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Monday, 17 March 2008
Page: 1844

Mr RUDD (Prime Minister) (12:40 PM) —Today the House has an opportunity to take an important step in building a modern Australia that delivers for working families facing cost of living pressures. The Workplace Relations Amendment (Transition to Forward with Fairness) Bill 2008 makes the first step towards a new balanced approach to workplace relations that delivers for the economy and delivers for working families—the first step towards a system that is designed to increase rather than reduce productivity growth, the first step towards a genuine safety net for working families, ensuring that employees will no longer have basic conditions stripped away by unfair AWAs, and the first step towards a modern industrial relations system, a modern workplace relations system, that is consistent with the core Australian value of a fair go for all.

Just over three months ago, Australians voted overwhelmingly against the extreme workplace relations policies and laws of the Liberal Party. For the Liberal Party, this policy was the centrepiece of their fourth term in office. It was their No. 1 priority. From July 2005, they had control of the House and the Senate—the first time that such power had been enjoyed for three decades. What did the Liberal Party do with this power? It used this power to ram through the legislation that reflects their deepest beliefs and deepest values—that is, Work Choices. This deepest belief is that working families and their children should be left to fend for themselves in an industrial relations system that has one organising principle and one organising principle alone, and that is the survival of the fittest: a system where hard-working people working in shops, offices, hotels, restaurants and workplaces of every kind could have the most basic award entitlements stripped away from them without any compensation. Make no mistake about it: the Liberal Party is the party of Work Choices, by Work Choices, for Work Choices. This is the policy supported in the party room and in the parliament by every one of them who were in this place before the last election, and by every one of them who, as candidates, defended this industrial relations system during the last election.

The Liberal party spent $121 million of taxpayers’ money trying to convince Australians to accept this extreme workplace relations system. That of itself is an obscenity. What is a double obscenity is the fact that this money was taken from the pockets of working families to try to sell, to the very same working families, the proposition that Work Choices was somehow going to be good for those working families.

Throughout 2007 and at November’s election, Labor outlined a clear alternative approach. This alternative reflects a core Australian value—the tradition of combining individual aspiration with a strong community safety net; a tradition that says that, to reward hard work, achievement and success through individual incentives, we do not need to become a dog-eat-dog society where working people are forced to fend for themselves. This Australian tradition says that we can provide a decent safety net and we can respect the rights of workers to bargain collectively without tying businesses up with the rigidities of a centralised wage-fixing system. The great Australian tradition is that we can have a society that protects decent minimum standards and also rewards individual effort.

The Liberal Party’s DNA says there is a core and absolute choice between individual aspiration and a fair go for all. Their conclusion is this: to hell with a fair go for all. Labor’s DNA, by contrast, says that in this country we can embrace a system that combines both aspiration and a fair go. That underlines our different approach to this core piece of law, this core piece of policy, this core piece of practice which affects every working Australian in their workplace.

The Liberal Party has got this wrong, because they have got Australia wrong. They do not understand the values of working families. They do not understand the cost of living pressures on working families. They just do not understand working families, period. They went to the last election proclaiming working families had never been better off and did so without dissent from any Liberal MP or any Liberal candidate. They are so out of touch that, according to their own former Minister for Employment and Workplace Relations, most of their cabinet ministers were not even aware that working Australians were being made worse off by Work Choices, despite the fact that the central point of the Australian industrial relations debate through 2005, 2006 and 2007 went to the absolute detail of the Work Choices legislation regime. Late last month the Four Corners program gave us the extraordinary picture of the member for North Sydney trotting from one cabinet minister’s office to the next as he told ministers, whom he claims were ignorant, that Work Choices was actually making people worse off. Hold the phone! There is some news for you.

I remind the House that this was happening in the first half of 2007, although almost two years had passed since the Work Choices policy had been announced. For all that time, the people who made up the frontbench of the opposition today were defending this legislation and denying its harmful effects on working families. They just cannot work out where they stand on this legislation, even as of today—one moment they are opposing it, the next moment supporting it and most recently they say they are not supporting it but they are not opposing it either.

The legislation that Labor introduces to the parliament highlights one further contrast between this government and the previous government. Before the previous election the Liberal Party kept their industrial relations plans secret. Once they had won the 2004 election, they sprung their extreme laws on Australians and rammed them through the parliament. In contrast, Labor announced our workplace relations policy in detail well prior to the last election and in government we are delivering on what we promised before the election.

We said before the election that we would achieve a sensible transition to our new, fair and flexible system that would come into operation fully from 1 January 2010. This bill takes us a step forward towards that goal. We said before the election we would prohibit the making of new AWAs. This bill achieves that goal. We said before the election we would allow for individual transitional employment arrangements for a two-year period only. This bill does that. We said before the election we would modernise the award system. This bill makes that possible. We said before the election that what we needed was a balanced system and an approach that delivers appropriate flexibility for businesses but provides a genuine safety net for working families. This bill takes us towards that goal.

