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Wednesday, 20 February 2008
Page: 864


Ms JULIE BISHOP (Deputy Leader of the Opposition) (11:26 AM) —The opposition will not seek to oppose the passage of the Workplace Relations Amendment (Transition to Forward with Fairness) Bill 2008. However, we will move an amendment that we believe will strike the right balance between flexibility and fairness in workplace relations. The proposed amendment will seek to enhance the new individual employment contract that is being introduced by the government in this legislation to ensure that there is available in workplace bargaining an option for employees and employers for a long-term individual contract. I am pleased that the Rudd government acknowledges the need for individual agreements by allowing existing agreements to continue for up to five years and through the introduction of a new individual statutory agreement subject to a new no disadvantage test.

I first received a copy of this legislation last week. My consultations over the past week confirm that Labor’s new individual contract should be a long-term feature of Australia’s workplace relations system. Therefore, my amendment will seek to delete the global expiry date of 31 December 2009 and give these new Labor individual employment agreements an expiry date of five years from the date of approval. We have maintained the eligibility criteria for Labor’s individual employment agreements for employers who had offered individual contracts prior to 31 December 2007. However, we acknowledge that this could have a significant impact on new businesses or employers who wish to avail themselves of the option of an individual bargaining arrangement. The Senate has in fact referred this bill to a committee, and this is the kind of issue that the Senate inquiry should consider. Labor’s industrial relations policy has not been accompanied by any economic analysis or modelling or any impact statement, and hence the necessity for the Senate to refer this bill to a committee.

The Minister for Education and Minister for Employment and Workplace Relations, who is also the Minister for Social Inclusion, has spent more than a year demonising individual agreements. The minister has also demonised employers who use these agreements and has attacked the integrity of individual employers and industry sectors. After months of these relentless attacks on employers, the minister then introduces a new individual workplace agreement. The minister will argue that this agreement is only transitional but that it will be fair for workers for the next two years. Then, for some reason, after two years, it will no longer be fair. Surely this is impossible if these agreements are to be subject to Labor’s new no disadvantage test. After all, what could be fairer in the eyes of Labor than a new individual contract designed and introduced by Labor and subject to a new no disadvantage test designed and introduced by Labor?

I can assure the minister that her attacks on employers and her hypocrisy on the matter of individual agreements have not gone unnoticed in the business community. But the minister was strangely quiet in question time this week when I raised the fact that union officials have been negotiating collective agreements on behalf of their employees which trade away the same terms and conditions that individual agreements do. It seems that her outrage is directed only at employers and not at union officials who have achieved precisely the same outcomes through union negotiated collective agreements.

At no time during her attack on employers has the minister acknowledged that the annualised salaries in both individual and collective agreements more than compensate for the so-called trading away of award conditions. A feature of the individual agreements in the Western Australian mining sector, for example, has been substantial salary increases based on productivity gains as a trade-off for award conditions that either are irrelevant or seriously hamper productivity.

Of course, we all know that if the minister had her way she would remove all flexibility in workplace relations. Last year, when employers raised their concerns over her first attempt at an industrial relations policy, which had been drafted and designed by the ACTU, the minister threatened them with injury if they dared to voice their concerns publicly. This unseemly outburst was tempered when the now Prime Minister was forced to intervene and overrule the minister at that time, and she was dragged, kicking and screaming, to a more reasonable position.

Workplace flexibility is vital to maintaining our strong economy. Opportunities for individual bargaining and both union and non-union collective bargaining have been a feature of Australia’s workplace relations system for over a decade. The Keating reforms of 1993 introduced the concept of enterprise or workplace bargaining, and this received bipartisan support. These reforms allowed collective agreements to override restrictive award conditions that held back productivity. However, the unions remained central to most negotiations. The 1996 reforms of the Howard government extended the workplace bargaining system into the non-union sector and provided the choice of individual agreements known as Australian workplace agreements. Workplace bargaining has meant that wages and employment conditions are negotiated in businesses rather than being determined by third parties with little knowledge of the particular needs of that business—bodies such as industrial tribunals, unions, employer bodies or government. Workplace bargaining has avoided the strangulation of the one-size-fits-all award system imposed by a tribunal.

