of Schedule A, Mr Bradley stated: Over the last 10 or 15 years, there has been an increasing casualisation of the TAFE teaching workforce. An increasing proportion of teaching hours in TAFE have been performed by part time casual teachers rather than permanent or temporary teachers. It is the clearly stated intention of the Department and Kevin Harris to reduce costs in order to maximise competitiveness and the Department has reduced costs by reducing equivalent full time permanency by 112 from 2006 to 2008. It is likely that this trend will continue and the Department will utilise any additional direct teaching hours required to be performed by permanent and temporary teachers by reducing the numbers of permanent and temporary teachers. In other words, the Department will make its savings as soon as possible and to the greatest extent possible at the higher $150.78 and $156.61 (for 2010 and 2011 respectively) rates by reducing permanent teacher appointments.

…

The Department's primary application in Schedule A would increase teaching by 71 hours in 2011 for every full time teacher. As there are about 5,000 full time teachers, the hours saved can be calculated as follows: 71 x 5,000 hours saved = 355,000 hours. As each full time teacher now teaches 36 weeks at a normal load of 19 "face to face" teaching hours per week, the yearly teaching load is 684 "face to face" hours. This is equivalent to about 355,000/684 = 519 full time retiring or resigning teachers who would not need to be replaced. In relation to Schedule B, Mr Bradley deposed that: The Department's calculations of the estimated savings to be derived from the increase in direct teaching hours proposed in Schedule B to the application is based upon data that indicates there are 4,654 equivalent full time permanent/temporary teaching positions in 2008…. As indicated above, the Minister and the Department have, suggested that the number of full time permanent/temporary teachers in TAFE is around 5,000. As is the case with the Department's estimates in relation to Schedule A, the Department is likely to have greatly underestimated the savings to be derived from the increase in direct teaching hours proposed in Schedule B.

4. Impact on the Quality of Provision of Services of Increased Direct Teaching Hours Sought by the Department . In this respect Mr Bradley deposed:

The Department's amended application provides for teachers to be required to perform 30 or even more hours teaching in any teaching week. This would have a severe health and safety impact on such teachers, as to maintain quality teaching by doing duties related to teaching, an untenable 75 to 90 hours of work per week would be generated. To do otherwise would result in reduction of the quality of teaching and student learning. Teachers would have minimal time to prepare lessons, assess students' work, give out of class assistance to students, consult with industry, to keep up to date professionally and to teach creatively. There has been much publicity about the damage to Australia's international student education export industry caused by low quality providers. TAFE should not be forced to lower its quality to compete with low cost, low quality providers because to do so could irreparably damage TAFE NSW's reputation as a high quality provider of vocational education and training. Australia is already having to introduce new legislation and spend considerable time and expense on restoring our international reputation for quality education because of the damage caused by "shonky operators"…. If such a program involving 30 or more direct face-to-face teaching hours per week continued for several weeks it would impose unsustainable pressures upon teachers and the ability to maintain current industry professionalism and competence. Mr Kevin Harris' assurances… about the proposed "unreasonable hours" award clause provide little comfort because it does not provide any firm limit on teaching hours and depends entirely upon the subjective perceptions of Institute Managers as to what constitutes reasonable teaching hours.

5. Savings achieved from other measures including TAFE restructure, teacher education . Mr Bradley stated: There has already been a restructure abolishing Curriculum Centres as set out in the document "Doing Business in the 21st Century". As a result, there is now an even clearer expectation that teachers do the work that the 30 or so educational staff (whose positions were deleted) previously did…. Rather than this work being largely centralised, there will be great duplication of effort across TAFE Institutes. The savings for the Department from the 30 positions is about $3.6 million each year (based on a Senior Education Officer Step 2 salary with oncosts at about $120,000 per annum) or $8 million over the duration of the Award. In relation to teacher education, Mr Bradley deposed that: From July 2008, the Department abolished higher education teacher education arrangements but allowed teachers to choose at the beginning of 2008 to enrol in higher education teacher education programs. In 2009 those teachers who chose in 2008 to complete a higher education teacher education qualification have benefited from time release of between 8 and 10 hours per week off their teaching loads. Newly appointed permanent teachers who commenced a higher education teaching qualification in Semester 2, 2008 continue to have the benefit of time release as a transitional arrangement. However, newly appointed permanent teachers from Semester 1, 2009 are required to teach an additional 8-10 direct teaching hours per week as a result of the abolition of higher education teacher arrangements. Savings from time release alone is about $45,000 per year per new teacher, based on documents annexed hereto which were produced pursuant to a Summons of Production in these proceedings. The Department indicated as from January 2008 all new TAFE teachers need to only hold a Certificate IV in Training and Assessment prior to employment, though the TAFE Award even allows the Director General to waive this requirement and allow a person without any teaching qualification to teach in TAFE. Based on previous years' figures, recruitments to replace teachers resigning or retiring would mean an average annual university intake of about 200 new teachers as set out in documents produced pursuant to a Summons of Production in these proceedings. This will produce savings in release time (with on costs) of about $9 million per annum and with HECS and other support arrangements the total savings are around $12 million per annum or savings of $36 million over the duration of the Award.

6. Efficiency and productivity . In this respect Mr Bradley stated: TAFE NSW is already able to compete effectively. The Productivity Commission Vocational Education and Training Report 2009 found that NSW was the second most efficient State or Territory in Australia with a low Government real recurrent expenditure of $12.63 per annual student hour (2007 dollars). Only Victoria was cheaper at $11.61/hour.

…

Since 1997, TAFE NSW productivity in economic real terms has increased by about 25%. TAFE NSW teachers have borne the main burden of this productivity improvement already, with student to equivalent full time staff ratio increasing from 23.6 to 31.2 in 2006, although study hours per student have also increased.

National Centre for Vocational Education Research financial data shows that Government recurrent funding for TAFE NSW is approximately $500 million per year less in real terms compared to 1997.

Further, the NSW Government has reduced its share of Vocational Education and Training total revenue from 65.6 % to 57.2%. In the same period, student fees/charges and other commercial/contestable revenue has consistently increased from 14.3% to 22.8% to fill the gap. Raising this revenue has increased the workload of teachers significantly.

…

[I]n real terms since 1997, total Government vocational education and training funding has been cut so much there is now a shortfall of about $600 million per year. This productivity would easily fund a 100% salary increase for TAFE full time teachers.

[A] Report of the Allen Consulting Group called "The Complete Package – The Value of TAFE NSW" showed consistent with the experience of overseas boom economies that increased government funding of education is a superb investment in future economic well being. The Report found that every $1.00 invested in TAFE NSW returns $6.40 over twenty years. Government funding cuts in real terms over the last twelve years to TAFE NSW would have accumulated to about $3 billion. Based on the Allen Consulting Group Report, this represents a loss of investment return of about $20 billion. I say that the employee related reform measures and cost savings proposed by the Federation to resolve this dispute will not only fund the salaries shortfall in the short term, but will provide much better long term returns on investment than the Department's counter productive short term excessive cost cutting proposals.

Further cuts have occurred since these referred to above. The 2009-2010, NSW Budget figures show that for 2008-2009, revised (actual) Government funding for TAFE NSW was cut by $40.6 million or – 2.9% compared to the original allocation, while total annual student hours increased by about 2%. In this year alone, after allowing for inflation, there was therefore a productivity increase of about 7% - more than enough to fully fund the additional teacher salaries above 2.5%. The same Budget table shows that TAFE revenue increased by 12% or $37 million over budget, indicating that TAFE has been able to significantly increase its commercial revenue last year. 7. Contradiction of contestable funding with maintenance of quality through investment . Mr Bradley stated: Mr Harris' affidavit gives scant consideration to the potential for serious damage to TAFE's "high quality provider" reputation from the impacts of cost cutting, including by the Department's application for increased teaching hours which will result in:

· Less time to prepare lessons. · Less time to mark and assess students' work. · Less time to consult with industry. · Less time to update professionally. · Less time to teach creatively and innovatively. · Less time to visit students in workplaces. TAFE has already exceeded the limit to other savings achieved by:

