The question of whether our industrial relations laws should be radically altered under the current Abbott government was the subject of this year’s AIER Ron McCallum Debate. Two hundred of Australia’s leading human resources, industrial relations and labour law practitioners gathered to hear leading union and employer advocates put their case for change or no change.
This year’s Debate was chaired by the Hon Geoff Giudice, a Consultant with Ashurst Australia and former Judge of the Federal Court and President of Australian Industrial Relations Commission and Fair Work Australia. Also taking part were the Hon Brendan O’Connor, Shadow Minister for Employment, Mr Stephen Smith, National IR Director, AiG and Dave Oliver, Secretary, ACTU. Professor Ron McCallum also spoke. The Minister for Employment, Senator Abetz and his Assistant Minister were unavailable due to other commitments and sent apologies.
In preparation for the Debate AIER prepared an extensive discussion paper setting out the various proposals for change from a variety of stakeholders.
Stability as a virtue
In briefly introducing the topic, the Hon Geoff Giudice noted:
“The first point is that in this country we have an obsession with our industrial relations system. We cannot stop changing it. It would be difficult to find a country at a comparable stage of economic development which alters or attempts to alter its industrial relations system as frequently as we do.
“The second point is that there are significant costs associated with this instability. There are costs to the parties and their representatives in the policy formulation process, costs entailed in the legislative process and a range of direct and indirect implementation costs when the system changes.
“The third point is that our national obsession with changing the system can be a serious distraction from more productive activities.
“None of this is to suggest that our system should be static. Change can never be eliminated and nor should it be. Our laws must change in response to social and economic developments. We are talking about an area of life in which some level of disagreement and conflict is inevitable. And I also understand that in our polarised socio-political system when there is a change of government there is an expectation that the new Government will deliver reforms which favour its traditional constituencies.
“But it seems to me there is much to be said for an improved policy formulation process in which the stability of the system is a core value. A principle objective of policy should be to achieve a sustainable system: that is, a system which does not represent nirvana for either capital or labour but which both sides can live with. Such a system would provide greater certainty for our industries and greater predictability for investors and customers.
“The Briefing Note prepared for this debate by AIER deals with some of the possible barriers to achieving greater consensus. Those barriers will not be easily overcome. Leadership will be required from employers and unions and from government. In my respectful view all three should actively support the development of a more stable workplace relations system that would operate in the interests of Australian society as a whole.”
Bi-partisan support needed for change
Shadow Minister Brendan O’Connor put a “no” case against another radical change in industrial laws. He noted that there was always a case for change when there is bi-partisan support for it, such as the introduction of enterprise bargaining for which there was a broad consensus. There was no support for changes such as individual statutory employment contracts, such as the AWAs introduced during the WorkChoices period by the Howard government and repudiated by the Australian people at the 2007 election.
Brendan O’Connor also rejected the need for a renewed Building and Construction Commission:
“Productivity did not rise during the last iteration of the ABCC nor did industrial disputes for that matter. But disturbingly fatalities rose…”
He also rejected the need for the proposed Registered Organisations Commission [ROC], to be created by new legislation introduced by the Abbott Government.
Both Bills he said were “aimed squarely at unions” and while the ROC could be seen as responding to unacceptable activities of certain HSU officials, it represented a radical departure from previous approaches:
“This Bill is a political play to exploit the very serious allegations of misconduct and criminal conduct at the Health Services Union. By playing politics and attempting to treat such organisations as if they were for profit corporations the government is going far beyond what is customary in this area.
“Indeed, it is a radical departure from the regulation of such bodies and not as it is arguing, heading towards to ‘sensible centre’. It’s no wonder then that the critics of this Bill include employer bodies that have criticised the way in which this Bill has been constructed and the potential and onerous implications for those organisations.”
Industrial legislation, he concluded, should not swing from point to point like a pendulum, but neither could it be unchanging. What was needed was a system that delivered the society that Australians want and therefore it must bring the people with it.
Change needed within existing framework
Ai Group IR Director Stephen Smith, said that the discussion was important and argued for key changes to the Fair Work Act but within the current framework:
“It is an interesting topic because history shows us that wide swings in the workplace relations system are not a good idea. What tends to follow is a wide correction in the opposite direction. Fortunately these days few people are arguing for wide swings in workplace relations laws. There appears to be a general consensus that any changes that are needed should be made within the framework of the Fair Work Act.
“We have seen the IR pendulum swing quite widely over the past seven years. A widespread view in the community is that the Howard Government over-reached with the Workchoices legislation. However, an equally widespread view within industry is that the Rudd / Gillard Government over-corrected with the Fair Work Act and what is needed now is to return the IR pendulum to the sensible centre. The Australian Industry Group subscribes to this view.
