The Changing Paradigm: Freedom, Jobs, Prosperity

Losing the Legislation Fixation

The Hon. Tony Abbott, MHR

Workplace relations reform is like competition running: you're only as good as your last race and every achievement is there to be bettered. Peter Reith's 1996 Workplace Relations Act was an institutional watershed because it established, for the first time since 1904, that people could make formal wage deals without a union as real or potential third party. The 1998 waterfront dispute was a great practical turning point because it challenged one of Australia's most militant unions and ultimately proved that it was possible to have better returns to shareholders, lower prices to consumers, and even higher wages for workers through pursuing workplace change.

By contrast, there were no comparable industrial milestones in the Howard Government's second term. The Government's "second wave" legislation never made it through the Senate partly, it was argued, because the 1996 reforms hadn't been given enough time to work, and partly because omnibus legislation gives critics an excuse to reject everything on the basis of one or two issues. The Government's third term challenge is to regain its earlier momentum---accepting that what's possible for a new government cleaning up its predecessor's mess is not always feasible for a six-year-old government which the public thinks has long fixed the most obvious problems.

Governments can never expect much credit for their achievements, partly because they're never entirely their own, but mostly because people are always more interested in what comes next. But the workplace culture has changed. And it's changed for the better. Among industrial commentators and policy-makers, there's now general acceptance, at least in theory if not always in practice, that the typical Australian worker does not need to be supervised like an L-plate driver. Unfortunately, the same cannot always be said for the people running the workers' compensation or occupational health and safety systems. However reluctantly and with qualifications, industrial policy-makers have come to accept that no-one knows any particular business better than the people who work in it and that no-one is better qualified than the workers and managers on the spot to know their own best interests. The old "umpire theory" of industrial relations is evolving at least to the extent that the umpire is there as a last resort, to restart the game rather than to make selections, determine team tactics, and fix the outcome in advance according to the principle of big brother knows best.

This Government is fully post-Marxist in that we understand that competition between enterprises is much more significant than the class conflict within them. We understand that the businesses in a particular industry are engaged in a competitive struggle to survive and prosper and that the shop-floor workers in a business have more in common with everyone else in the same business than with shop-floor workers at a competing business. The class struggle between capital and labour may not quite be dead, but free and competitive markets mean that competition is largely between businesses rather than within them. Once every three years, negotiating the next certified agreement might pit bosses against workers at the same factory. The rest of the time, the rival teams are the workers and bosses at one business versus the workers and bosses at another.

In something as complex as a modern economy, it's hard to say that any one change produces any particular benefit but only the most churlish would deny that this Government must have done something right in the field of workplace relations. The economy has created nearly 950,000 new jobs since March 1996. Unemployment is down from about 9 per cent to about 7 per cent. More importantly, the "structural rate" has fallen from over 8 per cent to about 6 per cent. Average weekly earnings have risen by over 8 per cent in real terms and basic award earnings (which actually fell five per cent in real terms between 1983 and 1996) have increased by five per cent under the Howard Government.

More jobs, higher pay and fewer strikes are the obvious benefits of reform and modernisation but, as Sydney's Archbishop George Pell has pointed out, even change for the better can have significant social side-effects. Under-employment for some, long hours for others and the impact of two-income families on the comparative purchasing power of one-income families are serious concerns, but they are unlikely to be helped by restricting people's freedom to work productively or by the state's adoption of any "model" solution.

The interaction of the tax system and the welfare system is especially hard on low-to-middle-income families with children (despite improvements this Government has put in place) but the wages system alone cannot be expected to fix the distortions caused by many decades of ad hoc changes to the tax/transfer system. Re-regulating the labour market or trying to establish a "just" wage will increase the pressure on many employers without necessarily putting more money in the pockets of those who need it most. For all the talk about job insecurity, the percentage of workers who feel they might be sacked tomorrow has dropped sharply from its peak in the early '90s. What's more, people who lose their jobs can have more confidence in their ability to find new ones with total employment at an all-time high.

The alternatives are not insecurity in an expanding market economy or certainty in a static command economy. As whalers at Twofold Bay, shale oil workers at Glen Davis and gold miners at Ballarat learned long ago, technological change cannot be resisted, competition ultimately helps secure better living standards and insecurity is a painful part of life. The challenge is to resist nostalgia for the time when the Industrial Relations Commission made all the important decisions and to help people understand and cope with the bracing new culture of freedom and responsibility. Far from being a "bosses' tool", Australian Workplace Agreements (which include a 'no-disadvantage' test policed by the Employment Advocate and the IRC) mean higher pay for better work with both workers and managers as beneficiaries. The average pay of non-managerial employees covered by AWAs is $895 a week compared to just $721 a week for non-managerial employees working under federally registered certified agreements.