This balanced approach to Australian workplaces is critical for both the long-term needs of the economy and our immediate priority of tackling inflation. Right now, Australia is facing a serious economic challenge arising from global financial market instability. That instability rages abroad while at the same time we have raising inflationary pressures at home. The key measure of ongoing inflation, the underlying rate of inflation, had at the time this government took office risen to the highest level in 16 years. Underlying inflation has been running at an average of three per cent, the upper limit of the RBA inflation target, for the past year and a half. It is now forecast by the RBA to stay at three per cent or higher until mid-2010.

The threat of rising inflation has not emerged overnight; it has been building for years as the Howard government neglected warnings about growing supply constraints and slowing productivity growth. Back in 2005, the Liberals told us that Work Choices would deliver low inflation, low interest rates and stronger productivity growth. They claimed that Work Choices was core economic business but they had nothing—no hard data, no modelling—to support their claims, and now we understand why. The member for Goldstein, for example, was very explicit when he told this chamber on 3 November 2005—and it is worth listening to this:

By promoting flexibility and greatly simplifying the system of industrial relations, this legislation—

that means the Work Choices legislation—

will deliver better outcomes for interest rates and employment and inflation.

Since then we have seen inflation reach its highest level in 16 years. Since then interest rates have risen seven times, the second highest level amongst advanced economies. Since then productivity growth has been flat and, as of when this government assumed office, had fallen to zero. The architects of Work Choices said it would lift productivity growth; it failed to do so. By failing to boost productivity growth, Work Choices failed to tackle the inflation challenge.

Nor did the Liberals deal with the rest of the inflation challenge: skills shortages, infrastructure bottlenecks and profligate government spending on the demand side of the economy. The result: rising inflation and, as a result of that, rising interest rates, despite the Liberals’ assurances that they would keep interest rates at record lows. Do you remember that? The assurance prior to the 2004 election, just before Work Choices legislation was introduced, that they would keep interest rates at record lows—as believable as the undertaking since that election that working families had never been better off.

At a level of policy, Work Choices has been an abject failure. Work Choices has been bad for the economy. Work Choices has been bad for working families and Work Choices has also been bad for business. It has created a red-tape nightmare, especially for small businesses. Just look at the fairness test, the bandaid that was taped over Work Choices in the run-up to last year’s election. By the time the Liberal Party lost office last November, employers had lodged 220,000 workplace agreements to be reviewed under the fairness test. Only 50,000 agreements had passed the test, and 9,000 of those needed to be changed before being approved. Just 72,000, less than one in three of those workplace agreements, had been finalised. There were 150,000 workplace agreements at the Workplace Authority waiting to be processed. You can just see it down there at the Workplace Authority: there is the shelf space for unprocessed applications for new workplace agreements—150,000 of them—and over there you have got the 467,000 Work Choices propaganda booklets. There must have been no room on the shelves down at the Workplace Authority; none whatsoever.

If you are in small business and you are trying to make sense of this extraordinary system which the previous government had implemented, consider, in a very tight labour market, the consequences of dealing with such a complex piece of legislation. For 150,000 workplace agreements to be with the Workplace Authority waiting to be processed is one of the most anti-business, pro-regulation, pro-red tape measures that any government of this country has ever introduced. They pretend to be not just the party of compassion but also the party of small business. If ever there was a set of statistics which underpinned the reckless disregard which the previous government and the Liberal Party had for the interests of business in general and small business in particular, it was in their bandaid solution last year to their industrial relations laws, resulting in an absolute nightmare for businesses trying to operate within that regulatory environment.

Harmers Workplace Lawyers estimated last year that the record-keeping requirements of Work Choices had imposed compliance costs of more than $950 million in relation to small and medium sized businesses. In the Australian Human Resources Institute survey of 1,000 human resources managers in August 2007, 55 per cent of HR managers reported that there was an increased need to seek legal advice since the introduction of Work Choices, 54 per cent reported that there was an increased level of record keeping since the introduction of Work Choices and 40 per cent said Work Choices had made employment arrangements more complicated. Asked the question of whether Work Choices was more or less likely to improve productivity, job creation or work-family balance with their organisation over the next three years, more said it was unlikely to improve these outcomes, and 78 per cent had not seen any improvement—I repeat, any improvement—in productivity since Work Choices had been introduced. In fact, five per cent had seen a decrease in productivity.