The circumstances of every business, of every employer and of every employee are different. Workplace agreements ensure that wages and conditions reflect the circumstances of a business and its employees which are more likely to make the business more competitive and be relevant to people’s changing needs. Workplace bargaining aimed at improving productivity has become the basis upon which improvements in wages and conditions have been achieved. Without improving productivity, increases in wages and improvements in employment conditions cannot be sustained. Improved living standards cannot be achieved.

The evidence is there for all to see. Under the Hawke-Keating Labor governments from 1983 to 1996, real wages decreased by 1.8 per cent, homeowners were hit with 17 per cent interest rates and, by 1993, almost one million Australians were unemployed. In contrast, the coalition government reforms since 1996 delivered increases in real wages of 20 per cent, while interest rates and inflation remained at historically low levels.

The OECD said in 2006 that Australia’s ‘recent macroeconomic performance continues to be impressive’ and that, ‘Living standards have steadily improved since the beginning of the 1990s and now surpass all G7 countries except the United States.’ The Australian economy has been a standout. It may come as a surprise to the minister that workplace flexibility has been critical in underpinning that economic performance. It was critical in allowing the economy to weather the economic stocks of the Asian financial crisis; it was critical in weathering the tech bubble burst and other economic challenges.

The management of our trillion-dollar economy was handed to the new government at the last election. I must say that watching the new Treasurer struggle every day does not instil in the opposition any confidence in his ability, and I am sure that it does not instil in the Australian public any confidence in his ability to manage a trillion-dollar economy. The Treasurer is clearly out of his depth, and it is terrifying to think of the consequences should a genuine economic crisis develop. The nation cannot afford to have a Treasurer who panics when confronted with detail and who is incapable of answering the simplest questions about his new responsibilities. He has yet to answer any question on his understanding of the potential impact of the government’s industrial relations reforms; hence the need for a Senate inquiry to give the Australian people the answers that the Treasurer is incapable of providing.

The opposition believe that the amendment we propose to Labor’s new individual employment contract recognises the need for there to be a range of workplace bargaining options, from collective agreements between an employer and a group of employees to agreements between an employer and individual employees, depending upon what best suits them. The significant workplace reforms of the Howard government over the past decade or more have aimed to increase the flexibility of the labour market, which has in turn generated higher productivity, higher real wages, increased labour force participation and lower unemployment. The most recent national unemployment figure of 4.1 per cent would have only been a dream under the previous Labor government. I note that it is substantially lower at 3.3 per cent in Western Australia, and that can be attributed to the strong economic growth over the past decade and to the reform of the labour market.

It is no coincidence that the period of labour market reform coincides with the growth of the economy and the creation of hundreds of thousands of jobs. Labor would have you believe that the strong economy has come about through good luck. The mining boom fell into the nation’s lap like manna from heaven. Labor would have you believe that workplace reforms did not play a role. The truth is that the mining boom would have passed Australia by if we had not become a reliable supplier to world markets. If Australia had continued to be a country beset by industrial disputation, we would not have been considered a reliable trading partner for the emerging economies, including China, or for our more traditional partners, including Japan and Korea.

Last weekend, I spoke to a number of senior mining industry executives. One told of his experience in the mining sector over 20 years. In the early 1990s, he left Australia to work overseas. At that time, the sector was suffering constant industrial disputation. There were strikes over the most insignificant of issues. In fact, in his sector there had been a strike over the flavour of ice-cream at the site kiosk. In his particular resource sector at the time, South American mining companies were the preferred suppliers as they were more reliable than Australian ones. South American mining companies were more reliable than Australian mining companies in their ability to deliver on time. This executive returned to Australia about two years ago. He described the resources sector of today as a different planet from that of the early 1990s. He said he was stunned at the change of culture, the gains in productivity and the cooperation between management and staff to ensure the smooth and efficient running of this particular operation. He pointed out that Australia had overtaken South America as the preferred supplier, but that we remain in a highly competitive environment and cannot afford any hint of a return to the bad old days of industrial disruption.