· Increasing class sizes. · Providing teachers with much less teaching time with students than the Department claims for as "nominal course hours "(Federation members have often reported that as little as half of the nominal hours have been provided for delivery). · Not paying teachers for recognition of prior learning done with student interaction during assessment. · Maximising use of much cheaper part time casuals teaching fewer than 10 hours per week (TAFE's "casual" and temporary employees constitute an appallingly high 70% of teachers, when Australia's 30% insecure workforce figure is the second highest in the industrialised world). · Cutting educational support staff, including about 50 positions in the "Doing Business in the 21st Century" restructure. · Reducing technical, stores, clerical and administrative support even though the demand for reporting and auditing processes has escalated significantly. The Government and the Department seem to be ignoring legislative requirements to maintain high quality vocational education and training programs…. Likewise, TAFE is required to provide access to the disadvantaged including specialised services such as delivered by special program coordinator teachers (see section 6(1) (e) of the TAFE Commission Act …). As these cause increased costs, which places TAFE at a competitive disadvantage, the Federal Government is already giving consideration to "market design" principles which should address this issue. In Kevin Harris' affidavit…, there is reference to TAFE not being able to deliver Commonwealth Government funded Productivity Places Programs "primarily due to the comparatively high cost of putting a full time TAFE teacher in front of a class to deliver these programs". This is grossly misleading as TAFE NSW has nearly three times as many part time casual teachers as full time teachers, and by the Department's own evidence, their hourly rate is nearly half of that of a full time teacher. Furthermore, part time casual teachers have not received a salary increase above 2.5%. The granting of slightly higher increases to full time teachers will have negligible impact on tendering for these programs. TAFE's ability to win major contracts with current salary arrangements is also clearly shown by Northern Sydney Institutes just winning a major $100 million contract.

Based on my experience and feedback I have received from members about the Department's application, if teaching hours are increased and other entitlements reduced, I believe that the tenuous goodwill of teachers working tens of excess unpaid hours each week will be lost or severely damaged. The result would be that teachers will not only have less time to spend on developing commercial and customised courses, but they will spend much less of their own unpaid time doing this. Coupled with the negative impact on quality of more teaching with less time to prepare for it, this would make TAFE less competitive, not more! 8. Entrepreneurial and commercial activity that has reduced Government costs . Mr Bradley stated: The NSW Treasury is not required to pay the cost of increases to teachers' salaries where the cost of the salaries are met by revenue derived from entrepreneurial and commercial activity undertaken by TAFE. 21.85% of TAFE income is derived from this type of activity in the 2008-2009 financial year. Therefore cost savings to fund the salary increases for 21.85% of the 4,654 equivalent full time teachers are not required to be met from funding provided by the NSW Treasury. Instead of cost savings of $55 million required to fund the increases in salaries, the real savings required to be funded by the NSW Treasury are 21.85% less or approximately $43 million for all classifications over the life of the award. This is more consistent with the $45 million figure being quoted by the Director General Michael Coutts-Trotter in emails to teachers. Other Federation evidence 48 There was also tendered an affidavit of Roderick Lindsay Brown, Welfare Officer with the Federation. Mr Brown's affidavit had been prepared in support of the Federation's claim for a Crown Employees (Education Employees Death and Invalidity) Award 2008. As with Ms Savvides' affidavit, the relevance of what Mr Brown deposed to will be explained later.

CASE FOR THE DEPARTMENT

49 Relying essentially on the evidence of Mr Harris, it was submitted that TAFE had moved from a virtual monopoly on the provision of post-compulsory vocational education and training to a highly competitive market place. The relevant developments have been: (i) increasing contestability for government revenue, particularly from or driven by Commonwealth Government policies; and (ii) an increasing reliance on non-government revenue streams.

50 Reference was made to the NSW State Plan and its aims to ensure the future growth of the New South Wales Economy. It was submitted that to ensure its growth (and prevent its contraction) TAFE needed to be more productive and efficient so that it is competitive with not only private providers but other State TAFEs. Further, that the reasonableness of the proposals to increase the hours of direct teaching as a proportion of total hours could be seen against the background of standards in other State TAFEs set out in Mr Harris' evidence. 51 The Department's submission then addressed the various costings that it had applied to the already agreed reform measures and to the proposed reforms in Schedules A and B of its application. These have been summarised above. 52 The Department noted the Federation's submission that a number of reforms agreed or made prior to the making of the initial Award in February 2009 should be offset against the cost of wages in excess of 2.5 per cent. Those were: a. the removal of time release and other support for teachers undertaking higher education teaching qualifications said to have saved $36M; and

b. the abolition of curriculum centres said to have saved $8M. 53 In this respect, it was submitted the Recommendation and cl 6 called for 'further employee reform measures and costs savings…', that is, further to those reforms already agreed or measures implemented prior to the making of the Recommendation. It was submitted the suggested savings did not fall into this category. 54 The Federation also claimed that since 22 per cent of TAFE revenue was derived from commercial sources, the Department was obliged to forego 22 per cent of the costs of funding pay rises in excess of 2.5 per cent. As to this proposition the Department submitted that it was the need to secure commercial funding and contestable funding which required TAFE to be price competitive with private Registered Training Organisations ('RTOs'). It was contended that the effect of the Federation's proposition was to apply the Treasury funding to the salaries of the teachers involved in these courses but not accept the conditions of that funding which apply to all other activities of TAFE. Further, that it was inconsistent with cl 6 of the Award, which required savings in relation to salaries paid under the Award. 55 A further issue addressed in the Department's submission was the discontinuance by the Federation of a claim for a Death and Invalidity Award. This was referred to in section 4 of the Recommendation as follows: The Federation will discontinue proceedings IRC 618 of 2008, Crown Employees (Education Employees Death and Invalidity) Award and will not make any further application for death and disability provisions during the life of this award. 56 The Federation had costed the claim at full value of $14.86 M and claimed this amount as an offset. It was submitted for the Department: There is no evidence from NSWTF as to the likelihood of the claim being acceded to. The claim for death and disability for public servants other than emergency services workers is unprecedented. There were compelling reasons for providing such a benefit to emergency service workers which do not apply to TAFE teachers….

Had the proposal been in serious contemplation, it would have been necessary for DET to negotiate employee related savings for its full cost, in accordance with Government wages policy. The net effect would have been zero which is the true value of the claim. The NSWTF had not offered employee contributions as provided by fire-fighters, police and ambulance staff….

DET also relies upon its contentions in respect of its proposed award….

It is submitted that the Commission would not take this proposal into consideration or alternatively would not assign any value to it. CASE FOR THE FEDERATION

Approach to be taken

57 As to the approach to be taken to cl 6, the Federation submitted the cost savings to be considered should also include cost savings from measures unilaterally made by the Department. In that respect, the Federation contended that cl 6.3 envisaged only the determination of employee related cost savings measures to fund the salary increases. To the extent that the salaries costs of the Department in relation to TAFE teachers during the life of the Award had been reduced by other measures implemented by the Department, further measures were not necessary, it was submitted. 58 It was further submitted regarding the approach to be taken by the Full Bench that it should consider the maximum savings available to the Department as a result of each of the agreed reforms, each of the existing cost measures or further changes sought by the Department. This approach, it was said, was consistent with the evidence of Mr Harris as to the approach the Department would urge the Commission to adopt of 'erring in favour of attributing maximum savings from each reform'. This approach also reflected the way that the Department functioned in practice which in Mr Bradley's experience was to always seek to maximise savings. 59 The Federation submitted: The onus must be upon the Department, as the party that has proposed the reforms contained in its amended application, to put forward convincing evidence as to the savings it would derive from the introduction of the award changes sought. It is particularly surprising that the Department did not in its evidence in chief endeavour to support its savings estimates. The initial affidavit of Harris did no more than assert certain figures without providing any justification or analysis. The Federation was forced to interrogate these bald assertions by issuing a summons to find any documents the Department used as a basis for its calculations and by thereafter making its own calculations. The Commission is, of course, bound by the usual obligations imposed by the Act in the context of Award proceedings. In addition to satisfying the criteria in clause 6.3 of the Award, the Commission must be satisfied that any measures to be implemented involving variation to the conditions of employment of teachers are such as to provide for fair and reasonable conditions of employment for employees covered by the Award for the purposes of section 10 of the Act. Ongoing savings 60 The Federation raised the issue of ongoing savings. In that respect, it was submitted, that the cost saving measures to fund the salary increases upon which the Commission was required to arbitrate pursuant to cl 6.3 were not confined to cost savings only accruing during the life of the Award and/or for the remainder of the life of the Award. Those cost savings continue in subsequent years. The Federation contended that the determination envisaged by cl 6.3 precluded the introduction of measures that would provide ongoing savings to the Department that would outstrip the cost of the salary increases afforded to teachers covered by the Award. Cost of salary increases 61 On the cost of the salary increases the Federation claimed that the total additional salary costs and oncosts above 2.5 per cent per annum were less than was estimated by Mr Harris. Mr Harris had estimated a total cost over the life of the award of $54.66 M. Mr McVicar had estimated a total cost over the life of the award of $53.21 M. It was submitted the estimates provided by Mr McVicar were much more transparent than those of Mr Harris and should be relied upon. However, it was further submitted: The relatively small costs of the salary increases for Bradfield College and TAFE Children's Centres must be added to the cost of salary increases for TAFE employees to assess the total cost of salary increases under the incorporated award. The Federation does not contest the total amounts of $270,000 for Bradfield College and $190,000 for TAFE Children's Centres attributed by Harris to the salary increases for the life of the award.

