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Women’s wages and the 2019-20 Annual Wage Review

Introduction

International Women’s Day (IWD) is now just a week away. A few days later, March 13th, is the deadline day for submissions to the Annual Wage Review (AWR) run by the Fair Work Commission (FWC).

So, in this blog I review what is happening with wage suppression in Australia and focus on what the AWR means for women in paid work.

The current context

First, recently we had another explosion of revelations of wage theft by large companies, and the first serious signs of defence on behalf of those corporations by them, their employer organisations, and their primary employer organisations.

One of the defences means a lot, negatively, for all women: it aims to excuse and justify employers systematically underpaying workers because of Australia’s award system. An award is an industrial agreement that applies to employers and workers in defined industries and occupations. There are 122 awards, and each one sets legal minimum standards on wages and conditions of employment for each industry and / or group of occupations. For example, there is an award for manufacturing workers and employers, another for retail workers and their employers, another for construction workers, and so on.

The employer arguments and the reporting of them are nonsense. Employers do not have to know about every award or the whole system in order to pay correctly for the award, or maybe 2 awards, that cover them and the workers they employ. Learning is not difficult. Years ago, when the system was more complex, workplace delegates (shop stewards) learnt their award as a matter of course, often by reading and discussing its contents with each other and their workmates, or by attending meetings and short courses run by their union or the old Trade Union Training Authority (TUTA). The company personnel officers did the same.

To support these hyper-exploiting employers, the Australian Financial Review (AFR) says the award system should be scrapped. As we shall see below, this is a big new problem for all workers, and especially so for women in paid work.

The AFR is also promoting the defence that the employers’ confected “award complexity” also leads to over payment of workers. There is no sign of real evidence to support that, as there is with wage theft.

Second, recently the Australian Bureau of Statistics (ABS) released its newest data on wages. These showed a 2.2% increase over the past 12 months and thus confirmed that wage stagnation, or wage suppression, is still in force.

The government’s conservative Workplace Gender Equality Agency (WGEA) pointed out this showed just the tiniest reduction in the gender pay gap and increasing complacency among employers towards reducing that gap.

A number of news reporters have provided strong descriptions of what’s happening with wages, although their analysis remains poor. (For example see here, and here.)

Michael Pascoe, reporting and commenting for the online news agency, The New Daily, said:

“… the 2.2 per cent annual pay rise is no rise at all. After tax and inflation, it’s a big fat 0 per cent….

“And it’s actually worse than zero growth for many people. The interaction with our transfer system – family tax benefits, tax rates and such – means many households went backwards. Their real take-home pay shrank….

“What’s more, the present policy mix means that while wages slaves go nowhere or backwards, those who already have substantial assets are enjoying the fruits of asset price inflation brought on by loose monetary policy.”

The Reserve Bank (RBA) governor has given up on his “strategy” against wage suppression – asking employers to say “yes” if their workers ask for a rise – using the bushfires, drought and the corona virus as excuses to do so. So much for the brief and pathetic effort of the Governor to be a workers’ champion. Anyone who fell for that really did come down with the last shower of rain.

Third. Of course, the employers are building new defences to protect wages suppression. The most significant is the new argument that superannuation increases is to blame for keeping wages down. Again, this assault on the superannuation system and wage setting is very serious for working women. Space limits means we must return to this in another post.

Fourth. At the same time, we have the government’s Ensuring Integrity Bill and its review of the Fair Work Act 2009 (FWA09) as it currently stands. This is intended to protect and strengthen wages suppression. The slow drift to an economic recession or downturn continues. Also, the past month has seen the 6 monthly reporting season of company financials and, associated with that, a “stunning” increase in share values on the stock exchange, now under downward pressure allegedly from Covid19.

Meanwhile the Australian Council of Social Services (ACOSS) reports new data that shows an increase in Australians living below the poverty line:

“That included 774,000 children, an increase from the previous study.”

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For all of these reasons, and maybe others, the AWR is a big deal for women in paid work, whether it be full time work or part time work, and as we shall see, has flow in effects – good or bad – to all other workers and their children.

