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Monday, 7 November 2005
Page: 120


Mr TURNBULL (8:25 PM) —The member for Throsby spoke a moment ago about flexibility and women in the workplace, and it reminded me of a mutual friend of ours who shall remain nameless for reasons that will become obvious. He was a trade union official at the time, working with a large union whose members were mostly women. I remember saying to him—because I was very interested in the issues of women in the workplace, work-family balance and so forth, as the member for Throsby rightly observed—‘How important is it to your members that there should be paid maternity leave?’ Paid maternity leave was a big issue at the time. He said, ‘It is of very secondary importance.’ He said that it surprised him that it was but that was the fact. He said that, overwhelmingly, flexibility in the workplace was the major issue—and that, really, was a message that underlined what the Workplace Relations Amendment (Work Choices) Bill 2005 is all about. It is about nothing more complex than freedom.

On this side of the House we believe in freedom. We believe that individuals are best able to chart the destiny of their own lives by themselves and that the most efficient way for people to resolve their employment relations is by direct dealings between the employer and the employee. We believe in freedom of association. We believe in the right to join a trade union and to be represented by a trade union, but we also believe in the right not to join a trade union—and both the right to join and the right not to join are protected in this legislation. The right to be represented by a trade union is protected in this legislation, as is the right to choose not to be. What the member for Throsby was objecting to was the prohibited content provisions in the legislation, which will be covered in the regulations. What she is concerned about—and understandably concerned, from the perspective of her background as a trade union leader—is that unions will have to work harder to win the support of the members they seek to represent. They will no longer be imposed upon workers and be, in effect, presented as the compulsory representative. We believe—because we believe in freedom—that that is a fairer, more flexible and more efficient way to regulate the relations between workers, employers and trade unions, the would-be representatives of employees, if they earn their trust. We can see, of course, how much trust Australian workers have in trade unions. The trade union share of Australian employees has never been lower. I read recently that it was at 17 per cent. How low can it go? It will continue to go lower if they do not deliver value. What this legislation will do is to throw down the gauntlet and say to the unions, ‘If you can deliver some value for employees and if you can represent them well, they will seek your services.’

The Labor Party say that this work choices bill is ideological. They forget that they are the party of ideology, not us. We Liberals are practical and pragmatic conservatives who know that experience and commonsense are always better guides to policy than ideology, let alone political theory. What has that experience been? Far from creating a collapse in living standards, as predicted by Labor, the changes in workplace relations effected by the Howard government over the last 9½ years have been accompanied by unprecedented growth in prosperity. Average wages have grown in real terms by nearly 15 per cent in the Howard years compared to less than two per cent in the Hawke and Keating years. With 1.7 million new jobs having been created, unemployment is nudging a 30-year low. On top of all of that, the Howard government has almost completely paid off Labor’s debt.

We know, as practical men and women, that it is absurd for Australia to have its employment law contained in 130 different pieces of legislation and 4,000 awards spread over six different industrial relations systems. That perception is not unique to our side. That is why Labor leaders over many years have supported one national system for industrial relations. It is why the International Monetary Fund, only a few months ago, wrote:

Further reforms of industrial relations are needed to expand labour demand and facilitate productivity gains.

In other words, they are needed to continue and sustain the prosperity that the Howard years have delivered. The IMF cited, as two examples of a defective industrial relations system, award complexity—addressed directly in this legislation—and the no-disadvantage clause—that hopelessly subjective and unworkable rule that puts employers and employees in the position of trying to compare, subjectively, apples with oranges. It stands as an enormous barrier to greater direct bargaining in workplaces and—as it was intended—to Australian workplace agreements.

We know, as practical people, that those nations with the most regulated workplaces have the highest levels of unemployment. Germany—a great example—has nearly 12 per cent and France has more than 10 per cent unemployment. Their laws, designed to protect employment, actually promote unemployment. Only recently I was in Berlin and met with a leading German politician who told me of the need to deregulate the German workplace relations system. He said, ‘We have lost, over the last few years, a million jobs to neighbouring countries in the EU with more flexible, efficient labour markets. They have just walked across the border.’ He was despairing at the inability of their electoral system to deliver a clear result so that they could do something about it.

We know that we have the highest ratio of minimum wage to average wage in the OECD. And we know that while that is seen as operating as a safety net—and of course a minimum wage is a safety net—the higher you set it the more of a barrier it becomes to new employment. That is why the new Fair Pay Commission will be required under this act, when it is passed, not only to provide a safety net for the low-paid—which is what a minimum wage should do—but also to have regard to the capacity for the unemployed and low-paid to obtain and remain in employment. This is the key weakness of Labor. If you like, it is its blind spot. Rooted in the trade union movement—and the Labor Party is, after all, the political wing of the trade union movement—it is focused on entrenching the position of people who have a job, with little or no interest in promoting the prospects of those who are unemployed to get a job. That is why Tony Blair’s 1997 homily to the British trade unions has been so often quoted in this House, and with very good cause. ‘Fairness in the workplace’, he said, ‘starts with a chance of a job.’

Labor knows that the old centralised system has been failing for years. Paul Keating said in 1993 that the model of industrial relations he was working towards was a model:

... which places primary emphasis on bargaining at the workplace level within the framework of minimum standards.

He went on:

Over time the safety net would become simpler. We would have fewer awards, with fewer clauses.

