Challenge to NSW PS sector wage cap fails: High Court

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Challenge to NSW PS sector wage cap fails: High Court

The attack by the public sector unions on the NSW Industrial Court’s approval of the State Government’s fixing of public sector wage rates has failed in the High Court.

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The High Court has unanimously reaffirmed that the separation of powers doctrine (judicial functions to be kept separate from non-judicial functions) which applies to the federal jurisdiction does not apply to the states. Consequently, the attack by the public sector unions on the NSW Industrial Court’s approval of the State Government’s fixing of public sector wage rates has failed.

The result is that the constitutional validity of the NSW legislation controlling public sector wages has been upheld. The decision of the Full Industrial Court of NSW — Public Service Association and Professional Officers' Association Amalgamated Union of NSW v Director of Public Employment [2011] NSWIRComm 143 (31 October 2011) — was affirmed by the High Court.

[Full text of this High Court decision: The Public Service Association and Professional Officers’ Association Amalgamated of NSW v Director of Public Employment [2012] HCA 58 (12 December 2012)]

The issue in this appeal
 
Justice Heydon noted that the SA Attorney-General correctly encapsulated the issue in this appeal as follows:
‘Does the operation of s146C [Industrial Commission to give effect to certain aspects of government policy on public sector employment] of the Industrial Relations Act 1996 (NSW) , which has no direct application to the exercise of the jurisdiction vested in the Industrial Court of New South Wales, undermine the institutional integrity of that Court by reason of the members of that Court also being members of the Industrial Relations Commission of New South Wales to which the Act does have direct application, requiring the Commission to give effect to Government policy on conditions of employment of public sector employees, or by reason of the interrelationship of the functions of the Commission and the Court?’
The three separate judgments — as noted below — each dismissed the union appeal.

French CJ
 
The Chief Justice noted:
Section 146C of the Industrial Relations Act 1996 (NSW) requires the Industrial Relations Commission of New South Wales, when making or varying any award or order, to give effect to any policy on the conditions of employment of public sector employees that is declared by the regulations to be an aspect of government policy that is required to be given effect to by the Commission.

The application by the Commission of a regulation of the kind contemplated by s 146C does not involve the Commission in giving effect to an executive direction. It is simply required to apply the law as set out in the IR Act and the relevant regulation, which incorporates by reference the principles set out in a policy declared by the regulation.

Such a policy could be embodied in the text of the regulation itself without any need to separately identify it as a “policy”.

There is no relevant constitutional distinction to be drawn between the making of a regulation which creates decision-making rules that have been formulated by the executive government to give effect to its policies, and the making of a regulation which incorporates by reference a statement of a policy setting out those rules.’
Hayne, Crennan, Kiefel and Bell JJ
 
This joint judgment agreed that the exercise of both judicial and non-judicial functions by Commission/Court members did not invalidate s146C:
‘Central to the PSA’s submissions was the observation that members of the Commission who are judicial members may exercise both judicial functions (when sitting as a member of the Industrial Court) and non-judicial functions (when performing other functions of the Commission). This observation is, of course, accurate. But it does not lead to the conclusion that s 146C is invalid ...

The doctrine of separation of powers developed and applied in R v Kirby; Ex parte Boilermakers’ Society of Australia in respect of the Commonwealth Court of Conciliation and Arbitration does not apply to the States. Kable v Director of Public Prosecutions (NSW); Kirk v Industrial Court (NSW).’
Heydon J
 
Justice Heydon was dismissive of the appeal — stating that the issue had been settled in earlier cases:
‘It is the law that courts are subject to legislative power. And it is the law that courts are subject to acts of the Executive, including the making of regulations, carried out pursuant to valid delegations of legislative power. 

Section 146C(1)(a) is a perhaps excessively colourful and triumphalist grant of regulation-making power. But it is no more than a grant of regulation-making power. Section 146C(1)(a) and the regulations which may be made under it do not suffer from the substantive vices which affected the legislation impugned in Kable’s case and in other cases where Kable’s case has been successfully invoked.

As the Attorney-General for the State of Victoria submitted, s 146C(1)(a) provides that the Commission ‘must give effect to delegated legislation in the exercise of its statutory powers’, but ‘merely sets the parameters for the Commission’s exercise of its statutory powers without directing the outcome of particular proceedings’. The members of the Commission are not required to implement government policy in a way which adversely affects the capacity of the Industrial Court when it is comprised of those members to be a fit repository of federal jurisdiction.’
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