The ALP and industrial relations policy – a key to its future

It is undeniable that a key reason for Labor’s loss at the recent election was its failure to address its economic credibility in the electorate. A broader dilemma for Labor is the fundamental direction of the party: who does it represent and what does it stand for – a matter now clouded because of Mark Latham’s failed balancing act between the outer suburban aspirationals and the professional urbanites. The policy area linking these two fundamental direction questions for Labor is industrial relations.

The IR policy that Labor took to the election was deeply flawed – in philosophy, targeting, emphasis and what it said about Labor’s confused priorities in the political and industrial spheres. One of the great successes of modern Labor’s halcyon days in the 1980s was the successful integration of the political and industrial agendas.

In the 1980s when the ACTU had genuine clout and a broader view of the national interest there was a common understanding between Bob Hawke and Bill Kelty that Labor needed a wages policy that complemented the economic objectives of low inflation and low unemployment. Both agreed that the wages push by the unions during the early 1970s was a significant contributor to the economic difficulties faced by the Whitlam government. The Prices and Incomes Accord was born and wage restraint was delivered in return for a stable economy and government commitment to social policy initiatives in Medicare, child welfare payments and child care amongst others.

The Accord worked reasonably well, providing across the board wage increases under a centralised system, but also tacitly endorsing the Labor government’s deregulatory plans in the banking sector, exchange rates and tariffs. Crucially, deregulation of the economy brought with it the need to deregulate the labour market as various sectors became exposed to global competition.

In the early 1990s, the Labor government and key ACTU figures pursued deregulation of the labour market through the centralised system – in particular, enterprise bargaining. After initially rejecting it, the Australian Industrial Relations Commission (AIRC), in 1991 finally agreed to enterprise bargaining on the basis that the arbitration power would be separated from enterprise bargaining. Essentially workers were able to gain wage increases either through enterprise bargaining or through an annual safety net case – but not through both.

The Coalition government’s reign since 1996 has seen the Workplace Relations Act (WRA) in 1996 replace the 1988 Industrial Relations Act. The essential differences between the two acts are that the WRA provides for Australian Workplace Agreements (AWAs) allowing individual agreements between employer and employee, ensures that awards can obtain only allowable matters (although in practice this has not been as ‘draconian’ as some union critics envisaged), attempts to weaken the power of unions (union deductions, bargaining fees, pattern bargaining) and makes clear the safety net role of awards.

In practice, until now and despite these changes, the system, with the exception of AWAs, has really been an extension of that commenced under the Hawke-Keating governments. Despite trade union angst, it is only the AWAs that represent radical change. But the number of AWAs approved – about 150 000 in 2003-4, although growing, is relatively small compared to the total workforce.

At the present time, the Coalition government, shortly to have control of the Senate, is considering a more comprehensive raft of amendments to the WRA. Some are aimed at repairing legal issues that have arisen. The recent Electrolux decision of the High Court, while potentially reducing the capacity of unions to have rights clauses in enterprise agreements, has also had an unexpected consequence, with many current enterprise agreements seemingly invalid and therefore technically open to renegotiation. Other amendments are squarely aimed at reducing the power of both the unions (secret ballots) and of the AIRC (unfair dismissals).

It is in this context that the ALP took into the recent campaign an industrial relations policy that was backward looking and totally out of step with community and workforce trends. A major flaw with the policy was that the ALP could never enunciate why changes to the industrial relations policy were necessary or desirable. Unemployment, inflation, industrial unrest, not to mention union membership, are at record lows and there has been a real increase in wages, even among safety net beneficiaries. Unarguably, a considerable part of the economic success of the past decade is directly related to the deregulation of the economy and the labour market.

One of the features of the ALP policy was greater access to arbitration but the why and how were never explained or justified. An impression was created that unions would be able to seek arbitration at will, precipitating unsustainable wage flow-ons. Only limited access to arbitration in an enterprise bargaining system retaining a centralised tribunal is a fundamental premise of a deregulated labour market, and goes to the heart of business concerns about ALP IR policy. Why there needs to be ‘more’ access to arbitration is unclear.

Nor is it at all clear what the ALP had in mind with its ‘casuals conversion’ policy. There are, in practice, essentially two types of casuals: the irregulars, often students and others moving in and out of the workforce, and secondly, those who have worked in the same job for significant periods but continue to be classified as casual and thus denied some permanent employment benefits. Often there is a fine line between the two types but the ALP policy suggested that most casual positions would be converted to permanent, with a whole class of jobs, particularly young people’s, under threat.

The attack on the AWAs was also misguided. AWAs are still relatively insignificant in numbers and, despite some examples to the contrary, most have not been used to exploit workers.

The ALP must radically rethink its industrial relations policy if it is to reclaim the middle ground (an essential ingredient in winning elections) and to define who it is representing in a less collectivist environment.

The trade union movement will be of precious little help to Labor in this, as it has become essentially an organisation in denial with a narrow self-serving interest in careerism and membership preservation. Trade union media spokespeople, with the exception of the urbane and eminently reasonable Greg Combet, appear to ordinary Australians as chip-on-the-shoulder, sour war-horses fighting battles that are far removed from the values and priorities of the majority of ordinary workers.

Labor’s way forward must be based on the realisation that today’s Australian society is an individualist and aspirational one. Generation X and Y have little interest in joining trade unions because they do not see a priority given to the sort of working environment in which they operate. For every one unfairly casualised worker who would like permanency there are two who structure their lives around the desirability of a casualised, job hopping lifestyle. For every one worker unwillingly forced to do overtime in a downsized workforce, there are two who hope or need to do as much overtime as possible in a harder working (and harder playing) society.

Labor has given the Mr Fixit job to the Perth MP, Stephen Smith, shadow minister for lots and lots of things. He has proven in the past a deft hand at digging Labor out of tough policy holes (Medicare, refugee policy). He will need all his skills to recraft Labor’s thinking in the IR area – especially as Mark Latham is now so inconsistent in his own priorities, recently sending very confusing signals about the ALP’s IR direction.

Smith must first force Labor to enter the 21st century in its industrial relations policy and not retreat to some position that existed prior to Hawke and Keating. The objectives of the ALP policy must be to maximise employment opportunities, minimise inflation and increase living standards over time. It must guarantee minimum standards through minimum wages, social security payments and tax rates and benefits. It must have a worker-friendly and coherent superannuation policy, which, unlike the 2004 version, does not take eight times more out of the ‘super bank’ than it would have put in.

But also, the policy should give equal priority to guaranteeing the rights of individuals in a workforce that demands enterprise bargaining as the main focus of an IR policy. An arbitration commission might be maintained to provide free dispute resolution. Minimum wages and standards might be set; AWAs might even move to the AIRC for AIRC scrutiny.

It is not an attractive feature of today’s increasingly deregulated economy that often the main beneficiaries of the productivity gains delivered by ordinary workers are seen to be obscenely rewarded CEOs. There is a position for the ALP in industrial relations that encourages further productivity gains but shares the spoils more equitably.