2026 STATE WAGE ORDER PURSUANT TO SECTION 50A OF THE ACT WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION CITATION : 2026 WAIRC 00381 DELIVERED : THURSDAY, 11 JUNE 2026 FILE NO. : CICS 1 OF 2026 Applicant AND (Not Applicable) Respondent Catchwords : State Wage order – Commission’s own motion – Minimum wage for employees under the Minimum Conditions of Employment Act 1993 – Minimum award rates of wage –State Wage principles Legislation : Industrial Relations Act 1979 (WA) s 6(ac), s 50A, s 50A(1)(a)(iii), s 50A(1A), s 50A(1B), s 50A(3), s 50A(3)(a)(i)-(iv), s 50A(3)(a)(vii), s 50A(3)(b), s 50A(3)(d), s 50A(3)(c), s 80BB Minimum Conditions of Employment Act 1993 (WA) Fair Work Act 2009 (Cth) s 284(1)(c), s 285(2)(c)  Result : 2026 State Wage order issued Representation: Mr B Entrekin and with him Ms D Arntzen on behalf of the Hon. Minister for Industrial Relations Mr C Harding and with him Mr L Prendeville on behalf of the Chamber of Commerce and Industry of Western Australia (Inc) Ms R Hendon and with her Mr G Hansen on behalf of UnionsWA Ms R Newbury-Freeman on behalf of the Western Australian Council of Social Service Inc Mr M Smith and with him Ms J Love on behalf of the Western Australian Local Government Association Case(s) referred to in reasons: 2022 State Wage Case [2022] WAIRC 00273; (2022) 102 WAIG 431 2023 State Wage Case [2023] WAIRC 00330; (2023) 103 WAIG 733 2024 State Wage Case [2024] WAIRC 00293; (2024) 104 WAIG 731 2025 State Wage Case [2025] WAIRC 00348; (2025) 105 WAIG 1167 Statement of Principles – July 2025 [2025] WAIRC 00365; (2025) 105 WAIG 1184 Annual Wage Review 2019-20 [2020] FWCFB 3500 Annual Wage Review 2022-23 [2023] FWC 1255 Annual Wage Review 2026 [2026] FWCFB 3500 Reasons for Decision THE COMMISSION IN COURT SESSION: Background The Commission in Court Session is required to make a State Wage Order effective on 1 July each year under s 50A of the Industrial Relations Act 1979 (WA). In doing so, the Commission is required to take a range of economic, social and equity factors into account. The Commission must balance the interests of the low paid, who are reliant on the State Minimum Wage and minimum award rates of pay, with the interests of employers, who, in the State industrial relations system, are predominantly small firms engaged in industries including accommodation and food services, construction, retail trade, and health care and social assistance. Both written and oral submissions have been received by the Commission in Court Session from the Minister for Industrial Relations, the Chamber of Commerce and Industry of Western Australia (Inc), UnionsWA, the Western Australian Council of Social Service Inc and the Western Australian Local Government Association. Additionally, as part of the Minister’s case, the Commission in Court Session has been assisted by a presentation from Mr Christmas, the Director of the Economic and Revenue Forecasting Division, of the Western Australian Treasury. Mr Christmas provided the Commission with an overview of the global, national, and Western Australian economies. In the context of this year’s SWO proceedings, the economic analysis included the present volatility arising from the conflict in the Middle East. We are grateful to the parties and Mr Christmas for their assistance. Contentions of the parties The Minister The Minister emphasised the importance of the annual SWO proceedings for those employees in the State industrial relations system who rely on the SMW and minimum award rates of pay and for the businesses that employ them. Whilst not specifying an amount by which the SMW should be increased, the Minister submitted that any adjustment should be meaningful and take into account the cost of living pressures facing those employees who are award reliant and who are on the SMW. At the same time, the Minister contended that the Commission in Court Session needs to be cognisant of cost pressures on employers and the need for any increase to be sustainable. The Minister also submitted that the Commission in Court Session should take into account the decision of the Fair Work Commission in its Annual Wage Review 2026, as a part of ensuring State system employees receive fair minimum wages. It was acknowledged that if there are significant changes to the operation of the National Minimum Wage or structural changes to classifications in modern awards, then such matters will need to be progressed outside of these proceedings. As to economic factors, the Minister noted that the Western Australian economy remains resilient, despite the disruption caused by the Middle East conflict which has resulted in a spike in energy prices, and its inflationary effect. The domestic economy, reflected in State Final Demand, is projected to grow by 3.5% over 2025-26. Strength is also evident in the State’s overall economic growth, as measured by Gross State Product, which is forecast to grow by 3.25% over 2025-26. The robust State economy is also evident in the labour market, with elevated levels of employment growth through late 2025 and early 2026. Unemployment remains low, in historical terms. Chamber of Commerce and Industry of Western Australia Whilst acknowledging the fundamental strength of the Western Australian economy, the CCIWA contended that smaller businesses, those most prevalent in the State system, have been exposed to rising costs, through increasing inflation. It is noted that the Consumer Price Index, nationally, has risen to 4.6% for the year to March 2026. The impact of the Middle East conflict has pushed fuel costs up by 32% in the year to March 2026. This has led to the transport component of the CPI increasing by 9.2% for the month of March 2026 alone. Similarly, Perth inflation has risen to 4.6% for the year to March 2026, largely reflecting the sharp rise in the transport component of the CPI. Cost pressures on small businesses are also reflected in the Producer Price Index, which has increased by 3.0% to March 2026. The CCIWA noted elevated levels of business insolvencies in Western Australia to April 2026, especially in those industries prevalent in the State industrial relations system, including accommodation and food services, construction, health care, social assistance, and retail trade. Given almost half of all insolvencies have occurred in these sectors in the 2024-25 year, combined with continued low productivity levels, and the uncertain outlook led by global volatility, the CCIWA contended that the Commission in Court Session should adopt a cautious approach in this year’s proceedings. Having regard to all of these factors the CCIWA contended that an increase in the SMW of 3.25% should be granted on this occasion. UnionsWA The position of UnionsWA is that with the Western Australian and Australian economies performing strongly, in the face of the rising cost of living, a substantial increase in the SMW and minimum award rates of pay should be awarded. UnionsWA propose a flat increase to the SMW of $61.95 per week and an increase in minimum award wages of 6.5%. According to UnionsWA, not only are the fundamentals of the Western Australian economy strong, but increased levels of business investment, and household consumption, evidence an economy performing well. A major focus of UnionsWA in its submissions is the rising cost of living and the pressure this is placing on the low paid. With inflation already elevated in late 2025 and into early 2026, the effect of