Women and the Annual Wage Review

The Fair Work Act 2009 (FWA09) requires that the FWC conduct an annual review of minimum wages and empowers it to award or not award an increase in those minimum wages. An AWR “panel” does this work, chaired by the President of the FWC. The process is described in relatively plain language at the FWC web site and, among other things, enables interested organisations and individuals to make submissions to it. It denies the rights of low paid workers and their unions to collectively bargain over minimum wages. Bargaining is replaced by “polite submissions” that the FWC considers. The statutory requirements for annual minimum wage setting imposed on the FWC can be found at Part 2-6 section 285 onwards of the FWA09.

All of the decisions from previous years are available at the FWC web site, along with the submissions from organisations and individuals for each year.

The FWC’s decision – increase or not – can be, and usually is, applied to minimum rates in awards, as well as the national minimum wage. Each of the 122 industrial awards sets minimum rates for workers covered depending on the level of the skill and knowledge and sometimes other factors. These are known as the award minimum rates.

Last year, the FWC awarded a 3% increase (close to and sympathetic to the employers’ claims – see below for a bit more), applied to both the NMW and minimum award rates. The NMW became $740 per week or $19.49, an increase of $21.60 per week or 56 cents per hour.

For low paid women, including those on the minimum rate in the award that applies to their work, the following applies:

“[18] The modern awards objective and the minimum wages objective both provide that in a Review we must take into account ‘the principle of equal remuneration for work of equal or comparable value’ (s.134(1)(e) and s.284(1)(d)).

Therefore when its decision is handed down and published the FWC must explain how it has taken women’s wages into account, and by how much.

Women in last year’s decision

Last year the FWC reminded everyone:

“[71] Women are disproportionately represented among the low paid and award reliant, hence, an increase in minimum wages is likely to promote gender pay equity.”

The FWC explains “low paid” thus:

“[199] A threshold of two-thirds of median (adult) full-time ordinary earnings is the benchmark we use to identify who is ‘low paid’ within the meaning of ss 134(1)(a) and 284(1)(c).

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

Median earnings are currently $1380 per week, maybe very slightly higher. Therefore two thirds of that is $920 week and anything there or less than that is the bench mark for being low paid … in the eyes of the FWC.   

But the current National Minimum Wage (NMW) is $740.80 per week..

That means the NMW is $189.20 less than what is accepted as a living wage.

The ACTU’s aim is to win increases that bring the NMW up to the accepted living wage.

What does “award reliant” mean?

The FWC defines an “award reliant” worker as one who is paid at the rate required for the work they do as defined in their relevant award. They exclude a worker who is paid a little bit more than that but who is, in all other respects, reliant for their conditions of work on their award.

So for example, a woman working for wages, may be paid at $26 per hour which is 50 cents above the minimum rate for her type of work. The FWC does not define them as “award reliant” even though, for all practical purposes, they are. Thus, the FWC under-estimates the number of workers, especially women, who are “award reliant”.

The Commission can potentially take any of several different forms, including per cent increases, flat dollar increases or a combination of these.

In recent years the increase has been in the form of uniform percent increases for all.

One factor in the uniform percent approach was this:

“A uniform percentage increase will particularly benefit women workers, because at the higher award classification levels women are substantially more likely than men to be paid the minimum award rate rather a bargained rate.”

The FWC’s decision runs to over 100 pages, and includes more extensive explanation of its thinking about women’s wages, especially equal remuneration and the gender pay gap.

I won’t canvas all of that here, except that it covers the various submissions put to it, especially by the ACTU and the employer organisations, and also its own review of Australian and overseas research. It includes this:

“[390] Most measures of the gender pay gap have fallen over the last couple of years, including the AWOTE, where the gap has reduced from 16.0 per cent in November 2016429 to 14.1 per cent in November 2018.”

Just a couple of weeks ago the government’s own gender equality agency expressed its concern that the slow fall in the gender pay gap has almost come to a halt.

The FWC summed up the situation, as follows:

“[399] Increases in minimum wages, particularly adjustments that might exceed increases evident through bargaining, are likely to have a beneficial impact on gender pay equity. This is so firstly, because of the dispersion of women within award classification structures and the greater propensity for women to be paid award rates and, secondly, because women are disproportionately represented among the low paid.”

We can say with certainty: the bigger the uniform per cent increase, the more likely a bigger decrease in the gender pay gap.

