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Monday, 7 November 2005
Page: 87


Mr McARTHUR (6:03 PM) —I am pleased to contribute to the debate on the Workplace Relations Amendment (Work Choices) Bill 2005. The introduction of this industrial relations legislation is as significant to Australians as the collapse of the Berlin Wall and East-West relationships. This parliament is contributing to history by introducing measures that will encourage a cooperative enterprise culture in businesses and work forces across Australia. The legislation will close the chapter on 20 years of debate about the need for a flexible industrial relations system. It is an issue on which the Prime Minister has stamped his mark in leading public policy debate, not only over 9½ years as Prime Minister but for a decade before in opposition—a remarkable achievement.

When I entered parliament in 1984 the industrial relations debate was a blank page. There was at the time essentially a political consensus for a third-party resolution of workplace arrangements and deals between big unions, big business and big government at the expense of individual workers and businesses. The Hawke government entrenched the power of the big union/big business corporatist model through the Accord with the ACTU, which over time actually reduced the wages of Australian workers. The then ACTU president, Bill Kelty, almost had cabinet status under these arrangements.

As chairman of the backbench committee and with the then shadow minister, the Hon. Neil Brown, we in the opposition developed the embryonic workplace agreement concept. This was a revolutionary thought when companies like BHP and Ford had never contemplated a world without myriad awards and a big brother arbitration commission making their human relations decisions for them. In fact, big business came out strongly against this early proposal. John Howard became the Leader of the Opposition in 1985, providing new impetus for industrial relations reform. The then opposition leader provided a vision within the Liberal Party and Australia for industrial relations reform.

Over the past 20 years there have been advocates for industrial relations heresy. Martin Luther would have been proud of them. I refer to the HR Nicholls Society, of which I am a proud member, which was a protagonist for change. It provided an intellectual base for practitioners, intellectuals and trade union leaders, showing them that there was a better way. It published papers, ran seminars and encouraged national debate, so much so that then Prime Minister Hawke called them ‘troglodytes’. The mining industry understood the necessity for better industrial relations. (Quorum formed)

As I was saying, the mining industry understood the necessity of better industrial relations and was ably led by Hugh Morgan of Western Mining Corporation in bringing about some quite radical changes to work practices in that industry. The Dollar Sweets case provided a focal point for union intimidation of the work force, and Fred Stauder is to be commended for his steadfast stand. The National Farmers Federation advocated a more flexible system, ably led by Ian McLachlan. Bert Kelly, the Modest Member, advocated a market economy, fewer tariffs and a more flexible system. Professor Blandey encouraged productivity and enterprise based agreements. Professor Judith Sloan argued for changes to the industrial relations club.

I draw to the attention of the House the trailblazers in industrial relations reform. There was the two-year strike at Mudginberri meatworks, where the manager, Pendarvis, wanted to pay his workers more money for increased productivity and removal of the tally system. This was a two-year strike. The changes were very strongly supported by the National Farmers Federation. It was union intransigence towards increases in productivity that brought about this very famous dispute.

Robe River and Charles Copeman fought a long and bitter battle that productivity should be a result of huge capital investment. That investment was controlled by a few Pommy shop stewards demanding unreasonable conditions. But, eventually, there were more flexible conditions in that mining operation. There was the wide-comb dispute in the shearing industry, which you would be aware of, Mr Deputy Speaker, in which the union wanted to ban the use of wide combs which would increase productivity. They wanted to go back to the old world.

In fact, the old world of industrial relations is based on the 1904 Harvester case and the living wage, with a presumption that Australia could remain prosperous by trading with itself and not trading overseas. BHP was a monopoly protected by government and held a dominant position in the market. The unions exploited this position with excessive wage demands and positions. There was no international competition for steel making in Australia at that time and BHP fell behind in the world of investment and in labour performance in their steel mills. The BHP steel division actually went broke, even after a huge injection of government funds. It only became profitable when it restructured its work force and changed its technology.

The car industry, which members of this House would be aware of, had 150 per cent tariff protection, which has been reduced to 15 per cent. Now the car industry is internationally competitive; however, the vehicle builders union remains influential, with pattern bargaining amongst the four manufacturers. The car industry is now much more aware of industrial relations concerns, and it looks after its work force and fully understands the importance of international competitiveness—a far cry from the 1960s of big unions, big factories and insensitive management.

