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Wednesday, 9 November 2005
Page: 46

Mr RUDD (12:16 PM) —The purpose of Workplace Relations Amendment (Work Choices) Bill 2005 is to radically change the nature of Australia’s industrial relations system—an industrial relations system that has served Australia well both in times of war and in times of peace; an industrial relations system that has served Australia well in times of economic expansion of the type we have seen this last 15 years as well as periods of economic downturn; and an industrial relations system that has also been an integral component of Australia’s social framework, a key part of our great Australian social contract and a key contributor to the prosperity we share as a nation. All this has been made possible because, for the last 100 years as a nation, we have believed that our industrial relations system, while never remaining static and always embracing reform, was both an economic agreement and at the same time a social contract.

With this bill all this is about to change, through the most extreme changes wrought in a century. I want to make three points about this bill that relate to my own portfolio responsibilities—a bill that is both bad for the economy and that undermines fairness. The first concerns the bill’s impact on productivity, international competitiveness and our trade performance. The second is the impact on fairness as measured by the agreed standards of the International Labour Organisation. The third, which also needs to be brought to the House’s attention, beyond the ILO, is the compatibility between this bill and Australia’s commitments under the Australia-US Free Trade Agreement in relation to the basic labour standards stipulated as part of that agreement.

Last week Australia recorded another trade deficit of $1.6 billion for September, the 44th consecutive monthly trade deficit, the deficit that dare not speak its name. Last year Australia recorded its largest trade deficit ever of $25.5 billion compared to a deficit of only $864 million in 1996. That contributed to Australia’s record current account deficit last year of $57 billion, blowing out Australia’s foreign debt to a record level of $430 billion and leaving Australia exposed to any sudden adverse change in sentiment by international financial markets. Despite government assurances, any recovery in Australia’s trade performance is turning out to be, at best, a very protracted affair. Average annual export growth under the Howard government between 1996 and 2004 was less than half that achieved by Labor between 1983 and 1996 right across the board—in commodities, agriculture, manufacturing and services.

The reasons for this appalling trade performance are many. Key factors that have been alluded to in numerous reports from the RBA, the IMF, the OECD and others include infrastructure constraints, skills shortages and a lack of government support and investment in education, R&D and innovation. The combination of these factors has led to our worst productivity growth figures in 19 years. We must reverse this slide. In the nineties Australia enjoyed the best run of productivity growth on record. Compared to the US, Australia rose from 79 per cent of US productivity rates in 1983 to 86 per cent by 1998. But, since 1998, we have gone into decline. We have now fallen back from 86 per cent to 81 per cent, losing most of the gains of the Labor years. The OECD has said that productivity measures consistently show that output per person hour in Australia is well below that in leading countries—in the US and also some in Europe. That is a fundamental cause of our export decline, and this parliament should be debating legislation that will reverse our productivity decline, not exacerbate it. In announcing his workplace relations reforms in May this year, the Prime Minister said:

... our future living standards will rely largely on the productivity of our workers and their workplaces ... Only through this—


... will the full potential for productivity gains in the Australian economy be realised.

In advancing these claims the government has not advanced any cogent body of evidence. In fact, it is a triumph of ideology over evidence. It is a triumph of prejudice over reason. Australia’s level of productivity could in fact diminish further if these new laws lead to significant disruption in the work force and/or a reduction in investment in skills and technology as employers seek to increase productivity by cutting wage costs rather than investing in new plant and equipment and upgrading the skills of their work forces. Any further reduction in productivity will exacerbate our appalling trade performance.

The Productivity Commission has done a considerable amount of research in this area. It attributes Australia’s productivity growth surge in the 1990s to the long-term policy reform strategy implemented by the Hawke and Keating governments that removed unnecessary barriers to competition and gave government business enterprises more autonomy and exposure to commercial disciplines. Structural factors, including the introduction and widespread take-up of new technology, especially information communications technology, and an increase in average education levels in Australia, also produced a burst in productivity growth. These are the policies—particularly greater investment in education, skills, training, R&D and innovation—that we must rediscover, reinvent and reinvest in if we are going to be able to generate the next productivity growth surge. Putting workers onto individual contracts is not a sure-fire route to productivity growth.

If we look across the Tasman and assess the New Zealand experience following the implementation of the Employment Contracts Act in 1991, which set the groundwork for many of the features contained in this bill, we see that the ECA abolished industrial awards, established a system to impose individual contracts and ended the official recognition of trade unions. The truth is that the changes instigated in the name of productivity under the ECA have not resulted in greater productivity growth. Dr David Peetz, of Griffith University, compared the experience of Australia and New Zealand in the 1990s. Between the late seventies and the early nineties, Australia and New Zealand experienced very similar rates of productivity growth but in 1991 Australia and New Zealand chose radically different workplace systems: Australia moved towards a system of collective enterprise agreements, while New Zealand shifted to individual contracts under the ECA. If the government claims are to be believed, New Zealand would have experienced much higher productivity growth. In fact, the reverse is the case—something the Treasurer refused to engage in when asked this precise question by the shadow Treasurer, the member for Lilley, in parliament yesterday.