Therefore, based on McVicar's calculations, the appropriate figure for the total cost of the salary increases is approximately $10.38 (rather than $10.48) million for 2009, $17.79 (rather than $18.21) million for 2010 and $25.49 (rather than $26.43) million for 2011, resulting in a total over the life of the award of $53.66 (rather than $55.12) million.

Although this discrepancy is only $1.48 million, it should be noted that McVicar's figures are based on a total of 5390 FTE employees as against Harris' figures which are based on a total of 5318 FTE employees. If McVicar had made his calculations based on the same total figure as Harris in relation to the number of FTE employees, the discrepancy would have been greater. Other savings

62 The Federation submitted that the estimate by Mr Harris as to the cost of the salary increases contained in the Award failed to have regard to a number of considerations which reduced the Department's employee related costs in TAFE to be funded by the NSW Treasury over the period of the Award.

Commercial Income

63 TAFE currently derives approximately 22 per cent of its revenue from commercial sources. TAFE had also been able to significantly increase its revenue from commercial and fee-for-service courses in recent years. For example, it was submitted, the NSW Budget papers demonstrated that TAFE revenue had increased by approximately 12 per cent or $37 M over budget. 64 The Federation submitted that the NSW Treasury was not required to fund the salaries of teachers engaged in commercial or entrepreneurial courses. That is, TAFE was already expected to generate income to pay for salary increases for teachers engaged in commercial or entrepreneurial courses without funding from the Treasury. If the cost of salaries payable to teachers engaged in commercial and entrepreneurial courses are excluded, it was submitted, the salaries to be funded by additional employee related cost savings measures were approximately $42 M.

Other measures

65 Other measures that, it was submitted, would reduce employee related costs in TAFE during the period of the Award included the following: (a) Removing time release and other support for teachers undertaking higher education teaching qualifications which has saved about $36 million over the life of the award; and

(b) The abolition of curriculum centres which will save about $8 million over the life of the award.

66 The Federation submitted that prior to 2009, teachers entering permanent employment with TAFE were required to hold or obtain a higher education teaching qualification. For over 30 years, newly appointed TAFE teachers undertaking higher education teaching qualifications were provided with eight or 10 hours release from direct teaching duties for the first one or two years of employment and payment of HECS and associated fees to complete the qualification. 67 The abolition by the Department of higher education teaching qualification time release meant that from Semester 1, 2009 newly appointed teachers were required to perform an additional eight to 10 hours direct teaching duties per week (288 or 360 hours per annum). Based upon existing recruitment rates, it was submitted, the Federation's evidence suggested that the savings to the Department in employee related costs as a result of this measure were likely to be approximately $12 M per annum or $36 M over the duration of the Award. 68 It was noted that the Department had also implemented a restructure having the effect of abolishing approximately 30 educational staff positions in curriculum centres. It was submitted that as a result of this reform, additional work was imposed upon teachers across TAFE in relation to curriculum development. As a consequence of the restructure, the Department would save approximately $8 M in employee related costs in TAFE over the life of the Award. Agreed reforms and cost saving measures

69 The Federation analysed the agreed reforms and cost saving measures accepted by the Federation and the Department in January 2009 as set out in the Recommendation made by Walton J, Vice-President on 21 January 2009. We have already summarised that analysis in terms of the different cost saving outcomes arrived at by the Federation and the Department. Where it becomes necessary in our consideration we shall refer to the reasoning or rationale underpinning the Federation's analysis. It is necessary, however, to say something at this point about the discontinuance of the death and invalidity claim.

Death and invalidity claim

70 It was submitted in respect of this claim that its discontinuation was a cost saving for the Department. It was contended that: This matter was clearly part of the Recommendation agreed to by the parties. There would have been no point in having the discontinuance in the Recommendation other than as a cost saving measure. In particular, there would have been no point in the Federation agreeing to the discontinuance if it was not going to be taken into account as a cost saving measure.

It was noted that the total cost of the claim was estimated to be $14.86 M over the life of the Award. 71 In pressing this offset the Federation indicated that it had agreed to discontinue its application for the making of a death and invalidity award as part of the salaries settlement for teachers in schools. This was a feature of the Recommendation accepted by the parties. The Federation recounted the fact that the Recommendation that was accepted by both parties provided a common increase for schools and TAFE of 4.4 per cent from 1 January 2009, 3.8 per cent from 1 January 2010 and 3.8 per cent from 1 January 2011, resulting in a common cumulative increase of 12.48 per cent. It was noted that the Director-General of the Department of Education was also the Managing Director of TAFE and his Department carried out the employer role for TAFE. Accordingly, it was submitted: The evidence demonstrates that the other employee cost savings agreed in relation to teachers in schools did not fund the cost of the salary increases over and above 2.5% per annum. The only inference that can be drawn is that the savings from the potential cost of a successful claim in the death and invalidity proceedings was considered by the Department as sufficient to bridge the differential. It is submitted that, given the close connection between teachers and related employees employed in schools and in TAFE that the same approach should be taken in these proceedings. 72 It was further submitted that it could not be said that no value should be attached to the agreement of the Federation to discontinue its claim for the making of a death and invalidity award and to not pursue the matter during the life of the Award. Such an approach, it was contended, would be inconsistent with the approach adopted in relation to teachers in schools and would permit the Department to accept the giving up of a valuable claim by the Federation as part of the quid pro quo for salary increases and subsequently contend it had no value. 73 It was submitted that the application for the making of a death and invalidity award was a serious claim that was foregone in return for salary increases. The costs saved by the Department as a result must be given consideration in these proceedings. The Federation submitted its application was not merely for a flow on of the arrangements applying in the emergency services: Further, the restriction of death and disability benefits to employees in the emergency services is not a position that has been endorsed by the Commission. It is no more than the position of the Government. There is no reason why these benefits should be confined to employees in high risk employment when they apply to death and disability outside the workplace.

See Re Coke Works (State) Award [1972] AR 575, in relation to accident pay (at 589-590 per Sheehy J). Summary

74 In summarising its position regarding the Agreed Reforms and Cost Savings Measures, it was submitted for the Federation: The Department has not taken the approach considered appropriate by Mr Harris of maximising the costs savings but rather has significantly undervalued the savings that it can expect to obtain from the introduction of the agreed reforms and has notably failed to give any consideration to the agreement of the Federation to discontinue its application for a death and invalidity award.

If the approach taken by the Commission is to consider the maximum savings from the agreed reforms listed above that have been considered by the Department, the savings are more likely to be about double the amount of $6.09 million estimated by the Department over the life of the Award. Further, the potential cost saving to the Department of a successful application by the Federation for a death and invalidity award is in the order of $14.86 million over the life of the Award. Schedules A and B Increase in direct teaching hours

75 One of the Federation's main objections to the increase in direct teaching hours that would flow from implementation of Schedule A or Schedule B of the Department's application was that it would be used to reduce the number of permanent or temporary teachers. 76 It was submitted that if the increase in direct teaching hours was used to reduce FTE teaching positions, the reduction brought about by the increases sought in Schedule A would be 383 such positions in 2010 and 553 such positions in 2011, while the reduction brought about by the increases sought in Schedule B would be 300 such positions in each year. A reduction of permanent or temporary teachers would also result in further savings estimated to be about $1 M arising from saving the cost of TAFE fees for Certificate IV in Training and Assessment TAA40104. 77 Counsel for the Federation submitted: A reduction in full time teachers being the result of an increase in direct teaching hours would not only maximise the cost savings for the Department, it would reflect the past experience within TAFE, whereby an increasing proportion of teaching hours in TAFE have been performed by part time casual teachers rather than permanent or temporary teachers. The evidence of Bradley demonstrates a long term trend of reducing permanent employment within TAFE by approximately 100 positions per year.