In 1992, 1.6 million working days were lost to strikes. This has fallen dramatically to now be at the lowest level in more than 100 years. There are workplaces that have not experienced a strike in a decade. We are in a period of industrial harmony that is unprecedented, and it is no coincidence that we are also in a period of unprecedented economic growth. Why have we entered a period of industrial harmony, which has delivered real wage increases? It is because there is no compulsion for employers and employees to have unwanted third parties interfering in the bargaining process. If employees wish to have a third party negotiate on their behalf, that is their right and they are able to do so, but it should not be forced upon them.

Even in unionised workplaces where no employees are on individual agreements, the availability of individual agreements has had a calming effect on the behaviour of unions. The union officials know that, if their behaviour or demands become unreasonable or they push the employer too far, the employer has the option of bypassing the union and negotiating directly with their employees. Many employers have not used individual agreements and prefer to negotiate collectively with their employees, but they do not want to be at the mercy of unreasonable demands or disruptive behaviour. They must have other options available to them. While around eight per cent of the Australian workforce are currently on an individual agreement, the mere presence of individual agreements as an option for employers is enough to make unions drop their excessive claims, behave reasonably and even talk about productivity gains.

It is fair to say that one of the major reforms since 1996 has been to give Australian employers and employees the right—and I would say the basic right—to conduct their business and negotiate their workplace agreements without compulsory reference to a union. This reflects the changing nature of the Australian workforce and its changing needs and circumstances. Whereas a generation ago over half the private sector were union members—in the early sixties it was about 61 or 62 per cent—currently more than 85 per cent of private sector employees no longer choose to join trade unions. The working public is passing judgement on unions and their effectiveness in lifting the standard of living.

Rather than take us back to an era of industrial relations that has long since passed, we need to continue to embrace reform. I had hoped that Labor would admit that it recognises the need for flexible working arrangements. After all, this legislation specifically enables existing individual agreements to continue to operate for five years—not for six months or 12 months but for five years. Yet Labor would have you believe that individual agreements are unfair. If they are so unfair, why are they lasting for five years, a period that could encompass not one but two federal elections? It is to be expected that the Senate inquiry will provide the evidence base that the government has so far failed to adduce on the significant benefits to the economy from the retention of flexibility in the workplace relations system.

The balance of this bill seeks to abolish Australian workplace agreements. Given the proposed amendment to embrace Labor’s individual employment agreements, with Labor’s no disadvantage test, as five-year agreements instead of transitional two-year agreements, the opposition will not oppose the amendment.

The bill also seeks to refer to the Australian Industrial Relations Commission the task of award modernisation and simplification. This is a process that has long been coalition policy but was opposed by the Labor Party for years until just a few months before the 2007 election. We welcome Labor’s change of position on this issue.

There are currently over 4,300 federal and state awards. There are over 105,000 employee classifications. This is a complex, unwieldy system. The reduction, simplification and modernisation of Australia’s complex and unwieldy system of awards are a necessary step in improving productivity. However, given that the government proposes to abolish the Australian Industrial Relations Commission, some might be forgiven for thinking that it will add to the confusion and complexity if the Industrial Relations Commission is tasked with the award rationalisation process in its dying days—yet it will be a new body proposed by Labor that will in fact oversee the implementation of the new awards. The handling of the rationalisation and simplification of awards is an area that is best covered by the Senate inquiry.

The bill also seeks to introduce 10 National Employment Standards to replace the five existing employment standards, to underpin Labor’s new no disadvantage test that is to apply to all agreements. We welcome the fact that it will apply to individual agreements that are being introduced by Labor. The proposed 10 standards have been released. There is to be a period of consultation before an exposure draft is published. I would note that the majority of the new standards relate to how much time one can have off work and there is no mention of the word ‘productivity’ in the substantive part of the proposed 10 standards. Given the concerns already voiced by employers about the potential for increased regulation, red tape and cost to business, this is another significant line of inquiry for the Senate.