“We need workplace relations laws that are more productive, more flexible and fairer than the current laws, and to achieve this we need a series of sensible and practical changes to the Fair Work Act.
“Our workplace relations laws need to encourage not deter favourable business decisions on investment and employment. Our laws need to promote flexible, modern workplace arrangements of benefit to employers and employees. Our laws need to encourage and support greater participation in the workforce and higher levels of productivity.”
“Our workplace relations laws of course need to be fair – but fairness has many facets. The laws need to be fair both to employers and employees…”
Stephen Smith pointed to three key areas in which his organisation, on behalf of its members, was advocating significant change:
• The scope of bargaining claims and enterprise agreement content – which should be brought back to the Electrolux decision
• The general protections laws – which were causing major problems and where the number of claims threatened to lead to a collapse of the system
• The transfer of business laws – which were drafted too broadly.
Ai Group’s position was that these issues needed to be addressed urgently. Stephen Smith said that the Federal Coalition’s industrial relations policy was “disappointing” and that these matters could not wait until after the 2016 election to be dealt with, but the Government was sticking to its line that only those changes mentioned in its policy document would be implemented in the first term.
Stay clear of the wrecking ball
ACTU Secretary Dave Oliver noted that 2013 represented 20 years since the 1993 Industrial Relations Reform Act ushered in a period of change, especially the decentralisation of wage fixing to the enterprise level. He said that the IR model that works best is one of collaboration, not confrontation.
Tripartism was an important value in our society that should be retained in any IR system. He noted that real wages were not keeping pace with growth and that the wages share of income was falling. The ACTU was concerned that the Abbott Government’s proposed Productivity Commission Inquiry was likely to be a “Trojan horse” of changes really sought by the Government. Unions support productivity improvements but this was not the same as a “race to the bottom” in wages and working conditions.
He noted that the capacity of management was an important driver in productivity and that the current legislative settings were compatible with good outcomes for both enterprises and employees.
The pendulum, he concluded, should not be used as a “wrecking ball”.
Broad based PC inquiry wanted
Professor Ron McCallum, for whom the Debate is named, reflected on the contributions of the three speakers. Prof McCallum commented first on the response of the previous Government to the Report of the Fair Work Act Review Panel, which he had chaired and which was released last year on the same day as the 2nd Ron McCallum Debate.
He said that he was disappointed with the response of the then Government, which made a number of changes to the Act not recommended by the Panel but did not make some technical amendments which had wide support, including those regarding individual flexibility arrangements and transfer of business.
Prof McCallum was also concerned about aspects of the new Government’s legislative program. He described the legislation re-establishing the Building and Construction Commission as draconian and was concerned about the ROC, although he thought that to some extent unions “had walked into” this situation through the behaviour of some unions and union officials.
Professor McCallum said that any proposed Productivity Commission inquiry into industrial relations should be broad-based and well balanced. He called for the inclusion of Commission members with differing backgrounds and not just “labour economists” to conduct the inquiry.
He also noted that previous reforms had led to too much regulation and too much explaining about how everything should and, indeed must, be done. In difficult times, he said the Government should be cautious in its approach.
Prof McCallum did not want the IR pendulum to swing dramatically, but called for a broadening of the base of labour law, that is, to include those many types of workers outside the reach of effective labor law. Many of these were young workers excluded from continuing employment by means of casual, temporary, contract and other forms of insecure employment. Traditional forms of continuing employment were declining as a proportion of all employment.
“Work/life balance was important and Australia needed to be a more connected and more civil society, not just one focused on productivity alone, he said.
Following the speakers’ presentations, the audience was able to make comments and to question the speakers. In this session:
• Dave Oliver noted that the union movement works for all employees, not just union members, for example, through its minimum wage advocacy, and while condemning the conduct of officials of the HSU, he noted that many workers suffered at the hands of unscrupulous employers.
• Stephen Smith advocated a role for individual enterprise agreements.
• All participants noted there was general concern about the impact of the ROC legislation on office bearers in both unions and employer organisations.
• The bullying legislation, due to come into effect from 1st January 2014, with cross-party support would be a new jurisdiction whose future would be closely watched by all.
• That employers supported the Productivity Commission inquiry, while the Opposition was concerned to see that both economic as well as social issues were addressed.
Each year since its inception in 2005, AIER has held a public debate regarding important issues in workplace relations. It is part of AIER’s commitment to promoting public discourse around important workplace issues. In 2011 we were honoured to have then Senior Australian of the Year Emeritus Professor Ron McCallum become a Patron of AIER and also agree to lend his name to our annual debate. Our debate has therefore assumed responsibility for promoting important ideas and discussions that are conducive to Ron’s work. Our overarching theme for all debates is therefore “Justice at Work”.