increasing fuel prices resulting from the Middle East conflict may not be fully understood until the April 2026 CPI figures are released. Accordingly, the CPI to March 2026 may understate the full effect on the cost of living. Given these circumstances, in particular rising costs for housing, transport and food, low paid households are increasingly finding it hard to make ends meet. Western Australian Council of Social Service Inc The WACOSS contended that the SMW should be increased by 6.5%. It noted that while the 3.75% increase in the SMW in the Commission’s 2025 State Wage Case decision ([2025] WAIRC 00348; (2025) 105 WAIG 1167) was crucial, the cost of living, in the form of increased rental prices, food, transport and healthcare, has exceeded wages growth. Despite temporary cost of living assistance measures introduced by Governments, a number of which have now ceased, low income households often struggle to afford the basics for a dignified lifestyle. The effect of increases in minimum wages on the WACOSS submissions, extends into families and communities, through increasing spending supporting local businesses. The WACOSS also noted the impact of financial disadvantage on children, and that deprivation in terms of the basics whilst children are growing up, can have an impact later in life in terms of educational achievement, health outcomes, and community participation. Western Australian Local Government Association The WALGA membership comprises all 147 Local Governments and Regional Councils established in the State. The industry employs 26,500 employees. Of the 147 Councils, some 105 of them apply a State award or a New State Instrument in effect under s 80BB of the Act. Given this situation, the WALGA submitted that increases in minimum award wages have a material effect on the operations of these Councils. In its submissions, whilst acknowledging the underlying strength of the Western Australian economy, the WALGA noted in particular the impact of the Middle East conflict on fuel costs, especially diesel and related products such as bitumen, used extensively by Local Governments in road construction and maintenance. The increased costs of diesel in particular, has been higher for regional Local Governments. Additionally, Local Governments, being part of complex supply chains, statutory intervention such as the Road Transport Contractual Chain Order – Fuel Cost Recovery 2026, made by the Fair Work Commission in April 2026, have an impact on costs. Given the limited capacity of Local Governments to absorb cost increases, the WALGA submitted that any increase in minimum wages should balance the provision of fair and sustainable wages with the ability of Local Governments to manage their budgets and serve their communities. Statutory requirements The requirements the Commission needs to consider are set out in s 50A(3) of the Act which relevantly provides as follows: (3) In making an order under this section, the Commission must take into consideration — (a) the need to — (i) ensure that Western Australians have a system of fair wages and conditions of employment; and (ii) meet the needs of the low paid; and (iii) provide fair wage standards in the context of living standards generally prevailing in the community; and (iv) contribute to improved living standards for employees; and (v) protect employees who may be unable to reach an industrial agreement; and (vi) encourage ongoing skills development; and (vii) provide equal remuneration; and (b) the state of the economy of Western Australia and the likely effect of its decision on that economy and, in particular, on the level of employment, inflation and productivity in Western Australia; and (c) to the extent that it is relevant, the state of the national economy; and (d) to the extent that it is relevant, the capacity of employers as a whole to bear the costs of increased wages, salaries, allowances and other remuneration; and (e) for the purposes of subsection (1)(b) and (c), the need to ensure that the Western Australian award framework represents a system of fair wages and conditions of employment; and (f) relevant decisions of other industrial courts and tribunals; and (g) any other matters the Commission considers relevant. Fairness, living standards and the needs of the low paid - s 50A(3)(a)(i)-(iv) In addressing these criteria, we have previously observed that the notion of fair wage standards in the context of living standards generally, and the requirement for the Commission to consider contributing to improvements in living standards, requires us to take into account cost of living changes to date, and how any increase in the SMW and minimum award wages may improve living standards for the future. We have also stated, in reliance on the broadly similar provision in s 284(1)(c) of the Fair Work Act 2009 (Cth), that to meet the needs of the low paid, means enabling low paid employees to purchase essentials in order to have a decent standard of living, so that they can participate in the community: 2025 State Wage Case at [55]. This requires consideration of how the cost of living has changed since last year, and also movements in wages generally over the same period. The notion of fair wage standards also requires the Commission to balance the interests of employees and employers. In these contexts, the Minister contended that the SMW and minimum award wages provide a critical safeguard in order to protect the needs of the low paid. This includes ensuring the maintenance of living standards and their improvement, consistent with the broader community. It is accepted that those paid the SMW and others who are low paid, are dependent on the outcome of the SWO proceedings to improve their standard of living. As set out in the Minister’s submissions at Figure 16, those employees who are solely award reliant are paid substantially lower rates of pay than employees employed under other pay setting arrangements. UnionsWA and the WACOSS focussed heavily on the escalation of the cost of living and its impact on the low paid. With headline inflation projected to rise to 5.5% to the June quarter 2026 in year end terms (excluding the electricity sub-index) and to 4.4% from March 2025 to May 2026 (excluding the electricity sub-index), UnionsWA submitted that the pace of wages erosion has picked up. Goods and services inflation (tradeable and non-tradeable) is reflected in the following tables as set out in the UnionsWA submissions at p 14: Further assistance on the impact of cost of living increases for households is obtained from the Australian Bureau of Statistics Selected Living Cost Indexes series, the latest being to the March quarter 2026. These indexes differ from the CPI measure of inflation, in that they reflect the purchasing power of households in after tax income, for a fixed basket of goods. Mortgage costs are included. The most relevant index for present purposes is the LCI for ‘Employee’ households. This shows a 2.6% increase for the year to March 2026, as set out in Figure 18 in the Minister’s submission at [97] as follows: Whilst the Minister submitted that the rate of increase in the LCI for ‘Employee’ households is lower than in previous years, the ABS notes that this figure does not capture recent interest rate increases by the Reserve Bank of Australia in February and March 2026, which are likely to be reflected in the June quarter of 2026 (ABS (2026) Selected Living Cost