Finally, its worth a quick look at 2 major submissions in last year’s review to compare them with each other and with the FWC’s decision. For women, the most important is the ACTU submission, because it takes the situation of women in waged work most seriously.

The ACTU Submission for 2018-19 (last year)

The ACTU’s aim is to lift the minimum wage to a living wage, and last year it sought a 6% increase applied to the NMW and all modern award minimum wages, as a step towards this aim. This would have been a $43.15 per week increase to the NMW. It’s submission included this:

In 2018 the Fair Work Commission granted an increase to the minimum wage of 3.5% or $24.32 per week, a step in the right direction but one which left many full-time workers struggling.

“The restoration of a living wage – one of the proudest achievements of the early Australian union movement – remains the goal of our ongoing campaign.

“The minimum wage should not leave people in poverty, it should provide a comfortable life for low-paid workers and underpin our labour market.”

For working women and women union activists the ACTU submission is a very important document. One reason for this is its critique of the thinking of the FWC and the employers on a number of issues, but particularly women’s wages, equal remuneration and the gender pay gap.

What is more, the material content in the ACTU Submission is way more comprehensive and gives a clearer picture of the situation than even the FWC decision. For example, it points out:

“Gender pay gap data based on AWOTE (Average Equal Ordinary Time Earnings) are the most commonly used metrics in Australia to measure progress towards gender pay equity, which is when women and men receive equal pay for work of equal or comparable value. However, this measure of the pay gap compares the ordinary time weekly earnings of men and women in full-time jobs only. It hides the gendered access to wage and benefit top-ups on ordinary time weekly earnings reflected in total full-time earnings. In 2018, Figure 6.1 shows that the total gender pay gap in women’s and men’s total full-time average weekly earnings (FTAWE) was 18%. The full-time data also shed little light on the gender pay gap for almost half of Australia’s working women, who work part-time and are not included in this metric. When we include average weekly earnings (AWE) for all workers, both full-time and part-time, the gender pay gap in 2017 rises to 32.4%. This high figure underscores women’s significantly lower earnings relative to men’s in Australia, which have ramifications for lifetime earnings, superannuation earnings and security in retirement.”

Further on equal remuneration, the ACTU says:

“In our submissions to the previous Review, we suggested that the principle of “equal remuneration for work of equal or comparable value”, as defined in the FW Act and applied by the Commission, was ill-suited to examining and addressing gender-based undervaluation in the course of an Annual Wage Review. We also indicated that the apparent rigidity of the equal remuneration principal was a serious flaw in the wage fixation framework.”

It’s also worth comparing the ACTU submission with the employers, for example the Australian Industry Group (AIG).

Australian Industry Group Submission

The AIG submission on wages and equal remuneration is brief and cursory and is, in essence, designed to keep the general FWC decision really low.

They sought an increase of 2%; that is up $14.40 on the NMW and $16.75 for a base level trades person or equivalent. The result was much closer to what they wanted than the ACTU claim.

On equal remuneration, the AIG confined itself to this:

“AIG supports the principle of equal remuneration for work of equal value and the importance of improving gender equality in the workplace. We have been advocates for realistic, practical and targeted measures to eliminate the causes of gender inequality in the workplace.”

In conclusion

The AWR is a big deal for all women but, of course, directly so for women in waged work. It is a big deal for workers who get their pay increases out of enterprise bargaining. The ACTU claim and its supporting arguments are essential elements in the struggle to ensure a better deal for all women because there are flow on effects from full time wages to part time, from those in more secure jobs (falling) to those in precarious work (especially women) and those who depend on the award rate rather than a collective agreement.

Right now, we do not know the ACTU claim but surely we can expect to do so at around IWD or shortly after. We can be sure that ACTU and key union staffers are working on it behind the scenes.

Will there be a fair dinkum campaign and not just polite submissions? What will be the content of such a campaign? Right now, there is no sign of one; no sign even of any systematic union education about the AWR and the award rates, even though relative to enterprise bargaining the AWR is more relevant to more workers than ever before. Is that the business of rank and file workers in our unions, or should they leave it to the wisdom of their elected leaders? That is up to them but, we do know in our history rank and file workers have initiated struggles to lift minimum rates of pay to higher levels.

There is nothing in the genetic make-up of workers in the 2020’s that says they cannot learn to do the same.