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There can be no doubt that the Department has the capability of reducing permanent appointments over the period of the Award. The only evidence given in the proceedings in relation to rates of attrition within TAFE was given by Bradley. Bradley estimated that rates of attrition were approximately 400 teachers per year. There is no suggestion that this rate will decline in the near future. Rather the TAFE teaching workforce is skewed towards those approaching retirement, including those covered by what Harris called the "old old superannuation scheme" who have no incentive to keep working. A slowing of recruitment in the coming years would easily permit the Department to make savings in permanent teacher salaries if any addition in direct teaching hours were imposed. To the extent that there were any practical problems in reducing permanent staff, they would diminish or disappear if the increase in direct teaching hours were modest and, as a result, the number of staff to be reduced were less.

Furthermore, the contention that a reduction of permanent staff would not be practicable because of a desire to maintain a core of experienced staff can have no application to temporary teachers who receive the same salaries and conditions as permanent teachers. As at 30 June 2008, there were approximately 379 FTE temporary teachers. Most temporary teachers are appointed only for a period of one semester with no guarantee of ongoing employment which makes it easy to dispense with their services. 78 The Federation noted that the increase in direct teaching hours of 47 hours in 2010 and 71 hours in 2011 sought in Schedule A to the amended application would produce a continuing saving of approximately $50 M per annum and the increase of direct teaching hours of 36 hours per annum sought in Schedule B would produce a continuing saving of approximately $27 M per annum. The ongoing salary costs after the end of the Award would be less than $27 M per annum. Accordingly, it was submitted: When other cost savings are introduced into the equation, the calculation of the amount of this windfall and the resulting overfunding in the Department's proposals in relation to direct teaching hours increases significantly. Depending on the extent to which the Commission takes account of the reform measures and costs savings discussed above, the only way this windfall from overfunding can be avoided is to either not introduce any increase in direct teaching hours at all or to have an increase in direct teaching hours significantly smaller than that proposed by the Department. 79 In summarising its position on this issue, the Federation contended that an increase in direct teaching hours was not warranted because of the evidence as to the deleterious impact on the quality of provision of services of increased direct teaching hours. The evidence indicated that TAFE teachers commonly worked well in excess of ordinary working hours in order to maintain good quality lessons and delivery with their existing direct teaching load.

Removing or Reducing Provision for Ten Days Professional Development Time for Related Employees 80 As the Federation observed, Schedule A to the Department's amended application proposes eliminating all professional development for related employees while Schedule B proposes a reduction in professional development for related employees by 50 hours per annum. 81 The Federation referred to the savings estimated by Mr Harris as follows: (a) eliminating all professional development for related employees would save nothing in 2009, $2.62 million in 2010 and $2.72 million in 2011, resulting in a total of $5.34 million over the life of the award; and (b) a reduction in professional development for related employees by 50 hours per annum would save nothing in 2009, $1.87 million in 2010 and $1.94 million in 2011, resulting in a total of $3.81 million over the life of the award. 82 These estimates were contrasted with those of Mr McVicar which, unsurprisingly, were favoured by the Federation: (a) eliminating all professional development for related employees would save nothing in 2009, $3.33 million in 2010 and $3.58 million in 2011, resulting in a total of $6.91 million over the life of the award with a continuing saving thereafter of $3.58 million per annum; and (b) a reduction in professional development for related employees by 50 hours per annum would save nothing in 2009, $2.47 million in 2010 and $2.55 million in 2011, resulting in a total of $5.02 million over the life of the award with a continuing saving thereafter of $2.55 million per annum. 83 The Federation submitted that the other problem with the Departmental calculations in relation to professional development reduction was that they did not take into consideration the abolition of the previous entitlement to accumulate any of the annual professional development available (20 hours in Schedule B), but not taken during the year. It was said this could result in a loss of about 10 hours per person per annum unable to be accumulated with a cost savings of about $1.0 M over the award duration.

Extended Leave Spanning Vacation Periods Deemed Extended Leave

84 In this respect, the Federation observed that there would be a continuing saving to the Department of $1.67 M per annum after 2011.

Increase in Attendance Hours

85 Whilst the Federation did not contest the Department's estimates regarding savings, it submitted that the impact on teachers of a required attendance of five additional hours per week only resulted in cost savings that could be achieved by each teacher attending for an extra 11 minutes or $2.95 per hour of additional work. These savings were minimal it was submitted noting that Mr Harris made it clear that he was not confident that any savings at all would be obtained from this measure. The Federation submitted: It would be absurd in these circumstances, where the Department says there is relatively little or even nothing to be saved by way of costs, for such a dramatic change to Award conditions to be introduced having the effect of requiring teachers to work an additional 205 hours per annum in attendance time.

Removing the Maximum Number of Hours on Averaging

86 The Federation contended that it was appropriate to describe the savings expected to be derived from the removal of averaging restrictions as minimal in the context of other matters subject of the proceedings. Further, that it was apparent from the Department's calculations that it expected that no savings at all to be obtained from the capacity to average direct teaching hours up to 35 hours in a week in Schedule B compared to the less attendance hours sought in Schedule A. It was submitted: Inclusion in the award of a capacity for teachers to be directed to work over 30 and up to 35 hours of direct teaching per week in any week or continuously would place unreasonable and unsustainable pressures on teachers. Teachers are expected to complete at least 10 hours of duties related to teaching in any week including attendance for additional hours for preparation, marking and industry liaison. The Department's proposal would expose teachers to unreasonable working hours.

Given the minimal savings the Department hopes to achieve by this reform and the potentially severe impact upon the work and personal lives of teachers that would result, it would be absurd for this reform to be granted.

Other award variations

87 The Federation observed that Schedules A and B to the Department's amended application proposed to introduce a new definition of 'approved program' in cl 2.3 of the Award which required a teacher's teaching and other duties be approved by the employee's line manager. A new cl 16 was proposed which would provide in cl 16.3 that managers would 'determine' the duties related to teaching that shall be conducted as part of an approved program. In relation to this variation it was submitted it: [C]onstitutes a significant alteration to the duties and responsibilities of teachers throughout TAFE and would undermine the professional standing and discretions of teachers. Absolutely no evidence has been presented by the Department to justify this proposed alteration to long-standing arrangements for the determination of the duties undertaken by teachers and other employees in TAFE. 88 It was further submitted the measure would not produce any cost savings and appeared to be no more than an opportunistic attempt to alter the working arrangements of teachers which was foreign to the cost savings exercise envisaged by cl 6.3 of the Award. 89 In concluding its written submissions, the Federation made the following points: 1. The award variations sought by the Department would go well beyond funding the cost of the salary increases provided for in the Award and provide ongoing windfall savings to the Department each year at the expense of the conditions of employment of teachers and the quality of teaching in TAFE. 2. The measures proposed by the Department in both Schedule A and Schedule B are also not justified by any necessity on the part of TAFE to improve efficiency or productivity. 3. The proposed increases in direct teaching hours, increase in attendance hours and removal of any limitation upon averaging of direct teaching hours, would impose pressures on teachers that have the potential to endanger the quality of teaching provided in TAFE and cause stress, anxiety and workload pressures. 4. No further cost saving measures were required to fund the cost of the salary increases in excess of 2.5 per cent per annum which were fully funded having regard to the following: a. The agreed reforms and cost savings measures in the January recommendation;

b. The unilateral cost saving measures introduced by the Department, during the period of the Award; and

c. The extent to which NSW Treasury was not required to fund the salaries of teachers engaged in commercial or entrepreneurial courses.