Indexes, Australia, March 2026, Catalogue 6467.0). This means, on the Minister’s submissions, that in the coming quarters, living costs are most likely to increase further. As to housing, as a result of rental cost increases placing Perth now in the second highest place in the nation to Sydney, both the WACOSS and UnionsWA emphasised that housing affordability is at a critical point for low paid employees. Rental costs have increased by 74% since 2021, far outpacing wages growth. It was contended that this has meant most rental properties in Perth are now out of reach for most minimum wage households. UnionsWA also referred to ABS statistics in relation to the distribution of household income, showing the disproportionate share of income spent on housing costs, of the lowest income quartiles (see UnionsWA submissions at [4.31]-[4.32]). When combined with the escalation in the cost of food and utilities, and most recently the spike in fuel prices, both UnionsWA and the WACOSS contended that minimum wage households struggle to make ends meet and often fall short to cover the basics (see Anglicare WA, Rental Affordability Snapshot 2026 (Report 2026 at p 6; WACOSS, Cost of Living 2025 (Report 2025) pp 5-9)). In connection with these submissions, both the WACOSS and UnionsWA referred to case studies of low paid households, detailing the challenges they face in meeting basic needs on low incomes. In its submissions in reply, UnionsWA submitted that what the case studies show is that many low paid households have little or no buffers to meet increased price pressures faced by consumers generally. These case studies are insightful, and do assist the Commission in understanding the circumstances that many low paid households face, in assessing the needs of the low paid and how increases in minimum wages can contribute to improving living standards. Whilst not cavilling with the underlying data on which the UnionsWA and the WACOSS submissions were based, the CCIWA observed in their main submissions and in their submissions in reply, that the Commission has consistently held that increases in the SMW and minimum award wages are not able to address all the needs of the low paid. That is so. Tax and transfer payments, via various Commonwealth and State Government benefits, provide targeted assistance to low income households. However, the extent to which low income households receive Government assistance in Western Australia is difficult to estimate, as there is no State specific data available. The CCIWA referred to a recent Australian Institute of Health and Welfare report (Australian Institute of Health and Welfare, Unemployment Payments, 2023), which estimates that about 25% of those receiving Federal Government income support also declared an income. We note that this data is not disaggregated by State or Territory. UnionsWA took issue with this report in its submissions in reply and in its oral submissions, and contended that Fair Work Commission research for the Annual Wage Review 2019-20 [2020] FWCFB 3500 suggested that only some 16% of low paid employees were in receipt of Government payments (see 34T). These issues are difficult to grapple with in the absence of relevant data. It is likely that some minimum wage employees are in receipt of various Government assistance payments. However, as we have said in the past, Government assistance, including recent initiatives such as the reduction in fuel excise to 1 July 2026, the suspension of freight user charges and State Budget 2026 cost of living support measures, are not a substitute for the ongoing beneficial effect of economically sustainable, regular adjustments to the SMW and minimum award wages. To discount any prospective increase in wages on the basis of receipt of such payments, would be to undermine their purpose, and would be contrary to the requirements of s 50A(3)(a)(i)-(iv) of the Act. Additionally, whilst the disaggregation of components of the CPI, and rates of inflation in terms of non-discretionary and discretionary goods and services provides useful insight into the areas where low paid employees may need to expend disproportionate amounts of income, we have, as pointed out by the CCIWA in its reply submissions, generally resisted the ‘unpacking’ of the CPI as a general measure of the cost of living across the community. This does not mean however, that the Commission cannot have regard to particular challenges facing the low paid such as, in the present context, sharp rises in housing costs in Perth and regional areas. We remain of the view that regular, sustainable minimum wage increases, will assist in meeting the needs of the low paid, contribute to improving living standards and help to ensure that State system employees have fair wages and conditions of employment. Protecting employees unable to reach an industrial agreement – s 50A(3)(a)(v) It is not controversial that employees employed in small businesses prevalent in the State industrial relations system are most likely to be paid wages in accordance with a relevant State award. We have previously observed that bargaining for industrial agreements in the small business sector covered by the State system is negligible. This is reflected in the Minister’s submissions, to the effect that industrial agreements registered in the Commission tend to fall outside of those industry sectors represented in the State system. This is also reinforced by the analysis of methods of pay setting referred to by both UnionsWA and the Minister, and the high level of award reliance in Western Australia in the industry sectors of accommodation and food services, healthcare and social assistance and retail trades (see also Minister’s submissions at [75], and Table 7: ‘Employment and award reliance by industry, WA, May 2025 (ABS (2026), Employee Earnings and Hours, Australia, May 2025, Catalogue 6306.0). In these circumstances, regular and sustainable increases in the SMW and minimum award rates of pay for this cohort of employees, will assist in achieving this statutory criterion. Encouraging skills development – s 50A(3)(a)(vi) Apprenticeship and trainee data contained in the Minister’s submissions shows that there has been a steady decline in both apprenticeship and traineeship commencements since the peak in 2022. This corresponded with the introduction of Commonwealth and State Government incentives to assist employers to engage apprentices and trainees: 2022 State Wage Case [2022] WAIRC 00273; (2022) 102 WAIG 431 at [70]. Since that time, with the winding back of incentives, commencements have declined. UnionsWA also noted the same trend in their submissions, when examining apprenticeship and traineeship entry and exit rates. Total numbers of apprentices fell from 10,926 in 2024 to 10,800 in 2025. Over the corresponding period, traineeships fell from 10,816 to 9,014. The total numbers of apprentices and trainees in training over the same period fell from 38,926 to 36,006. Whilst noting this gradual decline, the UnionsWA data does show a steady increase in the numbers of apprentices and trainees who complete their training, as a proportion of the total number in training from the third quarter in 2022. The reasons for those in training withdrawing or failing to complete are no doubt varied. The decline in entry rates is more challenging. As we observed in the 2025 State Wage Case at [81], regular increases in minimum wages to assist in meeting rises in the cost of