An Australian democratic just transition is possible, and urgently necessary

It takes a few paragraphs of blather (you might disagree) before you get to this:

“On Wednesday, Peter Dutton told ABC’s Afternoon Briefing that “obviously, as we’ve all pointed out, we’re experiencing hotter weather, longer summers, but did the bushfires start in some of these regions because of climate change? No. It started because somebody lit a match. There are 250 people, as I understand it, or more that have been charged with arson. That’s not climate change.”

But from the next sentence on there is a lot of sense in what Greg Jericho unravels here.

Starting with the most obvious: what Dutton says is not true.

‘Good’ climate policy can no longer be our goal. It’s time to reach for perfect | Greg Jericho

There is something that many, maybe just some, of us need to do over the next few weeks: force a stop to the “war” between ALP members who hate the Greens and Greens members who hate the ALP. (Note: not all of them play this destructive – for the majority of us – and silly game, and all strength to them.

Even so, That might be wishful thinking, so it might take a few months, or more.

That’s because there is a lot of substance to be filled into Brandt’s “green new deal” proposal, including a better name for it that is truly Australian instead of derived from the USA and its different political and union history. And the substance can be found in the work and deeds of many ALP members and also those of us who are not members of the ALP and the Greens .

Above all, in can be found in the latent and not so latent potential of workers themselves and their families, organised through their unions and / or community and regional assemblies, to design and implement their democratic and rapid just transition.

Rapid and just transition means new jobs in renewable economies and communities that are at least well paid, highly skilled, safe, steady (instead of precarious) and shared between First Nations and other Australians.

The role of government should be primarily to facilitate this with funds, encouragement, technical assistance when requested. The less government control and direction the better.

Brandt’s proposal, as it currently stands, does not nail this essential feature of a better society for the 90%. His proposal that it be funded by the rich and powerful fossil fuel corporations does.

There is a lot of substance to be filled into Brandt’s “green new deal” proposal, including a better name for it that is truly Australian instead of derived from the USA and its different political and union history. And the substance can be found in the work and deeds of many ALP members and also those of us who are not members of the ALP and the Greens .

And basing a strategy on waiting for parliamentary leaders means delaying what we cannot afford to delay … getting effective control of the lace of climate change by 2030.

Extreme bush fire smoke: workers’ rights and stand down pay

Introduction: Australia’s extreme and unprecedented bush fires must change everything

Australia’s bush fire season again started well before normal because of desiccated soil and foliage, brought on by the warming of the atmosphere because too much greenhouse gas has been pumped into it, and reinforced by long term failure of LNP governments in particular and energy employers to mitigate against climate change. The death and devastation brought upon people and nature is both tragically obvious and loaded with many other implications now more obvious than they were, and others not yet so.  

There are so many aspects to what must change and why.

In this piece I focus on extreme and unprecedented bush fire smoke and the clash between workers’ rights and the employer’s right to stand down workers without pay. We take a close look at section 524 of the Fair Work Act 2009 (FWA09) regarding “stand down” rights for employers, especially to stand down without pay. (In a follow up we will look more closely at workers’ rights and bush fire smoke relative to the Workplace Health and Safety Act (WH&S).)

The fundamental question is this: why should workers lose pay, or annual leave, or long service leave because of a bush fire smoke situation for which they cannot be held responsible?

This is especially relevant for workers in regional areas where wages incomes tend to be lower than in large regional and capital cities, although there are some obvious exceptions.

Union action already underway

Continuity of income when stood down is particularly important because unions, among other solidarity actions with communities directly affected, are now trying to work out at least what should be changed in workplace and industrial law in this new situation.

Despite its current review of the FWA09 this will not be a priority for the government nor the employer organisations that pushed the government into it.

Recent examples of unions pushing workers’ rights include:

  • Waterfront workers’ (MUA) industrial dispute over exposure to extreme bushfire smoke with DP World.
  • On December 19th  the ACTU asserted the immediate steps and urgent reforms that are needed regarding extreme heat and bushfire smoke danger here and here.
  • Just last week Michelle O’Neill (President of the ACTU) asserted that the current bushfire relief supplement for those who have been affected by the bushfires, at $40 a day, is not enough. She proposed that the Disaster Relief Allowance must be lifted to the level of the minimum wage and provided to all affected and rapidly delivered.
  • And Unions NSW Secretary, Mark Morey, reported by the Sydney Morning Herald, is proposing changes to the NSW Workplace Health and Safety Act that have been forwarded to the regulator, Safework NSW.   