5. If the Commission was of the view that cl 6 of the General Section of the Award required the imposition of further award variations that would realise savings to TAFE, the further variations to fund the salary increases under the Award in excess of 2.5 per cent per annum would be achieved by minimal further changes to award conditions, confined to the following: a. The Award be varied as proposed by the Department in Schedule B to deem any vacation period which falls within the period of approved extended leave to form part of the extended leave period and not constitute a vacation;

b. The Award be varied to provide for a small increase per annum in direct teaching hours for teachers and a commensurate reduction in hours of professional development for teachers (calculated, using Mr McVicar's estimates, at about $750,000 for each increased direct teaching hour per annum); and

c. The Award be varied to provide for a similar modest reduction in professional development time for related employees (calculated, using Mr McVicar's revised estimates, at about $500,000 for each reduced day of professional development per annum for this group of employees). 90 It was finally submitted that, if the Commission was of the view that any further variations were required, it would be prudent to reach a decision in principle and give the opportunity to the parties to discuss any appropriate award variations that might ensue. CONSIDERATION

91 It was submitted by the Federation that the task to be undertaken by the Commission in these proceedings was an unusual one. But that is merely in the sense that it is the only public sector case under the government's current capped wages policy that has been required to be arbitrated in accordance with the relevant provisions of the Act. In all other major public sector matters the differences between the parties have been resolved by conciliation or by using the Bluescope model: see Construction, Forestry, Mining and Energy Union (New South Wales Branch) and Macquarie Generation [2009] NSWIRComm 160; Operational Ambulance Officers (State) Award [2008] NSWIRComm 168; Notification under section 167 by the Minister for Industrial Relations of a dispute between BHP Billiton and The Australian Workers Union and others re proposed strike action [2002] NSWIRComm 378; Crown Employees (NSW Fire Brigades' Permanent Firefighting Staff) Award 2008 [2008] NSWIRComm 174; and Crown Employees (Public Sector - Salaries 2008) Award [2008] NSWIRComm 193. 92 In the present proceedings, cl 6 of the Award requires the parties, in accordance with their agreement, to submit to arbitration by the Commission in accordance with the requirements of the Act in the event they are unable to reach agreement on the question of employee related cost savings to fund the salary increases under the Award. There is nothing unusual in that and it is not inconsistent with the Commission's wage fixing principles. There is no doubt the case has 'special attributes' or is 'out of the ordinary' for the reason already cited (see Re Nursing Homes &c., Nurses' (State) Award (No 4) [2005] NSWIRComm 88; (2005) 138 IR 409 at [18])

93 Of course, consistent with the requirements of the Act, the Commission must be satisfied that the claim advanced by the party seeking to change the Award is properly made out. Further, the Commission must be satisfied that any measures to be implemented involving variation to the conditions of employment for teachers are such as to provide for fair and reasonable conditions of employment for employees covered by the Award for the purposes of s 10 of the Act: Re Operational Ambulance Officers (State) Award [2001] NSWIRComm 331; (2001) 113 IR 384 at [166].

Clause 6

94 The starting point in any consideration of the Department's application is the relevant Award provision. It sets out the process to be followed in identifying and implementing further employee related reform measures and cost savings to improve TAFE operational efficiency and competitiveness in order to fund the salary increases provided in the Award. 95 As it has been explained, that Award provision was originally cl 47 of the initial Award, but it metamorphosed into cl 6 of the Award. Clause 6 had its origins in the Commission's Recommendation issued on 21 January 2009. Clause 6 was a rewording of section 3 of that Recommendation. Section 3 was in the following terms: The parties recognise the agreed reforms part fund the salary increases in the award. To fund the difference between the agreed reforms and what is necessary to fund the salary increases, the parties commit to the implementation of further employee related reform measures and cost savings to improve TAFE operational efficiency and competitiveness.

A working party will be established from 2 February 2009 to identify and finalise the necessary employee related reform measures and cost savings by 3 April 2009. The working party shall consider a range of initiatives, including direct teaching hours of TAFE teachers and time credit hours, to fund the salary increases beyond 2.5% each year that are not offset by the employee related reform measures and cost savings detailed in section 2 above.

To ensure progress of the working party, the parties agree to regularly report to the Industrial Relations Commission as part of the Commission's Recommendation.

Should the working party not identify the necessary employee related reform measures and cost savings or should any dispute arise during this process, the parties commit that the Industrial Relations Commission shall arbitrate on the employee related reform measures and cost savings to fund the salary increases under the award in June 2009. 96 Clause 6 of the Award: 1. acknowledges there have been employee related reform measures and cost savings already agreed and implemented by the parties; 2. commits the parties to the identification and implementation of further employee related reform measures and cost savings to improve operational efficiency and competitiveness in order to fund the salary increases provided by the Award; 3. records the parties' agreement to consider a range of initiatives, including direct teaching hours of work of TAFE teachers and time credit hours to fund the salary increases beyond 2.5 per cent each year to the extent not already achieved by the employee related reform measures and cost savings already agreed and implemented by the parties; and 4. records that in the event the parties are unable to identify the necessary employee related reform measures and cost savings the parties are committed to take all necessary steps so that the Commission shall arbitrate on and determine the employee related cost savings to fund the salary increases under the Award. 97 It is clear from cl 6 and the background to that provision that the parties had committed themselves to finding further reform measures and cost savings that were employee related in order to fund the salary increases beyond 2.5 per cent each year that were not offset by the measures that were identified in section 2 of the Recommendation. Those measures were time credit, excess teaching hours, appeals to GREAT, sick leave and part time casuals. What is more, the parties committed themselves to the process of arbitration by the Commission in the event there was no agreement on the measures and savings. 98 The nature of the parties' commitments as recorded in cl 6 is important. It means that reform measures and cost savings that may have been achieved unilaterally by the Department at some earlier time, such as the abolition of Curriculum Centres and the changes in 2008 relating to teacher education, are not to be countenanced as part of any arbitration. The purpose underlying cl 6 was to find reform measures that would produce cost savings in addition to those already agreed upon measures and savings in order to fund the salary increases that exceeded 2.5 per cent in 2009, 2010 and 2011. It did not involve a retrospective search for savings that had already been achieved by TAFE at a time when the exercise required under cl 6 was not even in contemplation.

99 Further, it is apparent from the Recommendation that the discontinuance of the Federation's death and invalidity claim did not constitute an element of the already agreed upon measures to fund the increases beyond 2.5 per cent. The discontinuance of the claim was not a 'reform' measure representing a cost saving in section 2 of the Recommendation. Moreover, the discontinuance of the claim cannot be regarded as a reform measure representing a cost saving. It would lead to an absurdity if an organisation could make a claim, regardless of its merit, and then by discontinuing the claim contend that thereby the employer had achieved a saving by virtue of the organisation not proceeding to have the claim determined. There is no certainty the Federation's death and invalidity claim would have been granted, it being reasonably novel given the class of employee proposed to be covered (there are particular award provisions applying to emergency service personnel). Further, even if the claim had not been withdrawn and had been the subject of negotiations between the parties, given the Department's position of requiring the increased cost of salaries and improved employment conditions to be offset by employee related savings, we would expect that the cost of the death and invalidity claim ($14.86 M) would have to have been funded by a commensurate amount of savings. 100 The Federation had contended that an inference could be drawn that the savings from the potential cost of a successful claim in the death and invalidity proceedings was considered by the Department as sufficient to bridge the differential between the parties in relation to the settlement for teachers in schools and that given the close connection between teachers in schools and teachers in TAFE, the same approach should be taken in these proceedings. The Department does not accept that such an inference is available and nor do we. The Recommendation made by Walton J in respect of teachers in schools refers to the Death and Invalidity claim in a section on its own, separate to the other reform measures that had been agreed and in a manner similar to the structure of the Recommendation applying to TAFE teachers.

101 The discontinuation of the claim was clearly a matter that the Department could have taken into account in agreeing to accept the Recommendation because it would have meant that the Department would not have to expend time and resources in opposing the claim in any arbitration proceedings during the life of the Award. But there is no evidence that would support the proposition that there was any mutual intention that the discontinuance of the death and invalidity claim would constitute a 'reform' measure designed to fund salary increases. 102 A further point to be made about cl 6 is that under its terms the objective is to find employee related reform measures and cost savings to improve TAFE operational efficiency and competitiveness in order to fund the salary increases provided in the Award. It is clear from the evidence of Mr Harris that TAFE operates in a highly competitive environment and is in competition with both interstate TAFE Institutes and private RTOs for the training and vocational education dollar. We accept Mr Harris' evidence that TAFE NSW's ability to offer quality educational services that are cost effective is essential to its ongoing viability.