Australia’s growth in labour productivity was far superior to New Zealand’s year after year because collective agreements encourage more harmonious workplaces while also enhancing greatly the industrial flexibility of individual firms. This approach to enterprise agreements was based on the reality that, beyond the base level protection provided by the relevant industry-wide awards, firms needed greater individual flexibility to operate in the global marketplace. But, while Australia’s productivity growth improved considerably, New Zealand’s productivity levels languished well behind not only Australia but also most developed countries during the 1990s. New Zealand’s productivity in the 1990s in fact fell below the level achieved in the 1980s; yet, at a time of failing productivity, the government wants to take Australia down that very same New Zealand path.

Dr Peetz also noted in his submission to a recent Senate inquiry into workplace agreements that the fall in Australia’s productivity performance in recent years coincides with the implementation of the government’s Workplace Relations Act. The Workplace Relations Act has been in effect for the full period of the current productivity cycle, which started in 1999-2000. Prior to that time, labour productivity was growing at around 3.2 per cent, but it has since dropped to just 2.3 per cent per annum. Dr Peetz said:

... this is even below the rate of labour productivity growth that applied during the traditional award period. It is despite the fact that average union density, at 53 per cent, was over twice the rate of union density that has applied in the current cycle.

Union density in the current cycle is 24 per cent. Australia’s employment protection legislation is already one of the least restrictive in the OECD. According to the OECD’s Employment outlook report, only the US, Canada, the UK, Ireland and New Zealand had less strict employment protection legislation than Australia. Despite this, the Prime Minister argues that Australia’s current laws impose unnecessary costs on business—small, medium and large alike. Where is the evidence to support the Prime Minister’s argument that our current IR laws impose burdensome costs on Australian business, small, medium or large? None has been advanced. Where is the evidence that these new laws will shift Australia onto the next productivity growth surge? None has been advanced. In their latest long-term economic forecast for Australia, BIS Shrapnel definitively state:

As it currently stands, the proposed changes will do little to improve labour productivity.

BIS Shrapnel pointed out that it was the Keating government’s industrial relations reforms in the early- to mid-1990s that gave the major boost to Australia’s productivity over the second half of the 1990s. In a stark warning that this parliament should heed, particularly when our economy is burdened by record levels of debt and significant external imbalances, BIS Shrapnel question the whole basis for these reforms by also noting:

It is probably a bad time macro-economically to buy a fight on industrial relations.

The International Labour Organisation, of which Australia was a founding member in 1919, is the global tripartite agency responsible for setting and monitoring basic minimum workplace standards known as international labour standards, or ILS. As a member of the ILO, Australia voluntarily agreed to and is bound to implement international labour standards in Australian labour law, including the application of international jurisprudence protecting the right to strike from legal sanctions. In June this year, the government was successful in having Australia elected to the governing body of the ILO to represent the Asia-Pacific region. At the time of Australia’s election to the ILO, Minister Andrews claimed:

Australia has much to offer ILO members, and we look forward to greater engagement with the ILO both as a governing body member and representative of our closest neighbours.

The minister should be aware that being elected to the ILO governing body brings with it additional responsibilities, particularly the responsibility to lead by example and to show substantive commitment to the principles of the ILO. To highlight how out of step the government is with basic international standards, let me simply raise for the benefit of the House a number of the key ILO conventions. Article 1 of Convention 98, the Right to Organise and Collective Bargaining Convention, states:

Workers shall enjoy adequate protection against acts of anti-union discrimination in respect of their employment.

Such protection shall apply more particularly in respect of acts calculated to—

(a) make the employment of a worker subject to the condition that he shall not join a union or shall relinquish trade union membership;

(b) cause the dismissal of or otherwise prejudice a worker by reason of union membership or because of participation in union activities outside working hours or, with the consent of the employer, within working hours.

Article 4 says:

Measures appropriate to national conditions shall be taken, where necessary, to encourage and promote the full development and utilisation of machinery for voluntary negotiation between employers or employers’ organisations and workers’ organisations, with a view to the regulation of terms and conditions of employment by means of collective agreements.

Furthermore, article 11 of the Freedom of Association and Protection of the Right to Organise Convention states:

Each Member of the International Labour Organisation for which this Convention is in force undertakes to take all necessary and appropriate measures to ensure that workers and employers may exercise freely the right to organise.