living, can only be a positive factor in encouraging commencements and retentions in apprenticeships and traineeships, and hence, assisting and encouraging skills development. Equal remuneration for work of equal value – s 50A(3)(a)(vii) As noted in the Minister’s submissions, the principle of equal remuneration and the elimination of gender based undervaluation of work, is also now reflected in the objects of the Act in s 6(ac). The gender pay gap has narrowed from 21.7% to 20.2% in the year to November 2024, and from 20.2% to 19.3% in the year to 2025 (see 2025 State Wage Case at [82] and Minister’s submissions at [58]-[59] and Table 3). Both the Minister and UnionsWA submitted that 60.7% of award reliant non-managerial employees in Western Australia were women. The present gender pay gap of 19.3% means that Western Australia maintains the highest level comparatively with other States and Territories and nationally. It is the case that the reasons for the gender pay gap are complex, and it is partly the result of structural issues in the Western Australian labour market, with a high concentration of male employees employed in the resources sector. The Minister also notes in her submissions that the average weekly earnings for women in Western Australia are the third highest, with the Australian Capital Territory and New South Wales being first and second respectively. Given the reduction in the gender pay gap from 2023 to 2025, it is reasonable to conclude that the increases in the SMW and minimum award wages resulting from SWO cases over that period have had some positive impact and will continue to do so. To some extent, this is reinforced by the research referred to by UnionsWA in its submissions at [8.3] and [8.8], in relation to the impact of above average increases in award wages and the narrowing of the gender pay gap. State of the Western Australian economy – s 50A(3)(b) The Minister, the CCIWA, UnionsWA and the WALGA, all agreed that the State economy continues to perform strongly, as it did in 2024-25, as considered by the Commission in the 2025 State Wage Case. For the fifth consecutive year, Western Australia has been judged the nation’s top performing economy overall in the CommSec State of the States October 2025 report. It is noted in the report that ‘resources focused Western Australia has the strongest annual economic growth momentum, helped by robust household spending, a rebound in the export sector and solid population growth’ (at p 3). The following table, setting out the major economic aggregates in the Minister’s 2026 State Wage Case – Economic Conditions and Outlook at Table 1, is as follows: The domestic economy remains robust. The forecast SFD growth of 3.5% for 2025-26, flows on from SFD growth of 3.3% for 2025. As Mr Christmas noted in his evidence, household consumption and business investment remain strong, in particular the latter, with business investment forecast to grow by 6.75% for 2025-26. UnionsWA emphasised that business investment has grown particularly strongly in the non-mining sector, which rose by 25.7% in the December quarter 2025, and increasing by 34.2% over the year, indicating increased activity and growth. Household spending in Western Australia is noted as being the strongest of all the States. Dwelling investment has been particularly robust, with growth of 8% over 2025. The forecast for 2025-26 is dwelling investment growth of 9.5%, before some moderation in the out years. Strong population growth has underpinned household consumption and dwelling investment. In terms of the external sector, goods exports are forecast to increase in 2025-26, following a fall of 6% for 2024-25. Gross State Product is projected to grow by 3.25% for 2025-26, substantially ahead of 2024-25. Mr Christmas noted in particular the contribution of the record grain harvest for 2025 and an increase in lithium production, along with some lift in iron ore and gold exports. The CCIWA also noted in its submissions the significant role of exports in driving economic growth, with around 43% of the State’s GSP underpinned by net exports. The robustness of the State economy is sustaining a strong labour market, with a record 1.68 million people in employment as of March 2026, although the rate of growth is forecast to soften to 1.50% for 2025-26. Growth in the market sector is outstripping growth in the non-market sector by a considerable margin. To February 2026, retail trades, manufacturing, and utilities are the leading industry sectors. Healthcare also has had solid growth. Retail trades employment grew by 6.5% over the year to February 2026. Accommodation and food services fell by 1.6% and healthcare and social services lifted by 0.9% (see Minister’s submissions at [34] and Table 1). As has been the case for a number of years, the level of unemployment, although showing some uplift, remains well below trend and is forecast to average 4.0% for 2025-26. Participation rates, emphasised by the Minister, the CCIWA and UnionsWA in their submissions, remain at an elevated level. To March 2026, Western Australia’s participation rate was 68.8%, still the highest in the country. Along with shortages of skilled labour, the CCIWA maintained that the labour market remains very tight, posing challenges for businesses in terms of constraining growth. This tightness tends to be supported by the UnionsWA submissions concerning payroll jobs and wages data, using the ABS Single Touch Payroll system, which enables up to date statistics in relation to jobs growth and employee earnings. As of December 2025, Western Australia had the second largest growth in payroll jobs and the third largest increase total wages and salaries paid by employers. This leads into considering wages growth generally, as measured by the Wage Price Index, which rose by 3.6% for the year to March 2026. The WPI remains the Commission’s preferred measure of wages growth. The forecast is for growth to be 3.75% for 2025-26, broadly in line with the growth in WPI for 2024-25. Average weekly ordinary time earnings grew by 1.7% in the 12 months to November 2025, to $2,193.20. Whilst the CCIWA, as in the 2025 State Wage Case at [32], referred to non-wage incentives not captured by the WPI measure of wages growth, we maintain the view that components of remuneration such as sign-on bonuses and other incentive payments, are unlikely to form part of remuneration for low paid employees. Inflation projections have been complicated by the impact of the Middle East conflict. As a result of a 32.7% increase in the cost of automotive fuel for the month of March 2026, this has pushed the CPI up to 3.7% over the year to March 2026 (excluding the electricity sub-index). This reflects a substantial jump from 2.8% for 2024-25. Mr Christmas referred to the forecast CPI for Perth of 5.5% for 2025-26, in year-end terms, or 4.0% in annual average terms (both excluding the electricity sub-index). Inflation is projected to ease to 3.75% for 2026-27 and to return to the RBA target range in the out years. The 5.5% projected rate of inflation for Perth is higher than for the Commonwealth (5.0%) and the RBA projection (4.8% headline and 3.8% trimmed mean) as a result of the Western Australian Budget projections being finalised just prior to the ceasefire in the Middle East, and also taking into account the impact of some local factors. The CPI figures to March 2026 are reflected in the below graph and bar chart, as