103 The final point to be made about cl 6 is that on the face of it the provision requires reform measures to be implemented that constitute sufficient cost savings to fund the full extent of the salary increases in 2009, 2010 and 2011. However, even on the Department's own estimates there is a shortfall in both Schedule A and Schedule B, although the shortfall in Schedule B is greater ($5.267 M) than Schedule A ($1.287 M). It may, therefore, be inferred that the Department accepts an outcome that does not fully fund the salary increases.

Ongoing savings

104 By their nature, the reform measures proposed in Schedules A and B will provide ongoing cost savings beyond the life of the Award. The Federation contended, however, that cl 6.3 precluded the introduction of measures that would provide such ongoing savings.

105 It seems to us that, in the same way salary increases apply virtually in perpetuity, the reforms that were agreed arising from the Vice-President's Recommendation in January 2009 will provide ongoing savings beyond the life of the Award, yet no objection was taken by the Federation to this outcome. Moreover, the Federation was well aware of the Department's objective to increase direct teaching hours as an important element in achieving cost savings when the Federation agreed to cl 47 being inserted into the initial Award and later when cl 6 was inserted into the Award. It could not, realistically, have been the Federation's expectation that if the Department achieved its objective in whole or in part that when the Award reached its nominal expiry date that there would be a reversion to the teaching hours that applied prior to the teaching hours being increased.

106 In our opinion, cl 6 involves a search for employee related cost savings to fund the salary increases under the Award. And as one of the reform measures specifically identified as being required to be considered by the parties is direct teaching hours, it is our view that it was intended by cl 6 that direct teaching hours could, in the absence of an agreed outcome, be the subject of any arbitration by the Commission in order to produce the necessary cost savings, regardless of the fact that the savings might be ongoing. 107 It follows from what we have said that the fact there will be ongoing savings is no basis upon which to refuse the Department's application or any element of it.

Estimates of cost savings

108 It is true that the estimates of cost savings that could be achieved by the implementation of Schedule A or Schedule B differed between the Department and the Federation. Even if the Federation's estimates are correct, the differences between the two estimates are minimal given the overall savings required to be achieved and we do not regard it as part of the task of determining the employee related cost savings to fund the salary increases under the Award, to engage in a precise mathematical exercise.

Commercial income

109 The Federation had submitted that when assessing the cost of the salary increases the Commission must have regard to the fact that TAFE obtains approximately 22 per cent of its revenue from commercial sources. Accordingly, the cost of the salary increases should be reduced by 22 per cent to approximately $42 M if the evidence of Mr McVicar was to be accepted. It followed, it was submitted, that reform measures necessary to produce cost savings of $53.67 M (Mr McVicar's figure) were not justifiable. 110 There is a superficial attraction to the Federation's contention that because 22 per cent of TAFE's revenue is derived from commercial sources, Treasury is not required to fund 22 per cent of the cost of the salary increases above 2.5 per cent and, therefore, the cost savings necessary are some $12 M less that the original estimate (based on Mr McVicar's estimate). 111 The Federation's approach, however, is inconsistent with what was stated earlier, namely, the application of cl 6 does not involve a retrospective search for savings that had already been achieved by TAFE at a time when the exercise required under cl 6 was not in contemplation. It is also inconsistent with cl 6 to the extent that it requires savings in relation to salaries paid under the Award. Further, the 22 per cent is revenue derived from contestable and commercial services and we do not know what proportion of that percentage relates to the provision of contestable services, which includes revenue from successful bidding to conduct training at often pre-determined cost for Commonwealth and State government agencies. Commercial services, on the other hand, involve pricing services such that they deliver a profit. 112 More importantly, however, was the evidence of Mr Harris that: The sustainability of employment for employees engaged on commercial programs is wholly dependent on the ability of TAFE NSW to successfully tender for the contracts and to market and sell its commercial courses and services at a competitive course fee cost.

TAFE NSW is one of many providers of vocational education and training services in NSW.

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TAFE NSW has to compete with an ever increasing field of Registered Training Organisations.

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In the increasingly competitive vocational education and training market, the ability to offer quality educational services that are cost effective is essential to the ongoing viability of TAFE NSW.

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The capacity for TAFE NSW Institutes to be competitive in the growing international student market is essential to the long term future of TAFE NSW.

Increasingly TAFE NSW is competing with interstate TAFE Institutes and private RTOs for the revenue from international business both on and off shore. 113 The very purpose of the Department's application is to introduce reform measures that will produce cost savings so that increases in salary beyond 2.5 per cent do not render TAFE less competitive in an increasingly competitive training market. By discounting the costs needed to be saved on the grounds that 22 per cent of TAFE's revenue is derived from commercial/contestable sources, it would likely have the effect of reducing TAFE's ability to be as competitive as it otherwise might be if there were no discounting. 114 Further, the evidence indicates that the revenue derived from commercial services by TAFE is used to subsidise the services it provides for the neediest people in the community. It does not seem to us, in those circumstances, to be in the public interest to hinder TAFE's competitiveness by removing commercial gained revenue from the equation in this matter. 115 Finally, a competitive training market is a reality for both private and public training providers. The fact that TAFE has to compete is not, of course, the arbiter of whether or not the reforms proposed by the Department are fair and reasonable or that the Department has made out a proper case. But the environment in which TAFE operates is a matter the Commission is required to take into account in the public interest. It is impossible for TAFE to retreat into the near monopoly it once had in vocational education and training where the level of salary may have been regarded as a less critical consideration. In this new environment, there is likely to be less access to the public purse and if TAFE is rendered less competitive it will hinder its capacity to continue to expand and to increase its workforce of teachers and related staff.

Cost savings from agreed reforms

116 The Federation claimed that the Department's estimates of cost savings from the already agreed reforms relating to time credits ($2.18 M) and excess teaching hours ($3.51 M) were underestimates and the more accurate estimates were $4.4 M and $7.0 M, respectively.

117 As to excess teaching hours, Mr Harris agreed in cross-examination that there was some scope for variation, but predicted that the teaching pattern will remain much as it presently is, as it is driven by student and client demand. In making its calculations the Department relied upon 'history and experience'. In the exchange in cross-examination the following evidence was provided: Q. Indeed, your cost savings are based on an assumption that the pattern of work for 2008 will continue, in terms of time worked after 5.30pm? A. They are based on history and experience, yes.

Q. You don't accept the proposition that the pattern of work or pattern of classes after 5.30pm will change to direct more classes at the time from 5.30pm to 6.30pm? A. No, I don't accept that. The reason I don't accept that, because the studies demand and business demand determines when classes occur, and one reason I don't accept it. The second reason is that there is a growth in the way we deliver programmes, in terms of on-line programmes, personalised learning. The notion we will have an increased number of hours, more hours teaching, such to force a savings beyond the history, is probably contrary to what, no doubt, would probably happen.

...

Q. I am suggesting if cost considerations are taken into account the cost will be minimised by directing the post 5pm demand for classes to the time slot between 5pm and 6.30pm? A. If people can leave their place of employment, if this was possible, but it's not the fact, it is not our experience. A lot of the post trade classes start at 5.30pm but the majority of our professional classes - people working in the city or in an office type environment, they can't get to a class, which you are suggesting. Again, the demand would drive the practise, notwithstanding your point about restriction of commercial kitchens and facilities.

...

Q. The logical time to have a TAFE class is between 5.30 and 6.30pm so that the student can get there after finishing work and before the traditional time for dinner? A. Classes extend longer than 6.30. Some classes are one hour but most classes, particularly post trade courses, start at 5.30 and finish at 7.30, 8.30. Paraprofessionals start at 6, 6.30 and finish two hours later at 8, 8.30 or three hours later, up to 10 o'clock.

Q. You are suggesting there would be no change in that pattern, despite the very real cost savings that would be accruing to TAFE by putting a greater percentage of classes before 6.30pm? A. I believe that is the case because, again, I am working on the basis we have to staff what the customer requires, particularly of a more and more competitive nature where students can choose where they get their courses from.

...

Q. The existing percentage of classes that are outside normal hours but before 6.30pm is about 27 percent, is that right? A. I believe that is the case. I must admit, I have not looked at that data for some time. I do recall those numbers being presented by both the Teachers' Federation and ourselves in attempts to calculate the costing.

Q. There is plenty of scope for increasing that percentage, you would accept that, wouldn't you? A. If you believe we are running a business where the college could put on a time that suits itself as opposed to students and asking them to enrol in a course that does not suit them, and that is the only way it can change that, I don't believe that at all. I believe there is some scope and there will be variations but the majority will stay.

