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Wednesday, 9 November 2005
Page: 126

Mr KERR (5:56 PM) —The saddest thing is that I fear the honourable member for Makin, who spoke immediately preceding me, does not realise the Orwellian nature of her remark that this government is the best friend that the workers have ever had. I am charitable enough to believe that she does not understand that of which she speaks, rather than to say that she is part of the cynicism surrounding the introduction of the Workplace Relations Amendment (Work Choices) Bill 2005, a bill with language such as the ‘Fair Pay Commission’, which is designed to reduce the capacity to establish minimum base rates to sustain the Australian work force—particularly given that, as a commencing benefit of these new laws, the next national wage case to be determined will be delayed for at least six months so that, until then, we effectively have a wage freeze for 1.7 million workers.

This evening, however, I want to speak in relation to a number of matters that have not yet been given substantial attention. I want to look at the substantial change that the reliance on the corporations power, the destruction of state industrial tribunals and the rendering ineffective of state industrial laws will bring to a system that has hitherto operated within a robust federation. I want to draw attention to those matters because they have not only a number of direct consequences but also a number of long-term consequences, which have not been raised in debate, for this nation and for the political parties that contest elections.

By historical retreat, let us go back to the time when our forebears constructed the Australian Constitution. When the then colonies, now states, sent delegates to discuss forming an Australian federation, they intended to form a national government with certain specified powers and for the residue to remain with the states. For much of Australia’s constitutional history, the Liberal Party has been a strong defender of the federal compact and has resisted the growing centralisation of the authority of national government. But there is no doubt that that historical legacy has been entirely overturned under the prime ministership of John Howard. This is a centralising government that, by comparison, makes the Whitlam legacy look pale.

One of the key economic distributors of power across the Australian political federation was the reservation to the states of the control and management of the industrial relations affairs of each jurisdiction. If you go back to the pre-Federation debates, they were centred around one of two propositions. One proposition was that the national government should have no capacity whatsoever to regulate working conditions and wages or to settle industrial disputes, because, the argument was put, those matters were exclusively for the states to determine. Whilst certain industrial disputes had consequences across borders, the manifestation of each of those consequences was unique to each state and, therefore, nothing was to be taken away from that fundamental central right of a state to be the master of its own destiny concerning the regulation and setting of wages and the determining of industrial conditions in those jurisdictions.

The other argument that was put forward by delegates was that there had to be certain kinds of limited powers given to a national government, because industrial disputes pass across state boundaries. The compromise position that was reached was that the delegates crafted an arrangement whereby the national parliament was given a power not to set wages or to determine industrial conditions but to create a framework for the conciliation and arbitration of industrial disputes extending beyond any one state. All matters that were contained within a particular state, other than where no dispute existed, would remain exclusively for that state, but, where an industrial dispute extended across the borders of any particular state, there would be a capacity not to determine national pay rates or anything of that kind but to settle that dispute.

Over the decades that followed, the arbitration system grew out of that, which ultimately made the Conciliation and Arbitration Commission the leading wage setter and the norm setter for Australian living standards. The last Prime Minister who seriously sought to remove those kinds of industrial safeguards, which we are about to remove, was Lord Bruce, then Prime Minister Bruce, who lost his seat. He is the only Australian Prime Minister to have ever contested an election from government and not only had his government defeated but also lost his seat.

One of the central changes in this legislation is that, for the first time, the foundational element for the construction of industrial laws shifts from the power to make laws with respect to conciliation and arbitration of industrial disputes extending beyond the border of any one state to reliance on what is said to be sufficient to sustain these laws—the corporation power. I am not going to go into the constitutional arguments that can be addressed as to whether or not that power is sufficient to sustain these laws; it is sufficient to say that there are very respectable arguments that can be advanced that suggest it is not. No doubt, those will be issues that will be determined in the High Court of Australia, and I look forward to playing my part in those matters.

Constitutional validity aside, the fundamental philosophical difference is that, if the power extends, as enacted in this bill, to set up the instruments and machinery for the parliament to confer on bodies such as the Fair Pay Commission a power to set wages, it would also, by the same necessary logic, apply to the capacity of the parliament to directly determine those wages, by legislative instrument.

I say to organisations like the Business Council of Australia and many others, and to the Prime Minister, in remembrance of Lord Bruce: be careful what you wish for; you might just get it. If the legislation is sustained, the nature of Australian politics makes it inevitable that, at some stage, a government better disposed to the industrial interests of Australian workers will sit on the government side of this parliament and will have the capacity to directly legislate to establish national wage rates, without the need for the kind of machinery that is being set up. It would even extend to a law that would permit a minister by regulation to prescribe corporation by corporation, or sector by sector, wages that would apply, irrespective of considerations of the impact those wages might have on the cost structure of a particular business. It would also sustain the capacity to control prices. If you can control the cost of labour input, you cannot logically contain that power. If the corporation power extends to the setting of prices for inputs, it also extends to the setting of prices for outputs—the prices by which corporations place their commodities and services into the market.

The Labor government that will be formed in the future will have the capacity to directly establish minimum benchmark standards, without all this rigmarole about fair pay commissions, where the language is being rorted to such a degree, and also to establish price control. Be careful what you wish for; you might just get it.

I want to pause on this matter, because I want to address some of the other consequences that the Business Council of Australia might not have contemplated in its enthusiasm for this legislation. One of those consequences is that it will now have to deal with a mountain of red tape of a degree to which the normal system of collective setting of wages has made employers immune. This bill does two things: (1) it privileges the individual agreement over the collective agreement, and, (2) it privileges the collective agreement over the award.