“We need to have a uniform response where workers should be found alternative work or allowed to go home if they are working in hazardous conditions, and not be financially penalised for that,” he said.

Standing down because of bush fire smoke: Fair Work Act 2009 – s. 524

On the face of it, the FWA09 enables an employer, at section 524 (see below), to stand down workers in circumstances of intense bush fire smoke, because they can say that it is a circumstance for which they cannot be held responsible.

This appears to be an uncritically accepted view, including among some labour lawyers. For example:

“In contrast, under the Fair Work Act, business owners have the right to stand down staff without pay where work must stop due to circumstances beyond the employer’s control – such as the impact of bushfires.” (And also here.)

It is true that the intent of s. 524 is to maximize employers’ access to stand down rights and, as such, is a good example among many of the “broken rules” from the point of workers. This is what it says, in part:

  1. Employer may stand down employees in certain circumstances
    1. employer may, under this subsection, stand down an employee during a period in which the employee cannot usefully be employed because of one of the following circumstances: …

c) a stoppage of work for any cause for which the employer cannot reasonably be held responsible.

(3)  If an employer stands down an employee during a period under subsection (1), the employer is not required to make payments to the employee for that period.

Whether or not there is a natural disaster, or health emergency, or ‘act of god’ to use common parlance, does not appear to be relevant for the purposes of s. 524. I am not a lawyer and it is possible that there is judge made law on this that is relevant. I am happy to be corrected, if necessary.

Clearly, however, s.524 can deny workers continuity of income for a circumstance for which they cannot be held responsible, at least even less so than their employer. If stood down without pay they are forced to subvert their annual leave and long service leave rights and entitlements, if they have any.

Obviously, this part of the Act needs to be changed so that workers’ rights to continuity of pay and proper use of annual leave and long service leave are not compromised.

There is no sign from the LNP government that this will be addressed in its current review of the FWA09.

What if the employer can, at least to some extent, be held responsible for dangerous levels of bush fire smoke?

S. 524 does impose a limit on when an employer can stand down workers.

The cause of the circumstance that has stopped work must be something  “for which the employer cannot reasonably be held responsible”.

Is extreme and unprecedented poisonous bush fire smoke something “for which the employer cannot reasonably be held responsible?

Remember, we are not talking about “an act of God” or a “natural disaster”. The science of what is happening is clear.

The flow of causation works like this (in reverse): extreme bush fire smoke – unprecedented bush fires in volume and intensity – desiccated foliage of all types – extreme hot and dry conditions outside of normal season – global warming of the atmosphere – increases in greenhouse gases – major sources of greenhouse gas emissions – coal and gas intensive economies controlled by energy transnational corporations and others. This is now established by scientists and scientific organisations of many kinds and fire-fighting experts.

Some employers, especially the Commonwealth government as an employer, can reasonably, on the science, be held responsible.

In the current unprecedented and extreme bush fire smoke circumstances this may have two applications.

The first application is probably the most contentious and difficult to apply.

Does an employer that makes a significant contribution to atmosphere warming and the flow of causation bear some responsibility for bush fire smoke circumstances? Does an employer who does not recognize and take seriously the scientifically established flow of causation bear some responsibility for the bush fire smoke circumstance?

If the answer to these and associated similar questions is YES or YES IN PART then it can be argued that the employer can reasonably be held responsible or partly responsible. (The lawyers will have a feast on the world “responsible”.)

This means that a s. 524 stand down without pay applied by the employer may be wrongful.

I am not aware of any action by unions along these lines. However, it is something that should be talked through with the workers affected and then unions together before seeking the assistance of industrial lawyers. There is some really good union education work that can be done in such a process.

The Commonwealth government as an employer

The second application holds more practical substance. It applies to workers who are employed in Commonwealth government agencies and, maybe to workers employed in a private company carrying out work under contract and supervision of a Commonwealth agency.