Can I refer to the Hawke government’s decision to float the Australian dollar in 1983 and say that it changed forever Australia’s protection against international competitive forces. The reality was that the exchange rate was measured by Australia’s productivity, performance and real position on the world economic ladder. The missing link in this decision was, of course, a competitive wage structure. Internationally competitive, Australia’s position would be judged by the financial markets of Wall Street, London and Europe as to whether it was doing a good job. I do acknowledge the Hawke government’s landmark decision in floating the dollar.

Former Prime Minister Keating was convinced of the necessity to change the industrial relations culture—so much for the rhetoric of the current Labor leader, Mr Beazley, attacking the current industrial relations legislation. In 1993 Paul Keating, when speaking to the Institute of Company Directors, said:

Let me describe the model of industrial relations we are working towards. It is a model which places primary emphasis on bargaining at the workplace level within a framework of minimum standards ... Over time the safety net would inevitably become simpler. We would have fewer awards, with fewer clauses ... We need to find a way of extending the coverage of agreements from being add-ons to awards ... to being full substitutes for awards.

A hundred years of industrial relations in Australia was very dependent on the three members of the industrial relations club: the big employers, the big unions and the industrial umpire, the Conciliation and Arbitration Commission.

Australian business developed a mindset that the welfare of their employees was not their problem and that they should hand over lock, stock and barrel the problem of conditions, wage rates and productivity to the faceless men of the arbitration commission. Most bigger companies and corporations abrogated their responsibility for human relations, working conditions and rates of pay to a legalistic third party that had no understanding of their individual workplaces. The industrial relations club took very little account of the capacity of individual companies to be profitable in the long term. The banks show no mercy to individual entrepreneurs who cannot pay their bills. If a small enterprise cannot pay the bills, there are no jobs, no matter what award structures might be in place.

This attitude during the 1980s was reinforced by the Hancock report, which said that there was no other way. This voluminous report reinforced the prejudice of the main players in the industrial relations club. Strong industries such as oil refineries, car makers and the cement industry managed to extract higher wages than productivity would have justified. India, China and the rest of Asia are providing a model of flexibility in competitive world markets. Australia needs to follow their lead if we are to look after our children in the next three decades.

The proposed 2005 act is a culmination of the 1996 election promises and the implementation of the 1998 Reith Industrial Relations Act. The fundamental element of this Workplace Relations Amendment (Work Choices) Bill is to ensure that there is a more flexible enterprise based system, that there is cooperation between employer and employee for mutual advantage and that the peculiarities of every workplace around Australia are taken into account.

The waterfront monopoly of the MUA is a perfect example of increased technology but reduced performance of the work force. Entrenched old-world attitudes ensured that cosy award-ridden arrangements between stevedores and MUA members made it impossible to provide reliability on the Australian waterfront over the last 50 years. The removal of this monopoly in 1998, as a result of the Reith 1996 industrial relations legislation, was a major breakthrough in improving Australia’s waterfront performance. The dead hand of the Conciliation and Arbitration Commission third party was removed from the life of employers in Australia and their hardworking employees and families.

Australian workplace agreements will be encouraged and simplified. They will be covered by law once they are lodged so that both parties can move forward with confidence that their agreement is binding and within the law and that it meets the minimum conditions as laid down by the act: the fair pay and conditions standard.

The Alcoa plant in Point Henry is the best example of the AWA approach. In his capacity as then shadow spokesman for industrial relations, the Prime Minister, John Howard, visited the Alcoa plant in Geelong in 1995. The Point Henry plant was near its use-by date, but it has continued operational capacity because of industrial relations changes. These changes and this new approach included annualised salaries; the establishment of work groups; the involvement of the wives of workers; no overtime pay; 12-hour shifts; four-day working weeks, with three-day weekends; a build-up of enterprise culture; an awareness of international aluminium prices; benign support from the metalworkers union of the day for this particular set of arrangements; a high degree of employees’ work satisfaction; productivity targets, understood by management and the work force; and a dramatic change of workplace culture.