contained in Mr Christmas’s presentation at p 41. The spike in March due to the sharp rise in automotive fuel (transport) is evident from the bar chart for that month: The updated CPI monthly figures released by the ABS on 27 May 2026, show an increase of 0.4% for Perth for the month of April, and growth in the CPI of 3.9% for the year April 2025 to April 2026. Whilst noting the cut in the fuel excise, the direct impact of the spike in energy prices can be seen in the bowser cost of petrol and diesel fuel, as referred to in the Minister’s submissions at [23]-[29] and in Figure 2 and Figure 3 which are as follows: Whilst the flow through of fuel price increases on the CPI has been marked, it is to be noted that the CPI was becoming elevated in the latter half of 2025 and the earlier part of this year, as a result of domestic price pressures, leading to three 25 basis point increases to the cash rate by the RBA in February, March and May 2026. The uptick in inflation from the September quarter 2025, was noted by the CCIWA, and that in its view, inflationary pressures are likely to remain higher for longer. This was also the view of the WALGA, in emphasising capacity restraints placing upward pressure on inflation and prices. In terms of productivity performance, whilst ABS data for the market sector at the State level is presently experimental, and some caution should be applied in relying on it, Western Australia has had weaker productivity growth than that nationally. Mr Christmas referred to the likely effect on this outcome of declining mining sector productivity over recent years, as large mining operations reach production capacity, while still growing their workforces. The productivity data is reflected in the following table in Mr Christmas’s presentation at p 45: The CCIWA submitted, as with their approach in the 2025 State Wage Case, that productivity remains weak, despite having improved somewhat over the year to December 2025, by 1.0%. It was contended that wages growth over and above the rate of productivity growth, places upward pressure on inflation. Reference was again made to observations of the Fair Work Commission in its Annual Wage Review 2022-23 decision ([2023] FWCFB 1255) to the effect that the medium to long term objective should be that minimum wages maintain their real value in line with the trend rate of productivity growth. Whilst this is desirable, we note however that in relation to this issue, the Fair Work Commission qualified their observations and said that such an objective will be subject to the particular circumstances evident in a review proceeding, with cost of living pressures being of particular importance: 2025 State Wage Case at [43]. In reliance on the RBA (2026) Statement of Monetary Policy, February 2026, the CCIWA submitted that the anticipated return to the long run average rate of growth in productivity will be longer than expected by the Commonwealth Government in its Budget projections. The CCIWA maintained its view that productivity levels should be a moderating factor in the Commission’s decision to increase minimum wages. UnionsWA contended at [3.19] that: At the aggregate level nationally, growth in GDP per hour worked picked up at the end of the year, rising 1.0 per cent over the year to December 2025. Gross value added in the market sector rose at a slightly faster pace, increasing 1.5 per cent over the year to December 2025. The measure of labour productivity is captured in the following graph: UnionsWA also referred to Fair Work Commission statistical material for the Annual Wage Review 2026 in relation to measures of productivity, taking into account the divergence between the market (including and excluding mining) and the non-market sectors as follows: In particular, as was submitted by UnionsWA in the 2025 State Wage Case, UnionsWA contended in their submissions at [3.20]: …there is a clear divergence between the growth in market sector and non-market sector productivity. The Productivity Commission has identified that the healthcare industry and its rapid expansion have been ‘the single biggest contributor to Australia’s measured productivity decline.’ As the Productivity Commission notes, however, that this expansion has been critical to meet the changing needs of the population. Further, they note that the ‘quality measurement challenge’ is particularly pronounced in healthcare, with improvements in service quality and customer safety not included in measured output. Previous analysis by the Productivity Commission which studied healthcare for particularly diseases from 2011 to 2018, found that productivity when adjusted for quality changes increased by 3 per cent per annum. We examined this issue in some detail in the 2025 State Wage Case decision at [41]-[54]. We note there had been some improvement in national productivity to December 2025, although as we comment below, some of this has been given up as reflected in the most recent ABS National Accounts data published on 3 June 2026. We have taken into account these matters, as raised again in these proceedings. When balanced with the high level of business investment in Western Australia, especially in the non-mining sector, and the size of the mining industry contribution to the recorded level of productivity in the State, we consider it unlikely that any decision we make will have a significant negative effect on the level of productivity in Western Australia. In terms of risks to the outlook, Mr Christmas noted the major risk to the global and domestic economies is the volatility and uncertainty flowing from the Middle East conflict. This risk is reflected in energy markets, and the direct and indirect impact on Western Australia and its key trading partners. Fuel, freight and fertiliser price rises are the primary direct impact. Slowing demand from Western Australia’s key trading partners is the main indirect risk. The magnitude of these impacts will depend on the duration of the conflict. The ABS National Accounts released in June 2026, reinforced the underlying strength of the Western Australian economy. State Final Demand increased by a solid 0.5% from the December 2025 to the March 2026 quarters, supported by significant household consumption. From what is before the Commission, we conclude that the strength of the Western Australian economy can support a sustainable increase in the SMW and minimum award wages. This must be one that, as emphasised by the Minister in her submissions in reply, does not come at the expense of jobs and reduced working hours for employees. We have consistently held that aggregate demand in the State economy will be a moderating factor as to the impact of increases in the SMW and minimum award wages: 2023 State Wage Case [2023] WAIRC 00330; (2023) 103 WAIG 733 at [68]. There is no evidence before us on this occasion to suggest that prior increases, or any flowing from this decision, will overall, negatively affect the level of employment, inflation, or productivity in Western Australia. State of the national economy – s 50A(3)(c) The Commission in Court Session is required to have regard to the extent relevant, the state of the national economy. From the Outlook, the Australian economy grew strongly in 2025, and GDP is forecast to rise to 2.25% for 2025-26. The impact of the Middle East conflict is expected to trim growth to 1.75% for 2026-27. Inflation is expected to rise to 5.0% through the year to June 