Arbitration Week 8 Recap

Last week marked an important milestone in ASMOF’s Award Reform proceedings, with the cross-examination of expert evidence. The Full Bench of the Industrial Relations Commission heard detailed economic, labour market and productivity evidence from both ASMOF’s expert witnesses and one of the Health Secretary’s witnesses.

This evidence goes to the heart of what the Commission must decide: whether the proposed Award reforms are fair, reasonable, and sustainable in the public interest.

Clarification on the IRC decision

There have been some reports of confusion among members about whether there will be a vote on the outcome of the case. To clarify, the Full Bench of the Industrial Relations Commission (IRC) makes the final decision. Once the ruling is handed down, it is legally binding on both the NSW Government and ASMOF, and does not require a vote by members.

Read on below for a review of the key economic themes and insights presented to the Commission last week.

Who Gave Evidence Last Week?

Experts called by ASMOF

Dr Sarah Wise - Presented findings from ASMOF’s Award Reform Survey, capturing responses from 2,681 doctors across NSW.

A/Prof Grace Vincent - Provided specialist evidence on rostering, fatigue, shift work and circadian disruption.

Prof Anthony Scott - Gave expert analysis on productivity within the health system.

Prof John Buchanan - Examined wage movements, productivity trends and interstate wage comparisons.

Experts called by the Health Secretary

Michael Warlters (NSW Treasury) - Reported on costings and broader macroeconomic modelling based on assumptions provided to him by NSW Health.

Experts still to give evidence

Elizabeth Livingstone (NSW Treasury) - Evidence on the NSW Government’s fiscal position and budget outlook.

Bruce O’Shea (KordaMentha Forensic) - Analysis of the costings prepared by NSW Health.

Prof Martin O’Brien - Analysis of the cost of the claim prepared for ASMOF

What the Evidence Focused on Last Week

Last week’s hearings centred on the considerations the Full Bench must take into account under section 10 of the Industrial Relations Act 1996, which provides that the Commission may make awards setting fair and reasonable conditions of employment.

Importantly, section 146(2) of the Act requires the Commission to take into account the public interest when exercising its functions. For that purpose, the Commission must have regard to:

the objects of the IR Act

the state of the economy of New South Wales and the likely effect of its decisions on that economy

in matters concerning public sector employees, the fiscal position and outlook of the Government, and the likely effect of its decision on that position and outlook

The objects of the IR Act in section 3 include promoting efficiency and productivity in the State economy, encouraging strategies to attract and retain skilled staff where there are skill shortages, and ensuring the effective and efficient delivery of services.

These statutory considerations were central to the expert economic evidence presented last week.

The expert witnesses for ASMOF and the Health Secretary presented very different views on the economic impact of the claim.

ASMOF’s Economic Evidence: Why Reform is Needed and Justified

Doctors’ real wages have significantly declined

Professor Buchanan presented detailed data showing that doctors have experienced a substantial decline in real wages:

NSW doctors’ pay has fallen 12.2 percent in real terms since 2020 (based on CPI)

On a Living Cost Index basis, the real decline is 15.8 percent

Relative to the National Minimum Wage, NSW doctors’ remuneration has fallen 28.5 percent since 2011

Comparative analysis shows that NSW doctors’ pay now lags behind that of doctors in other states

His evidence indicated that the pay increase being sought by ASMOF is credible and consistent with restoring the lost real value of wages.

Better conditions will strengthen the public hospital system

Professor Scott explained how higher wages can directly improve productivity by:

reducing turnover and vacancies

increasing the proportion of doctors working in the public system

improving continuity, expertise and clinical experience

ensuring better staffing stability and more efficient service delivery

His evidence drew on large-scale research demonstrating that competitive public sector wages are strongly linked to retention and improved patient outcomes.

Productivity gains in the health sector

Professor Buchanan’s reports drew on new analysis from the Productivity Commission, which found that key parts of the Australian health sector have not only increased life expectancy but also improved the quality of those extra years of life.

It also reports on statistics showing that the Australian health care regime is one of the most efficient in the world. By most measures, the Australian health system is one of the most productive in the world.

The Health Secretary’s Case

The Health Secretary’s evidence focused on macroeconomic modelling assumptions created by NSW Health that were designed to illustrate potential statewide and economy-wide risks if substantial wage increases for NSW Health doctors were replicated across the entire public sector and then flowed through to private sector wage setting.

The Health Secretary’s case relied on broader modelling of different scenarios undertaken by NSW Treasury officials.

Wage spillover effects

The Health Secretary’s expert focused on wage scenario modelling. For example, Mr Warlters modelled a hypothetical scenario in which:

a 25 percent wage increase (in addition to the Government’s offer) was applied across NSW Health services such as to HSU Awards, and

similar wage increases flowed through to the broader public sector and private sector.

Impact on the economy

Under those assumptions that wages spill over into the broader public and private sector, Mr Warlters suggested that ASMOF’s claim could affect the broader economy and that the Reserve Bank might increase interest rates by around 1.5 percentage points relative to the baseline path.

ASMOF challenged the relevance of this modelling via its experts, noting that:

it does not reflect ASMOF’s actual proposal,  

the scenarios lack essential foundations,

wage spillover into other health workers is not actually legally possible given the timing of other public sector workers Awards expiry dates,

it assumes economy-wide wage growth in the public and private sector that is highly unlikely to occur

Productivity improvements not necessarily attributable to doctors

Mr Warlters also gave evidence that recent Productivity Commission findings on increased productivity in the health sector could not necessarily be directly attributed to doctors.

He suggested that improvements may also reflect factors such as:

advances in technology

improved medicines and treatments

productivity gains in other parts of the workforce (e.g., nursing)

He emphasised that policy makers must consider which types of spending deliver better health outcomes. In his view, the Productivity Commission’s report is observing improvements in the system but not attributing them directly to the productivity of doctors.

What’s Next After the Expert Evidence?

The expert economic evidence will continue on 21 April 2026 when we will hear experts giving evidence on the costings of the claim.  

After that, the Commission will proceed to closing submissions in late May 2026, where ASMOF will make written and oral submissions based on the evidence presented, including that:

NSW public sector doctors have experienced a long-term decline in real pay

the current system is not sustainable without meaningful reform

there have been significant changes in the work value, productivity and outcomes attributable to doctors in the NSW public health system

improved pay and conditions are needed to stabilise the medical workforce

the claim is reasonable, necessary and in the public interest under the Industrial Relations Act

ASMOF will continue to keep members updated as the case progresses.

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