Q. You can't guarantee that that percentage won't change? A. No, I can't guarantee that won't change. 118 In the cross-examination of Mr Bradley on the excess teaching hours issue, the following evidence was given (this evidence has to be read in conjunction with what was said about excess teaching hours in Mr Bradley's affidavit referred to earlier in this decision): Q. Before the adjournment I was asking you some questions about the time credit and the 19,000 hours and similar assumptions underpinning the excess hours calculation. It is fair to say your critical reliance is on history for the purpose of calculating those savings, is that right? A. Entirely reliant on history, yes, I am critical of that.

Q. You formed a view that greater use would be made of those times, is that right? A. That's correct.

Q. Effectively, in relation to each of those matters you estimate the savings to be double what the Department has estimated? A. Yes, approximately.

Q. Is that just a gut feeling? A. To some extent, but it is, I suppose, based on my experience of other reforms of this nature in the past that they do tend to get used a lot more. As I mentioned before, my belief the 19,000 figure was initially low. 119 Mr Bradley's evidence that the savings relating to excess teaching hours are likely to be at least double the Department's estimated $3.51 M appears to be based largely on a 'gut feeling' and does not constitute a basis for rejecting Mr Harris' evidence on this issue despite Mr Harris' concession that there could be some change.

120 As to the time credit issue, the estimates relied upon by Mr Harris were based on historical data. Mr Bradley again suggested the Department's estimates were wrong and that $4.4 M would be saved on the basis that the number of classes in the subject bandwidth would double. It may be that there will be an increase in the number of classes but there is no proper basis for accepting the proposition it will double based on Mr Bradley's 'gut feeling'. Even if it were to double, the amount under consideration is only $2.2 M.

Schedule A

121 Schedule A and Schedule B are two separate packages of reform measures that centre on working hours. Schedule B was put in the alternative. The rationale for proposing it was simply that on the Department's assessment it might constitute a more industrially acceptable set of reforms to that proposed in Schedule A, particularly because it involved a lesser increase in direct teaching hours (47 v 36 in 2010; 71 v 36 in 2011).

122 We have given serious consideration to approving Schedule A as the means of achieving the cost savings to fund the salary increases. However, we have decided against that option for the reasons that follow.

123 The increase in direct teaching hours in Schedule A is a significant upwards movement in those hours in what would be a period of just over 12 months. It would mean nearly a 10 per cent increase in direct teaching hours from 2011 onwards. Such an increase is strenuously opposed by the Federation and whilst its methods of demonstrating its opposition were reprehensible (see Director General, NSW Department of Education and Training v NSW Teachers Federation at [28]-[31]) it is apparent that such a sudden, substantial change to working hours arrangements is liable to have a marked unsettling effect on relations between the Department and teachers that is likely to have an adverse flow-on impact on students. We also have a reservation that the sudden, sharp increase in direct teaching hours could have a deleterious effect on the quality of lessons and their delivery and available time to consult with industry and make visits to workplaces, as adjustments are sought to be made in a relatively short time frame and most likely in an environment of discontent amongst teachers.

124 If the transition to a 10 per cent increase in direct teaching hours had been spread over a longer period we may have been more amenable to implementing Schedule A.

125 One of the Federation's principal objections to an increase in direct teaching hours was based on its concern that it would be used to decrease the number of full time and part time staff, either permanent or temporary, that would otherwise be used. The Department contended that this reduction in permanent employment was unlikely because of a desire to maintain a core of experienced staff. However, as the Federation submitted, no witness was called by the Department to give evidence as to what level of permanent employment was considered to represent a 'core of experienced staff'. Moreover, as the Federation also pointed out, the contention that a reduction of permanent staff would not be practicable because of a desire to maintain a core of experienced staff can have no application to temporary teachers who receive the same salaries and conditions as permanent teachers. As at 30 June 2008, there were approximately 379 FTE temporary teachers. Most temporary teachers are appointed only for a period of one semester with no guarantee of ongoing employment which makes it easy to dispense with their services.

126 Mr Harris accepted in cross-examination that how any increased direct teaching hours would be used would depend upon the particular mix required at the time, including consideration of cost, and he could provide no guarantee that any increased teaching hours would not result in a reduction in permanent staff: Q. What I am suggesting to you, if you got these direct teaching hours, and therefore you could make savings in hours taught by other employees, that those needs and student needs and other needs that you talked about will determine whether you use those extra hours to reduce full-time employment overall or to reduce part-time casual employment, or to have a mix of the two? A. I think you are suggesting that we would take the opportunity to reduce the full-time number of teachers in New South Wales to gain further than what we have indicated in our savings. If that's what you're suggesting, I would push hard back on that because our business would not be sustainable without the right mix, in terms of full-time teachers and part-time teachers.

Q. What's the right mix? A. The right mix varies. It is quite complex from section to section, in terms of the business needs. It varies in terms of the dynamics of those particular areas of industry, and it also varies, in terms of its practicalities of being able to recruit full-time teachers in a dynamic marketplace, in terms of salaries and various other things.

...

Q. And therefore whether you use the increased teaching hours to substitute for full-time employees or part-time employees - part-time casual employees - or any other category of employee will depend on the particular mix required at the time? A. And business requirements.

Q. You can't give any guarantee that all those increased teaching hours that are sought will lead only to a reduction in part-time casual employees as distinct from permanent or temporary employment, can you? A. Except to say in the life of the award, the needs to be able to make savings by full-time teacher reductions has got its practical challenges. So, no, I can't guarantee, other than to say there is practical limitation of the life of the award remaining two years. The notion that there would be a deliberate drive to reduce, to make further savings from full-time teachers, as - I would believe that would be wrong, because the sustainability of the business, it wouldn't be the right response, and impractical. 127 The 'right mix' of full time and part time staff, either permanent or temporary, and casual teachers is, of course, a matter for the Department and it is understandable Mr Harris was unable to give an unequivocal commitment that there would be no reduction in the numbers of permanent or temporary teachers as a consequence of the implementation of Schedule A. However, we note Mr Bradley's evidence regarding the trend to casualisation of the teaching workforce, a trend that we would have thought was neither appropriate nor sustainable in the medium to long term: Over the last 10 or 15 years, there has been an increasing casualisation of the TAFE teaching workforce. An increasing proportion of teaching hours in TAFE have been performed by part time casual teachers rather than permanent or temporary teachers. It is the clearly stated intention of the Department and Kevin Harris to reduce costs in order to maximise competitiveness and the Department has reduced costs by reducing equivalent full time permanency by 112 from 2006 to 2008.

...

I was present as a Federation Officer representative at negotiations with the Department regarding the Staffing Agreement 2007-2009 and for the previous Staffing Agreement. The Federation initiated these Agreements because of great concern about efforts of the Department to casualise the TAFE teaching service. This was being done because of the much cheaper hourly rate of part time casual teachers compared to full time "permanent" teachers. Head teachers and institute managers have been trained about the "savings" that could be made by increasing the use of part time casual teachers.

128 We should make it clear that we do not see as a legitimate objective of an increase in teaching hours the reduction in the number of permanent and/or temporary teachers. Given our concern about casualisation we have decided to take a more cautious approach than implementation of Schedule A would allow. 129 The third reservation we have is the 90 per cent realisation rate. In its calculations of the potential cost savings to be derived from increasing teaching hours, the Department reduced the part time casual teacher $79.92 per hour rate further to $71.92 per hour by applying a 90 per cent 'realisation' reduction factor for Schedule A only. According to Mr Harris, the rationale for attributing a 90 per cent realisation of additional teaching hours was to take into account the fact that student and enterprise client demand to a certain extent dictates what type of, and how many, courses are offered. He stated: The reality is that teaching sections servicing thin market sectors and some regional campuses will have a limited ability to increase direct teaching hours due to fixed demand for courses arising from the smaller student population in some of these areas and the Department deemed it prudent to take this into account in its costings. 130 It would appear the figure of 90 per cent was no more than a 'guesstimate', although in saying that we are not being critical of Mr Harris given the difficulty we expect would be encountered in arriving at an accurate figure. However, the fact that a realisation reduction factor was used in respect of Schedule A and not Schedule B, tends to support a more cautious approach rather than the bold adoption of Schedule A.