Workplace relations reform is another one of those areas like the state of our schools and the capability of our defence forces where we can never be entirely satisfied with the way things are if our country is to grow in peace and freedom. What's best practice today is second-rate tomorrow---not because fashions have changed but because someone is always discovering a more effective way to work. Certain values and aspirations don't change---like people's desire to earn a fair day's pay for a fair day's work---but what these might mean changes constantly and, where needs be, systems must be re-engineered to cope.

Industrial relations practitioners rightly draw attention to continuing deficiencies in Australia's industrial law. Statute and case law leaves a lot to be desired on issues such as the transmission of business, the content of awards, and the enforcement of bargains. Even so, legislative change will not directly tackle some of the biggest obstacles to a more productive society---such as timid management, demoralised workers and militant unions---where these still occur. The legislative framework is important but it's not necessarily the key factor in ongoing industrial reform and it cannot always be the sole focus of a reforming government.

For one thing, legislative reform requires the co-operation of the Senate. Then there's the separate State industrial systems which regulate the employment conditions of about half the workforce and which the federal government cannot easily influence. Some of the most enthusiastic deregulators would be concerned if a federal government sought to "cover the field" with its industrial legislation even though it is now the most liberal jurisdiction in the country. For another, the legislation fixation can easily become a free-market version of Australians' ingrained tendency to blame problems on government. As a justification for inertia, the government's alleged failure to get out of people's way can be just as much an excuse as the government's alleged failure to give people a hand. Governments are never perfect and must always seek new ways to enhance the freedom of individuals-in-community. Reliance on the state not to do things is still a form of reliance on the state. Good government is about improving the capacity of people and the communities they live in rather than encouraging dependence on the state to do things or even dependence on the state to refrain from doing things.

Over the next three years, the Government's task will be to address the deficiencies and build on the strengths of the existing legislation. The legislation should better embody the great principles of freedom and fairness which are at the heart of the Australian idea of the fair go and which this Government has consistently championed. Diligent, capable Australian workers and decent, creative Australian management deserve more opportunities to have a go---but this means further changing our workplace culture as well as our law. Sometimes, the focus on law can actually hinder the need for cultural change because it puts the emphasis on parliament rather than the workplace where it mostly belongs.

Ensuring that the culture better reflects the legislation is probably the biggest single challenge of the next three years. For instance, the Government is regularly urged to create a regulation-free "opt out" stream of workplace law for businesses which don't yet have their workers on Australian Workplace Agreements or non-union agreements under s170 of the Workplace Relations Act. The Government is regularly told that there are insufficient legal sanctions against strikes by businesses which often fail to use the sanctions which already exist. It's important to keep exploring future legislative possibilities but it's just as important to utilise fully the legislative opportunities which exist now.

Since Parliament resumed last month, the Government has introduced legislation to: exempt small business from unfair dismissal laws that inhibit hiring new staff; abolish compulsory union levies disguised as fees for services which workers didn't request and don't need; ensure workers genuinely want to strike by requiring secret ballots first; stop one-size-fits-all industry-wide bargaining; and give the Industrial Commission power to order cooling-off periods when strikes and lock-outs are just making a bad situation worse. The Government has just introduced further legislation to enhance the democratic control and accountability of unions and employer organisations and to give the Commission power to decide whether old employment agreements should apply to the new owners of a business. Each bill tries to deal with a single, "bite-sized" issue, so that the opposition in the Senate has no grounds for rejecting a range of measures because it disagrees with one of them. Supporters of the "big bang" approach to industrial reform might dismiss this as mere conservative incrementalism but these bills, if passed in something like their current form, will make a lasting difference to Australian workplaces and help to create tens of thousands of new jobs.

The challenge of the next three years is not confined to new legislation (important though that is) as much as ensuring that the workplace culture better reflects the freedoms and opportunities already (if imperfectly) available under the Workplace Relations Act. Because the legislative process can be so easily hijacked or stalled, the Government needs to focus at least as much on what can be achieved by executive act and good example as on what might be possible under Bills which have to run the gauntlet of an unpredictable Senate.

It's one thing to change the law but quite another to make effective use of it. As waterfront reform demonstrates, the big workplace relations breakthroughs need strong management as much as strong government. Some of the most influential developments (such as changes at Robe River, Dollar Sweets and Mudginberri in the 1980s) actually took place against the wishes and despite the policy framework of the government of the day. As these cases show, successful workplace relations change requires the sustained attention of senior management. Workplace change is too important to be left to others. One of businesses' consistent failures is chief executives' concentration on their companies' share price while middle management handles "unimportant" matters like statements to the media and negotiations with the workforce. Australian management would have a higher reputation if chief executives were less reluctant to argue their own industrial case in public while union secretaries suffer from no such shyness.