Right now in Geneva the ILO Committee on Freedom of Association is considering a complaint brought by the ACTU against the government’s current workplace laws and whether they breach the freedom of association convention. That complaint is being prosecuted in relation to the building construction industry legislation of 2003. This bill further undermines workers’ freedoms to voluntarily associate in the workplace. This new legislation again calls into question the government’s observance of the most fundamental of ILO standards of freedom of association and the rights of workers to collectively bargain.

‘Legislation more antagonistic to workers’ interests than operates in either the US and Britain’ is how Dr Peetz describes it. The US passed the National Labor Relations Act in 1935. That act created a right to collective bargaining and requires employers to bargain in good faith. Employees are covered by collective agreements that bind all if more than half agree. Under the British Employment Relations Act, businesses are required to recognise unions and negotiate with them if they cover more than half of the work force. Where is the balance in the Australian legislation between employers, employees and their representatives? There is no such provision available at present within the bill which is consistent with Australia’s obligations to comply with the ILO standards of freedom of association and workers’ rights to collective bargaining.

The government’s new workplace laws will effectively deny workers the right to organise, the right to strike and the right to collectively bargain. Such laws breach fundamentally internationally accepted standards for employee rights and represent a further chapter in the government’s general contempt for the rules and principles of the multilateral order of which we are part.

It should also be brought to the attention of the House that on 1 January this year the Australia-US Free Trade Agreement came into force. Debate about the USFTA centred in large part on Labor’s critically important amendments to protect the Pharmaceutical Benefits Scheme and to preserve Australian culture and content on television. In signing up to the FTA, the government also made a commitment to meeting its obligations relating to international labour standards. Under chapter 18 of the USFTA:

The Parties reaffirm their obligations as members of the International Labour Organization (ILO) and their commitments under the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up (1998) (ILO Declaration).

It continues:

Each Party shall strive to ensure that such labour principles and the internationally recognised labour principles and rights set forth in Article 18.7 are recognised and protected by its law.

What are those rights set forth in article 18.7?

1. internationally recognised labour principles and rights means:

(a) the right of association;

(b) the right to organize and bargain collectively ...

Not only does the government have internationally binding commitments to implement ILO standards through Australia’s membership of the ILO, particularly as we are now a member of the ILO governing body, but these commitments are also reinforced under our obligations under the USFTA.

The Prime Minister, in short, is seeking to Americanise Australia’s industrial relations system—low wages and low skills that will inevitably result in lower productivity, not higher productivity as the government misleadingly claims. It is a recipe for an economy built on the shoulders of the working poor. When the economy turns down, as it inevitably will at some point, the harshness of these measures will be visited upon those who are the most vulnerable in this society. Honourable members know that, if they are in honest dialogue with their consciences. In such a situation, the diminished bargaining power of workers and significantly greater power of employers, along with the exclusion of unions from the workplace, will lead to uncompensated job cuts, fierce competition between employees to stay in work on significantly reduced wages and conditions, and exploitation of the most vulnerable. This is the path that the government is deliberately taking us down.

The intent of this bill is best summed up by Saul Eslake, the Chief Economist of the ANZ Bank, who recently wrote:

In the end, attitudes to the government’s proposed reforms are probably informed more by politics than by economics ...

That is Saul Eslake, not the Labor Party. Precisely—a triumph of crass politics over sound economics; a triumph of crass politics over the demand for a just society. We need to ask why it is that these laws have been drawn into virtual universal condemnation by the churches—Catholic, Anglican, Uniting Church. Minister Andrews, sitting on the front bench, shakes his head. Are you in dialogue with your papal encyclicals on this question? Are you in dialogue with Cardinal Pell on this question? Are you in dialogue with the Catholic episcopate on this question? I submit, Minister, you are not. The Evangelical churches, the Salvation Army, even Family First, which has close links with Australia’s Pentecostal churches, condemn it. Those opposite know this to be true.

The condemnation of these laws by the churches is even more universal than the churches’ condemnation of the Iraq war. It is a rare thing in our national life when the churches raise their voices in virtual unison. The government’s response has been to attack the churches—an attack appallingly led by the member for Higgins and the member for Menzies. Wisdom suggests that when the churches speak in unison we in the legislature should pause, we should listen and we should reflect rather than unleash the dogs of war as these members have done. If these laws remain in place in Australia, Australian families will look back to these days in November 2005 as the time when parliament legislated fairness out of the Australian way of life. These laws are not the laws of Deakinite liberals; these are the laws of Thatcherite conservatives. These are laws which we intend to fight with every fibre of our political being and with the single objective of defeating at the ballot box those who have given this legislation sordid birth. I oppose the bill.