2026, reflecting the surge in fuel costs, before moderating to 2.5% for 2026-27. The April 2026 inflation rate as measured by the weighted average of the eight capital cities was an increase of 0.4% for April, and 4.2% for the year April 2025 to April 2026. The RBA has noted that inflation is likely to remain elevated, with second round effects expected to put pressure on prices for goods and services. Despite these pressures, the labour market is expected to remain resilient, with increases in employment and continued low unemployment, in historical terms. The ABS National Accounts published in June 2026, show a slowing of the national economy, with growth for the March quarter 2026 of 0.3%, seasonally adjusted, down from 0.9% growth to the December quarter 2025. As noted above, productivity as measured by GDP per hour worked, fell by 0.6% for the March quarter, giving up the gain to the December quarter 2025. Capacity of employers as a whole to bear the costs of increases in wages and conditions of employment – s 50A(3)(d) This criterion focusses on capacity as a whole, not individual businesses’ capacity to pay. As there is an absence of data focussing on the performance of firms in the State industrial relations system, as a proxy, the Commission has looked to macroeconomic data in relation to overall industry performance, using the ABS Gross Operating Surplus plus Gross Mixed Income (see Minister’s submissions at [67] and ABS (2025) Australian National Accounts: State Accounts, 2024-25 financial year; Catalogue 5220.0 Table 6). The GOS plus GMI for 2024-25 is as follows: In overall terms, as submitted by the Minister, the GOS plus GMI fell by 4.4%. A significant contribution to this overall fall was the 10.4% reduction in the mining industry, given its dominance of the overall GOS plus GMI performance. This latter point was picked up by the CCIWA which contended that the Western Australian economy is very largely impacted by the health of the mining sector, which contributes approximately 40% Gross Value Added to the overall State economy: (see CCIWA submissions at [62] and Figure 2). Due to this, the CCIWA submitted that the strength of the Western Australian economy is closely linked to the commodities cycle, given the State is a major exporter of iron ore and liquid natural gas. From the GOS plus GMI, agriculture, forestry and fishing had a robust performance, having increased by 23.2%, followed by health care and social assistance, up by 22%. This follows a strong performance by the healthcare and social assistance sector for 2024, which increased by 12.2%: 2025 State Wage Case at [87]-[88]. The retail trades fell by 0.9%, as did accommodation and food services, by 0.5%. This, however, is in contrast to the significant lift in full-time employment for the retail trades sector which, as noted above, was one of the leading performers for 2025 to February 2026. A factor given significant prominence by the CCIWA in its submissions is the impact of the Middle East conflict on both business confidence and cost increases for small businesses. Increased cost pressures as a result of the conflict was also given emphasis by the WALGA in its submissions on the impact of geopolitical events, especially as reflected in the Local Government Cost Index, and the limited capacity of Local Governments generally to respond to significant increases in its cost base. The CCIWA submitted that its March 2026 business confidence survey has reflected a sharp fall of 14%. Of the respondents to the survey, some 40% are small firms (see CCIWA submissions at [63]-[65] and CCIWA (2026), CCIWA Business Confidence Survey: March quarter 2026). Mortgage interest cost increases are also weighing heavily on small businesses according to the CCIWA, in the same way they are impacting on households. This was referred to by the RBA in its September 2024 Financial Stability Review, to the effect that rising interest rates tend to have a larger impact on smaller businesses, a point acknowledged by the Minister in her submissions in reply. A more specific indicator was a survey of members of the CCIWA dealing with the effect of the conflict on business operations. The CCIWA contended that about one half of respondents to the survey were impacted by fuel shortages, with fuel, freight and logistics costs increasing substantially (see CCIWA submissions at [64]-[65] and CCIWA (2026), CCIWA Snap Survey on the Gulf Crisis March 2026). Some of the responses to the survey were included in the CCIWA written submissions at [68] and they are set out as follows: 68.1. From a small country employer: “Freight costs have increased by 50%. Most of our goods are freighted from Perth so this is adding pressure on the cost of goods we have already quoted on. We travel throughout the south west to quote as well as install our products, again rising fuel costs add to our costs. We can pass this onto our customers but already we are seeing a drop in our conversion rates due to us raising our prices but also in customers not prioritising buying from us as they are struggling to pay for necessities.” 68.2. From a family-owned mechanic workshop: “Between the cost of living going up again, rates increasing & now the cost of fuel going through the roof, our small mechanical repair business faces the very real prospect of going under.” 68.3. From a small childcare centre based in metropolitan Perth: “as a childcare centre, our families are starting to reduce days due to increase in costs, fuel is limited and prices are on the rise.” As with the WACOSS and UnionsWA case studies, these CCIWA survey reports provide the Commission with useful insight into the current assessment by businesses of their operating conditions. Additionally, the CCIWA referred to cost increases also reflected in the PPI, in particular those impacting on the industry sectors of accommodation and food services and construction. Whilst we accept that small firms are facing cost pressures, especially in the current circumstances, business assistance measures announced in the recent Commonwealth Budget, as noted by UnionsWA in its submissions in reply, will provide some assistance. As noted earlier, elevated small business insolvencies also remain a concern to the CCIWA, as reflected in the recent RBA March 2026 Financial Stability Review (section 2.2 Businesses). Whilst small and medium enterprise profit margins remain overall consistent with pre-pandemic levels, the CCIWA noted this is prior to the outbreak of the Middle East crisis, and the impact that it is having on business operating costs. In noting this concern, in the RBA March 2026 Financial Stability Review, the observation was made at p 28 that insolvencies have stabilised in the course of the last year, and have returned to long run average rates. The review did note however, that insolvency rates in industry sectors such as hospitality and construction remain elevated. This includes personal insolvency of owners of businesses in these sectors. Overall business profitability was a matter taken up in the UnionsWA submissions. UnionsWA referred to the RBA March 2026 Financial Stability Review and its conclusion that for the period to the June quarter 2025, ‘most firms had been able to slightly improve their operating margins, despite strong input cost growth over recent years. Whilst the data set is from small companies, rather than unincorporated businesses, as an indicator overall, small and