And then he added, in what reads like a passage from the second reading speech of the Minister for Employment and Workplace Relations, Mr Andrews:

We need to find a way of extending the coverage of agreements from being add-ons to awards ... to being full substitutes for awards.

Paul Keating said that. That way has been found—12 years later. Awards remain simpler and with fewer conditions, as Mr Keating prefigured. The safety net remains—also simpler—and set by the Fair Pay Commission. The removal of the subjective and unworkable no disadvantage test means that agreements can readily substitute for awards where workers and employers agree to it.

Reading through the speeches of the opposition members in this debate, historians of the future will be convinced that the issue was not industrial relations but the regulation of government advertising. It is difficult, paging through the Hansard, to find anything of substance beyond rhetoric and a morbid fascination with advertising. There have been a few substantive criticisms but they have invariably been not only misguided but utterly false. Let us consider the three biggest whoppers of last week. First up was the claim that an employee was prevented by section 83BS to disclose information to a friend or a family member about a workplace agreement. The section was well titled in that regard because the prohibition applies only to staff of the Employment Advocate’s office. Second—and this one got an especially good run from the Leader of the Opposition and the member for Perth—was the claim that section 104 empowered an employer to force an employee to switch to an AWA. That is wrong again. Section 170CK of the act is unchanged and it makes it unlawful to sack an employee for not signing an AWA. (Quorum formed)

The new provisions will enable employers to make it a condition, for new hires only, that they sign a workplace agreement. But that is the law right now. Best of all, the third whopper of last week was Labor’s concerned advocacy on behalf of double dippers. Section 170CEE provides that where an employee is terminated for operational reasons—in other words, made redundant—and therefore paid redundancy pay, he or she should not be able to also make a claim for unfair dismissal. Labor objects. What an outrage!

The bill will also remove the application of the unfair dismissal laws to businesses with 100 employees or fewer. It will remain unlawful for any business, no matter what its size is, to sack an employee on a whole range of grounds, including having a particular political opinion, joining a union, family responsibilities, gender, age and so forth. The notion that employers will be able to sack employees at will in smaller businesses is nonsense, and that has been well established here.

Labor continues to defend the unfair dismissal laws. Whether or not those laws were well intended at the time they were introduced, experience has shown that they prevent and chill employment. The simple economic truth is that if you wish to promote economic activity, if you wish to promote transactions—in this case, employment transactions—you should reduce the cost of entering into those transactions. You have to free the market to do its work and let the cost of setting the clearing price—be it for labour, shares, home units or loaves of bread—be as low as possible, and by that I mean with as few transaction costs as possible. That is why, when years ago we wanted to free up the stock market, we removed stamp duty to reduce the transaction costs.

The simple reality is that the unfair dismissal laws are like rent controls—another measure beloved by socialist administrations in years gone by. Rent controls typically set rents at levels below their market level. When that is done, inevitably, demand exceeds supply. However, because the price is fixed, there is insufficient incentive for landlords to increase supply by building new properties or refurbishing old ones. Rent controls invariably restrain the supply of housing and ultimately work against the interests of tenants. In exactly the same fashion, unfair dismissal laws restrain or inhibit the supply of employment opportunities.

The unfair dismissal law has not preserved a single job. Nobody has kept their job because of it—not one person. All it has done is to increase, substantially, the cost of terminating an employee’s engagement. The impact of the unfair dismissal law is not measured by the number of unfair dismissal cases. The real impact of the law is that employers have to make substantially larger termination payments in order to avoid the risk of a claim. Just as excessively high minimum wages can price the less skilled out of the labour market, and therefore have the potential to work against the people they are designed to protect, so too do unfair dismissal laws work against the businesses and workers who most deserve support and encouragement. It is the least able, the less skilled and the least employable who are prejudiced most by the industrial relations system so beloved of the Labor Party.

Every decision to employ somebody is a risk. Not every employee works out. There is no fault or blame in that: it is life; it is life’s experience. Plainly, the more likely an employee is to be terminated, the ‘riskier’ the decision to hire that employee; the more marginal the decision is to take somebody on, the more significant is the added cost of the potential termination of that employee in the mind of the employer. This perceived riskiness may be a consequence of the employee being an uncertain match with the job. He or she may be taking on a new role; they may be younger than is normal in the position—or they might be older or less qualified. They may have been a good salesman for one product in one business; will they be able to sell a different one? The risk may be inherent in the position itself. A business which wants to expand will normally hire staff somewhat in advance of sales. I have done that many times myself. But how far in advance? If I hire an extra salesman, solicitor, software designer or assistant chef, will the revenues of my business grow to pay their wages? The reality is that nobody knows. We live in an uncertain world—and no-one more so than the entrepreneurs and the small business men and women of Australia who our side of politics believes are the mainstay of the Australian economy and the people whose enterprise this parliament should be supporting. These people take risks every day, and one of the risks they take is hiring others.

The unfair dismissal laws have imposed an additional risk on hiring, an additional cost of hiring. Together with many other aspects of Labor’s highly regulated industrial world that we are now seeking to free up with this Work Choices bill, they have worked against employees, they have worked against the unemployed and they have worked against the least skilled. They have worked against the very people who, if you took the rhetoric of Labor seriously, would be the people they should be seeking to protect but who in fact are only protected today by the Liberal Party and its coalition partners on this side of the House.