In the past, there have been certain benchmarks that have been normatively established. It is true that this bill will substantially reduce the capacity of people to take traditional industrial action, but it will not diminish the capacity of people to be extremely dissatisfied with their workplace conditions if those conditions distinctly differ in many different degrees from those who are working alongside them. Nor will it create a circumstance whereby people will be immune from the predatory action not so much of unions in this instance but of legal firms.

Why do I say that? Who advantages themselves most when new laws come forward? How was this bill actually drafted? Who drafted it? Was it the professional legal advisers of the government employed in government services? No. It was drafted by a large number of private law firms. Surprisingly, some components of this legislation do appear to have a modest degree of self-interest!

Consider, for example, the way in which the bill provides for the capacity of persons to negotiate collective agreements. If you are a trade union and you wish to negotiate a collective agreement, you can put yourself forward as the bargaining agent of the workers who belong to your union in the work force. You have to say: ‘I have five members currently in the union. I can negotiate collectively for those. I can put that proposal forward to the employer.’ Now consider the circumstance of another form of bargaining agent, a lawyer that advertises their capacity to negotiate a better deal for you. ‘I can do a better deal for you,’ says solicitor A. ‘I represent a large firm. One of you needs to appoint me as your bargaining agent.’

Mr Hockey interjecting

The DEPUTY SPEAKER (Hon. AM Somlyay)—Order! The minister will cease interjecting.

Mr KERR —Having been appointed as your bargaining agent, the bargaining agent who is not a union can make a claim in relation to every employee. You do not need to represent them; you do not need an authorisation from each of them.

Mr Hockey —The Labor states referred the power to the Commonwealth. You know that.

The DEPUTY SPEAKER —Order! There is too much noise on my right.

Mr KERR —You can put yourself forward and make that claim. Trade unions cannot do that; legal firms can. Obviously this represents a significant market opportunity for an entrepreneurial law firm—a law firm with a bit of industrial experience. What kind of law firm might that be? I suspect it might be one or two of the law firms that actually drafted this legislation. I suspect that some of the cheerful barracking that is coming out of the businesses that have signed up for this sort of stuff may be a little muted when they confront the kind of legal complexities that are likely to arise in relation to the way in which this legislation is worked through and the new kinds of bargaining agents who take advantage of some of the opportunities that open up.

Let me go back to my starting point about federalism. We started out with a rather historical introduction about the original intent of the framers of our Constitution to distribute powers between a central government with substantial powers—but limited powers—and states which still had substantial legal and economic entitlements to their own future. This bill changes that very substantially.

New clause 9 of this bill—proposed new sections 7C(1)(a) and 7D(1)—overrides all state industrial legislation and all state awards and agreements contingent on that in relation to any person who is employed not only by the Commonwealth but by any corporation. States are deliberately intended to retain a residual jurisdiction that applies only to that small group of unincorporated associations—partnerships and the like—and state public services. This will not be a happy position to be in, but it will not be a happy position to be in for the small businesses that are in that sector either. It will not be a happy situation.

When these provisions come into effect we will have the situation where a person who has been under state agreements will have a transitional arrangement that comes into place under clause 360, schedule 15, of the bill. The awards and conditions or agreements that they had previously continue to operate for a transitional period of up to a maximum of three years, overridden instantly if another agreement comes into effect—one which sells off the benefits they have received under state awards.

But section 15 has a little stinger in it. Section 15 of schedule 15 has a little stinger that says that the minister may, by regulation, ban what is called prohibited content. We do not know what that prohibited content is, but apparently it reserves an unregulated ambit of discretion to the minister to say that certain entitlements that people currently have under state laws will not be carried forward into the future.

If we knew what the constraints around prohibited content were, we might be more benignly relaxed about this. But no, we are asked to pass a pig in a poke, to push it through. Suddenly, we will discover that all those employees who were hitherto under state awards and protected under those jurisdictions or who had state industrial agreements suddenly are without those protections in relation to whatever elements, if these provisions are lawful and constitutional, are removed by the minister under these regulations. Then we discover that not only is that the case but, while people are under these provisions, all industrial action is prohibited.

Another interesting provision that has not been discussed much is proposed section 111. Proposed section 111 of the principal act—as it will be if this bill is passed and comes into effect—is on page 270 of the legislation. It intrudes in another way in state jurisdictions. It says that even if you are still under state law—if you are an employee or employer of an unincorporated association and not subject to these laws—or you are a public employee and you are likewise still under state awards, then if you undertake any industrial action, even if it is lawful, even if it is authorised, even if it is permitted under the terms of those agreements—guess what? Big Brother can step in. The Australian Industrial Relations Commission can come in. If your industrial action represents a threat—not a threat to the community but a threat to any constitutional corporation—guess what? A constitutional corporation is, yes, a trading or financial corporation formed within the limits of the Commonwealth. That is any company.

So any industrial dispute that emerges in a state—lawful, under those provisions—will now become subject to federalised law. That has not been discussed. It is a substantial cutting back on what has hitherto been a fundamental capacity of state jurisdictions to establish the boundaries of what is permissible within those jurisdictions. So we are confronted with a very interesting political point in time: this government abandoning federalism and transferring its commitment to centralism—that is, if this legislation survives this constitutional attack, it gives to the parliament the power to directly prescribe prices and incomes and, in the course of doing that, sabotage the industrial rights of Australian citizens both at a national level and—particularly unremarked on in the debate so far—directly at a state level. This is dreadful legislation. But, remember, Prime Minister, reflecting on the fate of Lord Bruce: be careful what you wish for; you might just get it. (Time expired)