medium enterprise operating profit margins are reflected in the following graph from the RBA Financial Stability Review as follows: Additionally, UnionsWA referred to the level of business entries and exits in Western Australia for the period 2024-25. It contended that this shows a net increase to 10,877 new businesses compared to 8,707 for the year prior. This places Western Australia as having the highest level of new business entries of any other State or Territory (UnionsWA submissions at [3.17]-[3.18] and ABS, Accounts of Australian Business, including Entries and Exits (26 August 2025). Whilst on an aggregate basis, and in light of the overall strength of the Western Australian economy discussed above, it can be concluded that employers as a whole have the capacity to bear the cost of any increase in the SMW and minimum award wages arising from our decision, the impact of the Middle East conflict is a factor for the Commission to take into account. Elevated fuel costs affecting the transport of goods and services and cost increases in other petroleum based products are weighing on businesses and Local Government employers. The uncertainty of the duration of this situation is a complicating factor. Decisions of other industrial courts and tribunals – s 50A(3)(f) The Commission is required to take into account decisions of other industrial courts and tribunals when making a SWO. The decision of the Fair Work Commission in the Annual Wage Review 2026 was delivered on 2 June 2026: Annual Wage Review 2026 [2026] FWC 3500. In its decision, the Fair Work Commission increased modern award rates of pay by 4.75%. Additionally, the 4.75% increase in modern award rates of pay was subject to a structural adjustment in modern award classification rates of pay to phase out the C13 classification rate to make the C12 classification rate the lowest classification rate in modern awards. The Fair Work Commission decided to do this in three stages. The first, to be implemented in this year’s decision, increases the C13 classification rate by one third of the difference between it and the C12 classification rate, (a 1.2% compound increase) with the C14 classification rate to be increased by the same percentage amount as the increase in the C13 classification rate, to maintain its relativity. As a consequence, the National Minimum Wage has increased to $1004.90 per week. This increase maintains the alignment between the NMW and the C13 modern award classification rate, as determined by the Fair Work Commission in its Annual Wage Review 2022-23 [2023] FWCFB 3500. This results in the lowest modern award rate of $1004.90 per week for ongoing employment (the C13 classification rate) and the lowest entry level rate of pay for employment of no longer than six months (the C14 classification rate) of $978.10 per week. The Fair Work Commission indicated that the second and third stages of such a realignment, will be subject to consideration by the Expert Panels in subsequent Annual Wage Reviews. In accordance with the Commission’s usual practice, the SWO proceedings were re-listed to give the parties an opportunity to make submissions on the Fair Work Commission’s decision. The Minister submitted that the decision of the Fair Work Commission placed emphasis on the maintenance of the real value of wage rates in modern awards in light of the living standards of the low paid and their capacity to meet their needs. This led to a 4.75% increase in all modern award minimum rates of pay and additionally, the increase of a compounded 1.2% to the C13 classification level as a part of an incremental phasing out of the C13 rate and its replacement by the C12 classification rate. The Minister noted the Fair Work Commission’s consideration of the impact of the Middle East conflict and the uncertainty created for the national economy, at least in the near term. The Minister emphasised the consideration by the Fair Work Commission of the impact of the Middle East conflict as a moderating factor in its decision to increase wages. Whilst noting that the national economic performance during 2025 was solid, capacity constraints in the second half of 2025 has led to an uptick in inflation beyond the RBA target band of 2% to 3%. Overall, the Minister, following the Annual Wage Review 2026 decision, continues to support increases in the SMW and award rates of pay in these proceedings, that takes into account increases in the cost of living for those who are award reliant minimum wage employees, meets the need of the low paid and is sustainable for employers. The Minister submitted that the Commission should take into account the Fair Work Commission’s decision as a part of ensuring that employees in this jurisdiction are afforded fair minimum rates of pay. A further consideration in the Minister’s submission, is the overall strength of the Western Australian economy, with it remaining stronger overall than the national economy. This is reinforced on the Minister’s submissions, by the ABS National Accounts published on 3 June 2026. On behalf of the CCIWA, it was contended that the Commission in Court Session should, despite the Fair Work Commission decision, maintain a cautious approach, and an increase in minimum wages of 3.25% remains appropriate. In particular, the CCIWA pointed to the headwinds in the national economy identified by the Fair Work Commission, in particular inflation, not only caused by the Middle East conflict, but more sustained inflation evident in the economy prior to the outbreak of the conflict. In this respect, the CCIWA noted the Fair Work Commission’s observations as to the uncertain and weakened economic outlook, and emphasised the need to be cautious regarding determinations by industrial tribunals of wage increases that may further drive inflationary pressures. As small businesses are disproportionately impacted by increasing costs, the CCIWA contended that there is less capacity for small business to absorb increased wages compared to larger businesses. Additionally, the CCIWA noted that in its view, the Fair Work Commission conclusions that award wages have fallen in real terms since 2021, does not extend to State award employees based on the C10 rate, over the same time period, as set out in the CCIWA main submissions. As to the changes made by the Fair Work Commission in relation to the C13 and the C12 classification rates, the CCIWA contended that this matter is more appropriately addressed at a later time, in order that the issues may be properly examined. UnionsWA maintained their reliance upon their original submissions that a 6.5% increase in award and minimum wages is necessary to ensure a real increase for the low paid. UnionsWA noted the Fair Work Commission’s decision to increase the national modern award C13 classification rate of pay by a compounded 1.2%, as a part of phasing out the C13 level classification rate. To adopt such an approach in this jurisdiction, given the smaller differential between the rates of pay, a compounded increase of 1% to the C13 classification rate would be necessary to achieve the same outcome. Alternatively, UnionsWA’s claim for a 6.5% increase across all minimum wages would achieve the same result. As to inflation, UnionsWA noted that in determining the outcome before it, the Fair Work Commission relied upon the RBA forecast inflation projection of 4.8% for the year to June 2026. In contrast, the same projection in Western Australia