Over the next three years, the Government is likely to focus as much on enforcing the law as on changing it. People can expect an activist government which makes more of its opportunities to intervene in Commission and court cases where the national interest is at stake. Last week, the Government intervened before the Federal Court to support the legislative intention of the Workplace Relations Act that certified agreements not contain matters outside the employment relationship. This week, the Government sought leave to appear in the Queensland Industrial Commission to oppose job-destroying redundancy provisions with retrospective contingent liability for small business. The Government intends to join an appeal against the Emwest decision permitting strikes during the currency of certified agreements. Last year, the Government cooperated with a union application to insert redundancy provisions (at the federal test case standard) into the OneTel award.

The Government must be highly selective about the cases where it seeks to intervene. In general, the parties to an industrial dispute should make their own arrangements, occasionally with the Commission's assistance, but nearly always without any government involvement. Even so, it's sometimes unrealistic to expect small companies or individual workers, for instance, to prosecute their rights against unions or large businesses which have all-but-bottomless pockets. Where there are clear cases of abuse of power or breach of the peace by industrial heavyweights, in fairness to people who would otherwise be denied their rights, the government should consider its options for acting as industrial policeman.

Late last year, for instance, Feltex sites were subject to "very vigorous" picketing organised by the Victorian union movement's militant tendency. In this case, it seems that the Victorian Government's idea of "keeping the peace" was to ensure that no-one was injured rather than to ensure free movement of willing workers in and out of the company's plants. Under Australian law, strikers and their allies are entitled to protest but not to intimidate or prevent other people from exercising their rights. The creation of a public nuisance is not excused because it's done by a mob with a slogan. It's the duty of the police to enforce the law regardless of who the law-breakers might be and to ensure that the forces of anarchy never win control of our streets.

There's considerable legal argument about the Federal Government's ability to force State governments to uphold the law. Still, any State government inclined to turn a blind eye to violence perpetrated by its political allies needs to understand that freedom under the law is this Government's "light on the hill". A political context no more excuses criminal acts than a domestic one. The Victorian Government's handling of criminal charges against AMWU chief, Craig Johnson, will be a key test of its commitment to equality before the law because there cannot be swift judgment for ordinary lawbreakers but "kid gloves" treatment for well-connected officials.

One of the real problems with the "umpire" model of workplace relations is that key players only accept the umpire's verdict when it goes their way. Unfortunately, the spirit of Clarrie O'Shea is alive and well among some senior officials of the AMWU and the CFMEU. Sometimes, fines are paid by "anonymous donors". At other times, they're contemptuously ignored by union officials who boast that they have "drawers full" of court orders. A recent $200,000 fine went unpaid for months and is now on appeal. Although there is some argument about whether and in what circumstances, the applicant, the registrar of the Federal Court, the Attorney-General or even the Minister for Workplace Relations can enforce a fine, serial offenders need to know that, one way or another, this Government will make them pay. Powerful and well-connected people who refuse to pay fines should ultimately go to gaol, just like fine-dodgers without good contacts.

One reason why the Industrial Relations Commission has been seen (unfairly) as the unions' playground is other parties' reluctance to use the Commission to seek more freedom and flexibility. It's hardly surprising that Commission decisions seem to reflect union values and aspirations if they are invariably made in response to union applications. Even now, Australian workplace relations practices (such as paying people more to go on holiday than come to work) are supposed to bewilder potential overseas investors, yet the last time anyone tried to remove holiday loadings from awards was a quixotic attempt by the National Farmers Federation nearly two decades ago. The fact that it's hard to remember when employer organisations last seriously sought to use the Commission pro-actively suggests a worrying form of defeatism.

It's not just politicians who are called to provide public leadership. One person's dereliction of duty does not excuse (however much it might explain) another person's failure to do what's right and best. It's now high time for business groups (as opposed just to individual executives gamely trying to sort out their own operations) to bring again to the debate over workplace relations that measure of courage and intellectual leadership shown in the 1980s and early '90s.

It needs to be said that there are increasing grounds for optimism. For every industry such as the motor industry (which insists it can't compete without subsidy yet still tolerates the closed shop) there is an industry such as the mining industry (which leads the world in productivity and profitability and has largely broken out of a union-dominated industrial straitjacket). The fact that senior construction industry executives have been prepared to make a clean breast to the Royal Commission of extortion payments thinly disguised as "consultancy fees" suggests a willingness to stand up for principle when there is a prospect of change for the better.

Government ministers, at worst, face parliamentary sniping and the odd demonstration. Workers and managers face commercial suicide and the real risk of physical intimidation when they seek to assert the rights and freedoms which people take for granted beyond the factory gate. They ought to know that the Government is on their side and will do everything in its power not to let them down.