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Wednesday, 14 June 2006
Page: 129


Senator MURRAY (6:25 PM) —The regulations being debated before us today, while containing little different than what was foreshadowed late last year, do confirm the Democrats’ worst fears—that is, that the Liberal and National parties’ industrial relations changes are extreme, complex and unfair and will detrimentally impact on vulnerable or disadvantaged employees and job seekers over time.

Of course, the minister is both right and wrong. He is wrong in thinking that the Work Choices legislation is some kind of economic nirvana and that there will be no social effects. But he is right in believing that the sky has not yet fallen in. It has not yet fallen in for the very reason that many agreements that were struck under the old legislation have a long time to run. The other point is that anyone who is in an advantaged position in the job market is not going to be impacted negatively whilst there is a shortage of labour in certain sectors.

The regulations coupled with the Work Choices legislation are highly interventionist and one-sided, and our belief is that in the end they will hurt Australian society and the economy. Because of that, we think it inevitable that this government, if it remains in power, will have to amend them, and amend them significantly. Of course, if Labor achieve power, they will be thrown out altogether and a new system will be put in.

The sky might not have fallen in yet, although for those who are unfairly sacked or lose penalty rates or public holidays for the famous extra 2c a week I am sure it will feel like it. But these changes overall over time will radically alter our work and systems values and may end up creating a dog-eat-dog environment for those with low bargaining power, and they will suffer accordingly.

I am not deliberately exaggerating the impact of these reforms. In fact, it is not my style to do so. It must be remembered that these are fundamental reforms. These changes are nothing like those in the 1996 act that was produced, even before it was amended by the Democrats, because that 1996 act was the second wave of legislation built on the same foundations as the first wave, which was the 1993 act. These changes, in contrast, assault the cultural, economic, social, institutional, legal, political and constitutional underpinnings of work arrangements in Australia. Since the legislation and the regulations came into force, there have been cases that have received media attention of employees sacked for smirking, for restructuring purposes or for being too ill and of 60-year-olds being offered individual contracts that cut wages by $40 a shift, and so on and so forth.

In the Senate budget estimates committee hearing last month, federal Employment Advocate Peter McIlwain revealed that of the 6,263 individual contracts, known as AWAs, lodged with his office since the Work Choices legislation began, every one of the 250 analysed by his office did exclude at least one award condition. Sixteen per cent of Australian workplace agreements lodged under the new laws had dropped all award conditions and replaced them with the government’s five minimum conditions. They had gone down from 20 to five, if you looked at the maximum. Forty per cent of those AWAs dropped gazetted public holidays. Leave loading was erased in 64 per cent of agreements while penalty rates disappeared in 63 per cent. Fifty-two per cent of AWAs got rid of shift allowances.

These are major social impacts. These are things which affect how families live their lives, for example, when children are able to play sport or be with their families. It very much affects the social fabric. Pay increases over the life of the AWAs were provided for in 78 per cent of agreements, while 22 per cent had no change in pay. While a large percentage of the AWAs may have provided a pay increase, the actual level of increase commensurate with other benefits lost needs to be taken into account. In the recent and infamous case of Spotlight, Spotlight offered 2c more an hour to new employees to enter workplace agreements which were without penalty rates, without public holidays or without leave loadings. This is why the Prime Minister refused to guarantee before the legislation was passed that no worker or set of workers would be worse off. He knew he could not guarantee it, because large numbers of workers would be worse off and are worse off.

The Spotlight case highlights that these changes will have a disproportionate effect on women. Because women are in and out of the workforce as a result of caring responsibilities, women are a large proportion of low-income earners in Australia and are disproportionately employed in industries such as retail, clerical and community services and in part-time and casual work. When the Western Australian industrial relations system was deregulated during the Court government, which provided the template for these changes, those changes resulted in a decrease in wages, increased inequality and saw women in particular worse off. In February 1992, the Western Australian gender pay gap was 22.5 per cent. By May 1995, it had widened to 27.8 per cent. As HREOC noted during the Senate’s inquiry into Work Choices, the capacity for more vulnerable employees to bargain effectively and to choose their employment arrangements is impinged upon by the existence of so-called take it or leave it individual bargaining arrangements. The consequences are felt not only by workers but also by their children and families. It is the social effect which is very damaging from this legislation.