The fundamental question is this: does the Commonwealth have responsibility and opportunity to take responsible action to prevent and reduce the risk of bush fire disaster and the consequent circumstance of extreme bush fire smoke circumstances in workplaces?

First, we know about the general policy inadequacy about climate change and the destruction it brings (high carbon emission levels have stopped coming down) and the governments failure, indeed opposition, to pro-actively explain the science to the general public.

Second, there are at least 2 government decisions and several other advices to government that suggest the Commonwealth had the opportunity and probably, in one of them, was required to exercise greater control of the unprecedented and extreme bush fire situation and did not.

One recent opportunity to exercise control is cited here. Then there is this reminder that successive governments have known since 2008 (the Garnaut Report) that bush fires would be happening out of season and getting more extreme.

Commonwealth “in control” but dodging the action

However, just recently, an AFR journalist pointed to the Commonwealth’s government non action on the regular National Disaster Risk Management Report that is produced in the Department of Home Affairs. This 2018 report alerted the government to significantly increased bush fire risk (and other risks) and made recommendations on actions that should be taken. The report cites a number of advices to government about the action it could take to be in control of the situation.

I have included extracts from this report as a separate addendum at the end of this commentary.

This report clearly establishes that the Commonwealth government has significant control over and responsibility to reduce and prevent extreme bush fires and consequent bush fire smoke.

The report should at least have been circulated to all Commonwealth government agencies, and possibly more widely to at least state and territory governments. There is no evidence at this stage that the government took this step.

If it can be established that the Commonwealth, starting with the minister responsible (Peter Dutton), did not act properly on the report, we have a situation where the responsibility for the employer to be in control is established but has not been taken.

In any case, it can be argued that the actual statutory requirement for the Report, and its production for the government, is indicates that the extreme and unprecedented bush fire smoke circumstances are indeed the responsibility – to one degree or another – of the Commonwealth as an employer.

And, thus, Commonwealth government employers cannot have access to the stand down provisions at s. 524., especially to stand down workers without pay or by forcing them to use annual leave or long service leave accruals.

In any case, there is no clear or workable remedy for workers who are wrongfully stood down under this section of the Act. There might be some connection between a s. 524 breach and the heavily regulated and complicated “General Protections” sections of the FWA09.

Workers have to pay for circumstances beyond their control but not the employer.

From a union point of view this is clearly not acceptable.

Much of this is relevant also to workers’ rights regarding bush fire smoke as established in the WH&S Acts. We will focus on this in a forthcoming commentary.

__________________________

Addendum: extracts from the National Disaster Risk Management Report

“However, with the driver of a changing climate there is growing potential for some natural hazards to occur at unimagined scales, in unprecedented combinations and in unexpected locations. …

“We are better positioned now than ever before to take a comprehensive approach to addressing the causes of disaster risk, rather than only dealing with the symptoms. We can give urgent priority to this sophisticated program of work. This will ensure Australian communities can endure more frequent and intense natural hazards. It will also ensure Australian communities can thrive and prosper following these events.

“Responding to these opportunities and challenges, the National Disaster Risk Reduction Framework outlines a national, comprehensive approach to proactively reducing disaster risk, now and into the future.

… Sendai Framework … “… strengthening disaster risk governance to manage disaster risk; investing in disaster risk reduction for resilience; and enhancing disaster preparedness for effective response, and to ‘Build Back Better’ in recovery, rehabilitation and reconstruction. …

“While individuals and communities have their roles to play, they do not control many of the levers needed to reduce some disaster risks. Governments and industry in particular must take coordinated action to reduce disaster risks within their control to limit adverse impacts on communities.” …

“over the past 10 years disasters have cost the Australian economy around $18billion per year. Assuming current development patterns and population growth continue, this is forecast to reach $39 billion per year by 2050. This forecast does not account for the effects of a changing climate, which are expected to magnify these costs; …

“The Australian Prudential Regulation Authority and Australian Securities and Investment Commission have stated that climate-related physical and economic transition risks are foreseeable ….

“Climate change can increase disaster risk in a variety of ways, including by altering the frequency and intensity of natural hazards, affecting vulnerability to natural hazards, and changing exposure patterns. These impacts are outlined in reports such as the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (2014), the National Climate Resilience and Adaptation Strategy, and Bureau of Meteorology/ CSIRO State of the Climate 2018 Report.