is for inflation to rise to 5.5% to June 2026. Furthermore, in examining the recent CPI figures for Perth, for April 2026, it was noted that the April CPI figure was affected in part, by the temporary reduction of the fuel excise from 1 April 2026. When that expires at the end of June 2026, unless it is continued, this will contribute to inflation from that time. The WALGA submitted that the Commission in Court Session should take the decision of the Fair Work Commission into account in determining an appropriate outcome. The WALGA in particular referred to the Fair Work Commission’s identification of increasing inflation, a decline in business confidence and the effect on costs, of the Middle East conflict. These were said to be moderating factors in the Fair Work Commission’s decision. It was contended that this Commission should also adopt a similar view. In particular, the WALGA submitted that the Commission should adopt a cautious approach in relation to cost increases on Local Government and its limited ability to absorb them. Conclusions The circumstances of these SWO proceedings have been complicated by the uncertainty and volatility created as a result of the Middle East conflict. Whilst, as we have concluded above, the Western Australian economy has performed strongly, rising costs, especially for fuel, have placed additional pressures on low paid employees and also on small businesses. The elevated level of inflation to April 2026 of 3.9%, is an increase from 3.7% to March 2026, and inflation is forecast to remain elevated into 2026-27, above the RBA target band of 2% to 3%. Despite these headwinds, the Western Australian labour market remains solid, and levels of business and dwelling investment, along with household consumption, have remained robust. The Western Australian economy is forecast to grow somewhat more strongly than the national economy, and wages growth is expected to be slightly higher. A moderating factor in this year’s consideration is the uncertainty in the economic outlook and the duration of any negative effects on the business sector, as a result of the Middle East conflict. This not only directly impacts employers through higher fuel costs, but also through second round effects through higher costs of goods and services. Business confidence has fallen substantially since the outbreak of the conflict, despite business investment remaining strong over 2025 and into the first quarter of this year. It is accepted, as contended by UnionsWA in these proceedings, and as we concluded in last year’s decision at [68]-[72], that in light of high inflation over 2022-2024, there have not been real, sustained increases in minimum wages over the period 2021-2024. We note that the re-alignment of the SMW with the C13 rate rather than the C14 rate in our 2024 decision, boosted the SMW relative to inflation. In 2025, the Commission awarded a substantial real wage increase by increasing the SMW and minimum award wages by 3.75% with the CPI for 2024-25 coming in at 2.8%. This had the effect of improving the position of the low paid and contributing to living standards of employees in the State industrial relations system. However, with the uptick in inflation in the second half of 2025, and the first part of this year, the benefit of our 2025 decision has been eroded. There is some downside risk of a contraction in household spending if the Middle East conflict continues for longer than expected, coupled with the impact of the three interest rate rises to date, with the possibility of further interest rate increases in the latter part of this year. If this eventuates, then industries such as accommodation and food services, which are sensitive to decreases in discretionary spending, may be negatively impacted. Whilst some indicators of the overall performance of the accommodation and food services sector and the retail sector, such as GOS plus GMI for 2025 have shown some softening, others, such as employment growth, especially in the retail trades, point in the opposite direction, as noted earlier. In terms of the contentions of the parties, the CCIWA’s submission that the SMW and minimum award wages should be increased by 3.25%, would have the effect in the current climate, of a reduction in real wages for low paid employees. Given the current elevated level of inflation, the level of the WPI reflecting wages growth in the community generally, along with the uncertain prospects laying ahead, such an outcome would not be in line with our statutory obligation to take into account meeting the needs of the low paid and the need to contribute to improving living standards. The position adopted by UnionsWA, of a flat increase of $61.95 per week in the SMW, and a 6.5% increase in minimum award wages, would be an outcome well in excess of wage movements generally in the community, as reflected in the WPI, the current CPI rate for Perth as at April 2026, and the forecast CPI rate for 2025-26, based upon the material before us. Whilst we appreciate the concerns expressed by UnionsWA in relation to the need to provide an outcome leading to real wages growth in a high cost of living environment, we must also be mindful of the impact of our decision on the small business sector, which is also facing cost pressures. This is especially so in the current volatile environment. We must balance these competing contentions. This is recognised by the Minister in her main submissions and submissions in reply, and those she made in response to the Annual Wage Review 2026 decision. In all of the circumstances, and taking into account the requirements of s 50A(3) of the Act, and balancing the interests of both employees and employers, we have decided the increase in the SMW, and minimum awards rate of pay will be 4.75%. The SMW will increase to $998.30 per week from 1 July 2026. As to the decision of the Fair Work Commission in relation to the partial realignment of the NMW between the C13 and C12 modern award classification rates, the Commission does not have the ability to examine this issue in the depth that is required, given the time constraints imposed by the Act in these SWO proceedings. The Commission will, however, undertake a review of the circumstances applying to the relationship between the C13 and the C12 classification rates under State awards in the near term, as we did with the re-alignment of the SMW from the C14 classification rate to the C13 classification rate in the 2024 State Wage Case [2024] WAIRC 00293; (2024) 104 WAIG 731. Consideration will also need to be given to relativities within relevant awards, as foreshadowed in our 2024 decision. The Commission will need to examine the best means by which these issues can be progressed, and we will revert to the s 50 parties in due course for this purpose. Employees with a disability Sections 50A(1)(a)(iii), (1A) and (1B) of the Act, require a rate to be set the same as that in s 285(2)(c) of the FW Act, for employees with a disability who have been assessed as having a reduced productive capacity under the SWS. Accordingly, the minute of proposed order arising from these proceedings will specify this rate, as will awards that prescribe a rate for an employee that contains a rate of pay specified for the purposes of the SWS. Statement of principles No party raised any issues in relation to the operation of the Commission’s Statement of Principles – July 2025 [2025] WAIRC 00365; (2025) 105 WAIG 1184.