131 For the reasons given we have decided against a variation of the Award in terms of Schedule A to the application. Schedule B

132 We earlier described the five substantive elements of Schedule B to the Department's application: 1. that TAFE teachers engage in direct teaching for an additional 36 hours in 2010 and 2011, that is, for 720 hours per annum; 2. that the averaging cap of 24 hours be removed; 3. that TAFE teachers be required to attend for 35 hours per week (presently 30) and that the additional five hours be devoted to related duties work; 4. that there be a reduction in professional development time to 20 hours per annum for related employees; and 5. that any student vacation within a period of extended leave be deemed to form part of the extended leave. 133 The main reason why we decided not to approve a variation of the Award in terms of Schedule A is because it constitutes a very significant change to the employment conditions of TAFE teachers, especially in relation to a core condition, namely working hours, in a relatively short timeframe, and because we discerned the need for a more cautious approach given other factors we have identified. The Department, we believe, has also recognised the magnitude of the changes it has proposed in Schedule A, and the strength of feeling of teachers opposed to it, by proposing Schedule B as an alternative, which whilst it will deliver improvements to TAFE NSW's operational efficiency and competitiveness, the changes will be more modest in their impact. 134 The Federation has taken issue with some of the Department's costings relating to Schedule B. We said earlier our task does not involve a precise mathematical exercise, but in any event the Department's costings of Schedule B reveal a $5.267 M shortfall in funding the salary increases. Even if the Federation is correct in contending the Department has overestimated the cost impact of certain of the reforms in Schedule B, the overestimate may be absorbed into the shortfall.

Teaching hours, attendance time

135 In so far as direct teaching hours is concerned, Schedule B effectively restores the standard of 20 hours per week fixed by the Full Bench in the 1991 TAFE case. In the 1994 NSW TAFE Commission Teachers and Other Educational Staff Enterprise Agreement a new clause, 14.2 Professional Development – Teachers, provided two hours per week in the first and second years of employment and one hour per week thereafter for professional development for all permanent teachers. This professional development time was deducted from the 20 hours direct teaching time per week fixed in 1991, meaning that teachers (after the first two years of employment) were required to undertake 19 hours direct teaching per week. 136 Schedule B (cl 16) proposes the removal of the current practice of discounting of the direct teaching component by one hour a week for professional development. Professional development would no longer be allocated on a weekly basis, but rather an annual allocation of hours would be guaranteed under the Award. Professional development would be debited from the annual hours allocation for duties related to teaching. Professional development is already prescribed as a duty related to teaching under cl 15 of the current award. 137 The annual hours allocation for duties related to teaching is increased to 540 hours or five additional hours per week to 35 hours. 138 Teachers undertaking teacher training will retain their existing entitlements but these will be expressed as an annual hour allocation that is 72 hours per annum in their first two years of service. Teachers who are teacher training on recruitment will retain their existing entitlements but these will be expressed as an annual hour allocation that is 72 hours per annum in their first year of service. In the case of these new teachers, their direct teaching hours would be reduced by half the requisite professional development time. All other teachers will be required to provide 20 hours per week of direct teaching time and they will be entitled to 20 hours of professional development per annum, which will be a guaranteed component of the annual hour allocation for duties related to teaching as set out in the proposed cl 16. 139 According to the Department's evidence the changes proposed in Schedule B in relation to working hours will deliver nearly $33 M over the life of the Award. Increasing the existing hours of attendance will result in an increase in the number of hours that teachers are available to engage in duties other than teaching at their place of work and may, therefore, reasonably be expected to increase productivity. We also accept that increasing the direct teaching component of all teaching classifications, and freeing up the way in which these direct teaching activities can be delivered in accordance with the proposed cl 16 - Approved Program, will assist in improving TAFE NSW's operational efficiency and competitiveness.

140 Given that cl 6 of the Award clearly contemplated an increase in teaching hours in order to improve TAFE's efficiency and competitiveness to fund the not insubstantial salary increases, and given our approach to cl 6, the changes to the Award proposed in Schedule B relating to increased attendance time and the increase in direct teaching hours are fair and reasonable. 141 In this respect, we note Mr Harris' evidence about the hours of TAFE teachers in other States and Territories. The new hours arrangements proposed in Schedule B are not inconsistent with the general pattern applying interstate.

Maximum averaging

142 The Federation's concern about removing the cap on the maximum average of teaching hours to be performed over a fixed period (presently 24 hours in one week) would permit a teacher to be directed to work up to 35 hours of direct teaching in any week. It was submitted this would place unreasonable and unsustainable pressures on teachers. Senior counsel submitted that teachers are expected to complete at least 10 hours of duties related to teaching in any week including attendance for additional hours for preparation, marking and industry liaison. The Department's proposal, it was submitted, would expose teachers to unreasonable working hours. 143 However, whilst the proposed cl 16 - Approved Program removes the limitations on the number of hours of direct teaching that can be undertaken on a weekly basis, the hours worked are subject to a reasonable hours test and the total annual hours set for each teaching classification. The proposed clause also requires that all teachers will have an 'approved program' that meets the particular Institute's needs and that managers will determine in consultation with teachers the duties related to teaching that form part of that program. 144 This would seem to us to provide sufficient protection against any abuse that might be caused by the removal of the cap, especially when regard is had to the dispute resolution procedure in the Award.

Professional development time for related employees

145 Schedule B proposes the removal of the requirement that 10 working days per annum (70 hours) must be set aside as professional development time thereby producing a saving of $5 M over the life of the Award. Related employees will, nevertheless, have a guarantee of 20 hours professional development per annum, the same as that proposed for teaching classifications. Additionally, related employees will not be precluded from access to other professional development opportunities provided by the employer. Further, related employees employed as at the making of the variation of the Award with an existing balance of professional development time may utilise that time in accordance with proposed cl 29.2, with the approval of their line manager.

146 We propose to make the variation in the terms sought. However, we would be concerned if there was any deterioration in reasonable access to professional development opportunities such that it adversely affected the capacity of related employees to adequately perform their functions. The parties should incorporate a means of monitoring the application of proposed cl 29.

Extended leave spanning vacation periods

147 Under the current award provision, where a teacher takes extended leave which spans student vacation periods that leave is, in effect, extended by the period of the student vacation without the student vacation period being debited against extended leave entitlements.

148 The Department's proposal would remove that benefit by deeming any student vacation period within a period of extended leave to form part of the extended leave. 149 It was estimated by the Department that this variation would result in a total saving of $3.32 M over the life of the Award. The Federation did not contest this calculation. 150 We regard the proposed variation as the appropriate removal of an anomaly in the Award.

CONCLUSION

151 We consider that in accordance with the requirements of cl 6, the Department has made out its case for variation of the Award in the terms of Schedule B to its application. The reform measures in Schedule B will produce cost savings that will fund 90 per cent of the salary increases exceeding 2.5 per cent over the life of the Award. 152 In the context of our approach to cl 6 and the significant salary increases to apply over the three year life of the Award, we have considered the reforms proposed in Schedule B in the light of s 10 of the Industrial Relations Act, which requires conditions of employment to be fair and reasonable. We have concluded that the reforms are fair and reasonable and that they will contribute in a substantial way towards improving TAFE's efficiency and competitiveness and thereby maintaining its capacity to continue to employ teachers and related staff. 153 We propose to order that, subject to the parties being given the opportunity to discuss the terms of Schedule B in order to detect any errors in drafting or unintended consequences, the Award shall be varied consistent with Schedule B and the variations shall operate on and from the commencement of the first TAFE term in 2010. ORDERS

154 The Commission makes the following orders: (1) Subject to Orders (2) - (5) hereof, the Crown Employees (Teachers in TAFE and Related Employees, Bradfield College and Teachers in TAFE Children's Centres) Salaries and Conditions Award 2009 is varied in the terms of Schedule B to the further amended application to vary filed in these proceedings by the Director General of the Department of Education and Training on 17 September 2009. (2) The parties to the abovementioned Award shall discuss the terms of Schedule B in order to detect any errors in drafting or unintended consequences. (3) The Department shall file and serve orders reflecting Order (1) hereof as varied, if that be the case, by any agreement arising from Order (2), within 14 days of the date of this decision. (4) In the event of agreement on the terms of any final orders the orders shall be made in Chambers. (5) In the event of any disagreement as to the terms of any final orders the Department has liberty to apply on short notice to have the disagreement listed for resolution by the Full Bench. (6) Final orders in this matter shall take effect from the commencement of the first TAFE term in 2010. ___________________________

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