The revolution begins here


On Thursday 26 May 2005 John Howard made the long-awaited announcement of his government’s plans for workplace relations reforms.

Much of the package came as little surprise. The government was always going to push ahead with changes that had previously been blocked by the Senate, such as special regulation for the troublesome construction industry, and making it harder for unions to take industrial action.

Thanks to Bill Leak

Thanks to Bill Leak

The proposals do, though, include some radical changes that go well beyond the platform that the Coalition took to the last election. Howard has clearly decided – perhaps as his political swansong? – to take advantage of the unexpected Senate majority and leave a lasting mark on a system that is still more the work of the Keating Government than his own.

The ‘headline-grabber’ is the move to exempt not just small businesses from unfair dismissal claims, but any firm that employs up to 100 employees. Given that the great majority of employers fall into this category, the right to complain of arbitrary or unjustified treatment is apparently intended to be a ‘privilege’ enjoyed only by those who work at large workplaces.

Arguably the more important change, however, is the revamping of the Australian Workplace Agreement (AWA) system. These individual agreements are relatively unpopular at present with employers, for two key reasons. One is that they involve a great deal of bureaucracy to implement, compared to the relative ease of either negotiating a collective agreement or simply leaving workers on award conditions. The other is that – in theory at least – they are not to leave workers any worse off on balance than they would have been under the relevant award.

The government has announced, however, that besides simplifying the procedures for getting AWAs approved, the present ‘no-disadvantage test’ is to be scrapped. It will be enough that agreements comply with four minimum standards (on annual leave, personal leave, unpaid parental leave and maximum ordinary working hours), and that the basic rate of pay for ordinary hours does not fall below the relevant award rate.

What this means is that employers will be able to use AWAs to take a wide range of award conditions out of play, without the need for any compensating benefit to the worker. It will be possible, for instance, to offer agreements that offer no penalty rates for work in ‘anti-social’ hours, or a casual loading, or redundancy pay, or even long service leave. There seems little doubt that this newfound flexibility will make AWAs an appealing proposition for a wide range of businesses, especially if they are not confronted by an effective union.

One of the major losers under the reform package is the Australian Industrial Relations Commission. The ‘independent umpire’ will see much of its routine business stripped away, with the fall in unfair dismissal claims and with the transfer to the Employment Advocate of responsibility for approving collective as well as individual agreements. It will also lose its powers to set award wages to a new body, the Australian Fair Pay Commission, whose members will doubtless be carefully chosen to ensure that the ‘right’ kind of economic views prevail on the vexed issue of ‘affordable’ pay rises.

The announcement also talks of ‘moving towards’ a national system of regulation, though the critical lack of detail on that point (as well as others in the package) suggests that the government has still not found a way to overcome the constitutional hurdles that stand in its way. The Commonwealth arguably has the power to set up any system it likes for corporations, but there are still many unincorporated businesses (such as partnerships or sole traders) that are outside its legislative reach, together with parts of the State public sectors. Unless the States play ball by handing over their powers, as Victoria did in 1996, dual coverage will remain. For many small businesses, it may be necessary to incorporate in order to ‘escape’ State regulation, obtain the benefits of the unfair dismissal exemption, and enter into AWAs.

In the end, this is not quite the ‘big bang’ that it might have been. There will still be awards, albeit they will shrink in significance as more employers opt for the new breed of ‘quick and dirty’ AWAs. The AIRC will still hear unfair dismissal claims against larger employers, and will probably retain a role in resolving disputes at strongly unionised workplaces (at least outside the construction industry). The State systems may also survive, at least for a time, to cover the non-corporate sector.

Nevertheless, there can be no doubt that the changes will take Australia just that much further down the road to a US-style system, in which union agreements stand as islands of collectivism in a sea of individual arrangements.

Underlying the reform package are two fundamental philosophies. One is a convenient fiction that is typically used to mask the presence of the other.

The fiction is that this is all about allowing employers and employees to ‘sit down together’ and negotiate conditions that suit their mutual needs, to exercise what the Prime Minister terms freedom, choice and flexibility. The government’s stated position has long been that individual workers are quite capable of negotiating with their bosses, and that to suggest otherwise is pure paternalism.

Out in the real world, almost nobody believes this. There are certainly individuals – perhaps a growing number – with the confidence, skills and bargaining power to negotiate on something close to equal terms with potential employers. But for the great majority, the position today is no different to what it was a century ago. Without the support of a union, most workers face a simple choice: accept the terms offered, or find another job. Negotiation rarely comes into it. Witness the fact that where AWAs are in place, they are almost always standardised documents that do not vary from worker to worker.

So why the fiction? Because it is politically more palatable than the real reason for the changes, which is simply to shift the balance of power in favour of employers. Underlying John Howard’s views on industrial relations, and those of his supporters, is a powerful conviction. It is that Australia will be more productive and prosperous if employers are allowed to get on with running their businesses, without hindrance from trade unions or industrial tribunals, and if they are permitted (with certain basic exceptions) to offer employment on whatever terms workers are prepared to accept.

Opinions may legitimately differ on the extent to which the state should intervene in the labour market to moderate its operation, on the balance to be struck between equity and efficiency, and on whether we should be regulating to promote fairness and decency at work. But whatever views are taken on those questions, it is a debate that is too important to be obscured by spurious rhetoric about individual ‘freedom of choice’.

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