Under the new Work Choices legislation, these AWAs are unacceptable. Under the old Workplace Relations Act, while AWAs needed improvement and greater protections built into the system, they were workable. It is at that level that we parted company with the Labor Party, because we supported AWAs under the old federal act. We do not support the new AWAs under the Work Choices legislation. They are almost always take it or leave it contracts. Duress is not policed. There is no global no disadvantage test. There is no requirement to bargain in good faith, and the minimum conditions underpinning the contract are derisory. While it is unlikely that all Australians will be detrimentally affected by these changes, we do believe they will erode conditions for significant numbers of Australians over time. Because of that, we are hopeful that the government will take a step back from its very strong defence of these unfair laws and move to amend them before the community endures too much pain.

The Prime Minister and his ministers have successfully used doublespeak to conceal the true nature of these changes. Progressive words like ‘choice’, ‘flexibility’ and ‘freedom’ disguise the heavy authoritarian micromanagement and restrictions on collective labour—namely, the unions—and the dismantling of the architecture and infrastructure of our former workplace relations system. While the Prime Minister is correct that most of what is contained in these regulations does not change the intent and direction outlined in the Work Choices bill, the regulations do reveal just how interventionist and dictatorial this government will be. Unwisely, unprecedented ministerial intervention will replace the former sensitively balanced federal system where politicians were kept at arm’s length from work arrangements and disputes. This central planning model has alarmed some of the government’s backers, such as the HR Nicholls Society, who are reported as expressing concern that the new laws are too government-centric. In fact, they have likened the federal government’s new industrial relations laws to the former Soviet system of command and control. That is coming from the friends of the government!

The Industrial Relations Commission is required to report on a weekly basis to the minister on the number and details of applications for protected action ballots, suspension and termination of bargaining periods and applications for right of entry. The OEA must send the minister every workplace agreement within three weeks of it being made. This level of ministerial intervention is unheard of. Surely a senior minister would have better things to do with their time than interfere in the day-to-day workings of business, unless they are in command and control mode. It is quite mind-boggling that part of the justification for the government’s IR changes was to reduce third-party interference—that is, union involvement—yet what has happened is third-party interference in the form of the minister has reached levels which could be dangerous and are certainly unprecedented. This is doublespeak of the like we have never seen before. The now well-entrenched coalition executive style is also likely to mean that bias and secret agendas will contaminate what should be open public processes.

The regulations also appear to have raised more questions than they have answered and, rather than reduce the need for lawyers and third-party intervention, the complexity is in fact likely to result in the opposite. All up, the legislation and the regulations total about 1,500 pages of text to explain, compared to the law in New Zealand, which I am told does it in 20 pages. We are concerned that, in attempting to cover every angle with the intention of hamstringing unions, the government have created an overly complex system with the likelihood of many unintended consequences. I assure you that, if the Democrats had retained the balance of power, this Work Choices legislation would not have been law, although I can also assure you—probably to the consternation of some of my Labor colleagues—that this would have been a national system, because we agree with one system. When Labor reach power in due course, we do hope that you will at least retain that as a centrepiece of your workplace law. Of course, it does need to be agreed with the states. We have always acknowledged that.

We are concerned that, in attempting to cover all these angles, the regulations are creating real problems. For instance, the Australian Medical Association—hardly a hotbed of socialist activists—are concerned that the regulations do not clarify who can legally issue medical certificates for employees’ sick leave. This is an excellent example of how an unnecessary change of requiring employees to provide a certificate after one day of leave compared to two days leave is now having unintended consequences. From the viewpoint of an ordinary person, not leaving that whole bureaucratic function to the integrity and the ethics of the medical profession to decide on is really a great mistake.

There is uncertainty about cashing out annual leave, about whether employees can be paid under the minimum wage if it is averaged over a 12-month period. Rather than help small business, the government have made it more difficult. Many small businesses preferred the previous award system because it enabled them to bargain on a level playing field with other small business competitors, and much of the work in negotiating terms and conditions was done for them. It is self-evident that individual small business employers do not have the human resource capacities required to bargain in these ways themselves.