The OECD have long been advocating a more flexible wage system for modern internationally competitive economies. Their supporting statements have been on the public record for the last four or five years, with high rates of unemployment in Germany at 11 per cent and France at 10 per cent. The old postwar Europe—Germany, France and Italy—of corporate state, big business and big unions, which has worked for 20 years, is now fundamentally flawed.

In Great Britain, productivity dropped to an all-time low because of entrenched work practices and the domination of industrial processes by craft unions. The dramatic changes by the Thatcher government ensured that the balance was redressed between capital and employees. The manifestation of these changes was the coal strikes and the quite dramatic changes that they precipitated in other basic industries. The Thatcherite industrial relations revolution was vigorously resisted by the trade unions in the UK, but the resurgence of the British economy is a stark reminder of the success of those changes. Prime Minister Blair, a third-way Labour leader, has not altered this industrial relations framework such that Great Britain has maintained its economic growth under a Labour government.

My recent overseas delegation to Sweden and Denmark supported the assessment that Sweden was a corporate state with high taxation, excessive social security and a high-ground industrial relations structure designed to suit big corporations and big business. Small business in Sweden is disadvantaged by the age-old concept of last on, first off. This discriminates against younger employees who could contribute to the profitability of a business. That nation should be advocating something similar to that which we are advocating in this House.

The two key objectives of the Work Choices bill are to create wealth and more jobs. To bring about these changes, a cooperative enterprise culture between management and its work force will make Australia a more competitive nation. Following the industrial relations changes of 1996 the heavens did not fall in. However, real wages have increased by 14.2 per cent over the 9½ years that these changes have been in force. In comparison, under the Labor government, real wages improved by 1.5 per cent over 13 years.

Wage and job growth cannot be delivered by bankrupt businesses. Medium to small businesses in the private sector must be competitive. No job security is possible, no matter what the unions demand, if a business is going bankrupt. Ansett is a perfect example—bankrupt, no jobs and lost entitlements. So much for unions’ ever-increasing demands for wage equality, fair pay and conditions when the boss has gone broke! Compare the case of Ansett with Alcoa where cooperation and an enterprise culture have kept the company going in a very competitive world of manufacturing aluminium.

Union membership is in decline. Union membership was 51 per cent of the work force in 1976. In 1990, it was 40.5 per cent; and in 2004, it was 22.7 per cent, of which only 17 per cent of the private sector were members of a union. Union members are voting with their feet. Even before the Keating government reforms, the old system of big union, big business and the third umpire did not meet the needs of workers, with 20 per cent of the union members leaving between the mid-1970s and the start of the 1990s. Even the workers knew the system was broke. Independent contractors and small business equal the number of employed persons in Australia.

The new legislation before the parliament is a 700-page document which replaces 3,000 pages of industrial relations legislation and regulation. This gives a lie to the opposition claim of complexity in the new legislation and the number of new pages contained in the new document. The new legislation replaces 4,000 awards, with almost 44,000 different rates of pay. This is a mind-boggling morass of regulations which is impossible for any employer to fully comprehend, even in their own industry. The act will have national coverage under the Corporations Act. Hopefully, the states will follow Victoria’s lead and join the Commonwealth in accepting this national approach to an Australia-wide problem of having industrial relations accepted in every state. Banks, companies and the Stock Exchange are national entities with employees in multiple states, so why not run a national industrial relations system?

This is a very historic time for me personally. It is a historic time for Australia. This is a time when we have introduced new legislation, when we have brought about some fundamental change to the industrial relations culture. This argument, as I have said, has been going on for 20 years. I am disappointed that those opposite are fighting it tooth and nail, because they know that the future of Australia depends upon the introduction of this act. I commend the Minister for Employment and Workplace Relations for his assiduous attention to the detail incorporated in this new document. I also commend the members on this side of the House on their activities in developing the conceptual arguments in the detail. I commend the Prime Minister and everyone associated with developing the argument that Australia needs a new industrial relations system related to flexibility, with unfair dismissals being reasonable, with flexibility related to workplace culture and with a change that will ensure that Australia remains competitive with the Asian nations.

No longer can we be part of an internal culture. We need to make sure that employees, employers and small businesses are cooperative, that they understand that profits provide job opportunities, that profits provide good conditions and that prosperity will be here for future generations of men and women. They will know that in this particular week in 2005 there was a dramatic change in the Australian workplace culture that was for their benefit for the next 50 years.