As to other provisions in this bill: there will be a new commencement date for agreements—that is, upon approval rather than lodgement with the Workplace Authority; and there are changes to the termination conditions for collective agreements—some pre Work Choices certified agreements can be extended and varied on application to the Australian Industrial Relations Commission. Yet the government is reserving its most significant industrial relations changes for some years yet, including the establishment of a truly national industrial relations system. This was coalition policy, now adopted by Labor. But we can have no confidence that this new era of federal-state cooperation, so touted by the Rudd government, will actually see the creation of a truly national industrial relations system as promised by the Prime Minister prior to the last election. We will see the state ministers digging in their heels. We have already had the unseemly spectacle of the Minister for Industrial Relations from New South Wales—


Mr Morrison —Very unseemly.


Ms JULIE BISHOP —it was a very unseemly spectacle—overthrowing the Rudd government’s idea of a truly national IR system. The creation of a single body called Fair Work Australia has been put off for some years, again leaving the Australian Industrial Relations Commission in limbo. It has been told it will cease to exist, that some of its members will be appointed to the new body and some will not—clearly an indication that those who behave according to the Rudd government’s agenda will be appointed and those who act independently will not. This also raises a number of logistical let alone constitutional issues, but that is legislation for another day.

The abolition of the Australian Building and Construction Commission is a matter of considerable concern to a great many in the building industry, but once more Labor has put that off, presumably beyond the next election date.

And there is the roll-back of the small business exemption from unfair dismissal laws. This is a matter of considerable concern to small businesses across Australia, for people who have been employed by small businesses since the introduction of the unfair dismissal exemption but particularly for the long-term unemployed. This exemption works for the benefit of long-term unemployed—those who would not otherwise get an opportunity for a job. Small business believe that, as long as they are not hampered by having to pay ‘go away’ money, they can give someone the opportunity to take on a job.

The exemption from unfair dismissal laws is all about the long-term unemployed. It is not about those with a job; the focus is on those who do not have a job. We have seen the most dramatic shift in the long-term unemployed in many, many years. Structural unemployment is very hard to shift, yet in Australia we have seen a dramatic decrease in the number of long-term unemployed because employers are giving people a go. Yet the roll-back of the small business exemption from unfair dismissal laws has been put off for another day. One could be forgiven for presuming that Labor wants to continue to reap the benefits of a decade of reforms for as long as possible before it has to pay back its debt to the unions. Why else would Labor not bring forward its laws to roll back the exemption from unfair dismissals? It would be a very simple piece of legislation. I am sure it could be drafted overnight, yet Labor has put it off to a much later date so that it can continue to reap the benefits of the long-term unemployed being given the opportunity of a job. The 4.1 per cent unemployment figure that we have seen recently has not come about by accident. It means there are more people in the workforce, and that includes long-term unemployed who are for the first time in a long time being given the chance of a job.

Given that the unions spent more money on an advertising campaign in the last federal election than both major parties combined, the unions will be demanding their pound of flesh. Today we read that the National Secretary of the CFMEU is ignoring the government’s calls for wage restraint, is ignoring the suggestion that wage claims should be based on productivity gains and is ignoring the fact that the ABCC has played an important part in cleaning up the building industry. We will see continuing disruptive union activity break out across this country. We have to ask what the government will do to prevent a wages breakout that will feed into inflation and that will lead to the kind of recession that Australia experienced in the 1990s, the last time Labor was in government.

Work Choices is no longer coalition policy. We will not oppose the passage of this bill. We will not oppose the abolition of AWAs. But we urge the government to support our proposed amendment to extend the Labor Party’s new individual contracts with the Labor Party’s own no disadvantage test. We urge the government to support this in the interests of a better, more flexible and fairer workplace that reflects the reality of workplaces and reflects the reality of the needs of employees and employers in the 21st century. It is time for Labor to admit that flexibility in the workplace is underpinning our economic reforms. I urge them to support our proposed amendment.