Not only has the government taken away the certainty and ease, but through the regulations before us it requires small business to keep time and wage records, making personal record-keeping requirements broader and more onerous. It has been reported that a MYOB survey in December last year found that small and medium business owners were more confused than ever about the industrial relations package. They do not know whether they are in or out and they do not know how the systems have affected their legal obligations to their employees. They were familiar with and happy with the previous system.

The mining association have expressed concern about the reforms and the impact it will have on their industry. One major mining company publicly said that they are concerned the changes could wind back the clock 30 years. As journalist Laura Tingle said a couple of months ago in the Australian Financial Review:

It makes you wonder—whatever your ideological position might be on industrial relations—what the government is thinking will unfold politically from these changes, or whether, in the haze of a long-cherished ideological ambition finally realised, it has thought about it at all.

I agree with Ms Tingle. I think these changes, and those likely to come, are too much based on ideology and have not had enough regard to the economic and social aspects. In that respect, they are irresponsible.

When I hear the government ask: ‘Why would we risk power? Why would we risk our seats? Why would we risk our government on a reform which is going to put the back of the Australian people up?’ I sometimes think that we forget that this is a radical government. It is not a conservative government; it is a radical government. It wants to change the Australian economy and society radically. And to do so, it is prepared to take very significant risks with those things that we know have underpinned our society for decades, for generations—those things which have ensured a fair go and fair dealings between employers and employees, backed by a working, flexible and maturing system of workplace law and regulation.

I am not pretending for a moment—and no-one who has been in my situation for the last decade could—that the previous system was perfect. I am not pretending for a moment that it did not need reform and further change. But what I have seen is such a holistic, radical change that I can only think that those who have driven it are prepared to sacrifice the government to try and secure a change which they hope will be permanent and from which the country can never resile. I do not know if that will be the result of it all. The other point that is very clear to me is that many, many Australians who will be affected by the Work Choice regulations and laws will only feel those effects after the next election. That really does need to be understood by many people. Of the agreements that are extant and operating now, many of them will only end after the next election, so those people will not be affected by these laws at present.

As I have said many times in the many debates we have had on this matter, unless an economy is genuinely in dire straits and unless a society is genuinely in dire straits, and both need radical surgery, risky economic and social change like this is dangerous. It is not more important than social cohesion and a fair progressive society. As a migrant, I came to Australia because of its reputation for fairness and for looking out for the everyman and the everywoman in our society. I am disturbed by legislation and regulations like these because I feel that they attack things which go right to the heart of society as it has been for many decades. And those were hard-won gains that people enjoyed: fair, First World wages and conditions that allowed Australia to grow to be competitive, to be wealthy and to become a country of note in the world. Now they have been overturned.

It is absolute nonsense to say that the latest employment figures or the latest economic figures have anything to do with this legislation at all. It is absolute nonsense to think that law which came into place at the end of March has already had an effect on the national indices that we measure. I think we are yet to see the true effects of this legislation, and we are certainly in the early days of it. The great failure of the federal government is that even to this very day, in my view, it has failed to provide any empirical persuasive economic case for these changes. If my memory is correct—and I hope I get the number of pages right—the total economic case that the Treasury advised us that they put forward to support these changes was four pages long. It is just assumed that this is good for the economy.

I am an economist, and hopefully I have a reasonable understanding of it. It is perfectly true that if you take away people’s wages and conditions, alter them completely and their wages fall, profits will grow because you will get a straight shift into the hands of others. It may be true that an additional worker may be employed on occasions because there is now more money to do that. But the whole purpose of a civilised, First World democracy is not to race people down to the bottom. It is not to compete with the poorest or the least advanced nations. It is to maximise their wages and conditions.

I urge anyone who thinks that that is false economics to look at how wonderful the economies of Scandinavia are. They are built on exactly that proposition. They are high-wage, high-skill, highly competitive, globalised countries. The government’s economic argument is faith based and boils down to this: lower wages, far fewer conditions and more power to employers will equal more jobs. I am not convinced and I do not think the country will be convinced, but we will see.