AWAs did not deliver for the economy, AWAs did not deliver for business, but AWAs certainly did deliver substantial harm to the interests of working families. According to the Bureau of Statistics, workers on AWAs work more and earn less per hour than those in the same jobs who are employed on collective agreements. Last week, the Deputy Prime Minister and minister for workplace relations reported to the House on new data analysing a sample of 670 Australian workplace agreements submitted to the Workplace Authority in the two months after May 2007, when the fairness test had been announced. This data showed that, of the sample of AWAs that had failed the fairness test, around 45 per cent underpaid workers by between $1 and $49 per week below the required rate of pay for the protected award conditions, 50 per cent paid $50 to $199 per week less than the required rate of pay, and five per cent provided $200 to $499 per week below what was required. These are extraordinary numbers.

Last month, the Deputy Prime Minister again revealed other information about AWAs that had been kept secret by the previous government. That information showed that, in a total sample of over 1,700 AWAs lodged between April and October 2006, 89 per cent of those AWAs removed at least one award condition that the previous government’s advertisements said was protected. Further, 31 per cent of those AWAs took away rest breaks, 49 per cent took away overtime loadings, 63 per cent removed incentive based payments and bonuses, 65 per cent removed penalty rates and 70 per cent took away shift loadings.

Consider also the evidence of the impact of Work Choices on women. Women on AWAs earn less per hour than those on collective agreements. Women on AWAs who work part time earn $3.70 less per hour or $85.10 less per week, based on an average of 23 hours per week, than those on collective agreements. This unfairness lies at the heart of the Work Choices legislation. This is the legacy of the Liberal Party—the party that, three months later, wants to pretend now to be the party of compassion.

What I have run through for the benefit of the House today is the cold, hard, statistical data as it impacts on working families and as it impacts on hardworking small businesses. And still the Liberal Party does not know if it supports Work Choices or opposes Work Choices. It is why we now come today to start to build a new, fair, flexible and modern system. The first step towards a new workplace relations system is this bill, the Workplace Relations Amendment (Transition to Forward with Fairness) Bill 2008. The transitional arrangements will be followed by the introduction of more substantial workplace relations legislation into the parliament later this year to ensure that the government’s new, fair, flexible and productive workplace relations system can be fully operational by January 2010. If the coalition finally backflips, a big ‘if’, this legislation can declare a stop to the use of AWAs now—if the coalition backflips.

The transition bill ensures that Australians will no longer be forced to sign unfair AWAs that strip away key conditions with little or no compensation. From the commencement date of this legislation, no more AWAs can be created. An employer and employee can agree to terminate an AWA and replace it with another type of arrangement. We know we cannot correct every injustice of the old Work Choices system overnight. It took the Liberal Party, represented by their spokesman at the table, quite a period of time to construct such an entrenched and complex system of injustice. It will take us some time. We need to focus instead on building a system that will not allow such injustices in the future.

This bill ensures sensible transitional arrangements for employers who have been using AWAs under the previously existing law. Where an employer was using AWAs as of 1 December 2007, employees on AWAs or new employees may be placed on individual transitional employment agreements that can have a nominal expiry date up to 31 December 2009. The bill abolishes the so-called ‘fairness test’ and introduces a new, genuine no disadvantage test that provides a genuine safety net for employees. The new no disadvantage test will apply to all individual and collective workplace agreements.

Importantly, the bill will also make it possible for the Australian Industrial Relations Commission to begin the process of award modernisation. The bill enables an award modernisation request to be made of the AIRC by the Minister for Employment and Workplace Relations. It is intended that modern awards be simple and provide an appropriate benchmark to support collective bargaining, while at the same time providing a safety net for award-only employees. It is also intended that modern awards be relevant to the Australian economy by not being overly prescriptive and by allowing for flexible working arrangements.

The AIRC will play an integral role in the award modernisation process during the transition period. The intention is to ensure that this exercise is overwhelmingly completed by the end of 2009. Modern awards will be able to contain 10 allowable modern award matters, including minimum wages; arrangements for when work is performed, including hours of work and rest breaks; overtime rates and penalty rates; and allowances. Modern awards may also build on and provide industry specific detail about the proposed National Employment Standards, the content of which will be finalised by June, following the exposure draft process that is occurring now.

We are proud of this legislation because it brings to an end a system of rank injustice on the part of those opposite. We believe that it is entirely appropriate that this legislation be supported by the parliament. The modern, fair and flexible system that Labor is building demonstrates that we can build long-term prosperity without throwing the fair go out the back door. We can build long-term productivity growth while giving working people the right to bargain collectively if they choose. We can have a low inflation economy without forcing the lowest paid workers to make all the sacrifices to achieve it. The government takes very seriously its responsibility to deliver on its election commitment. That commitment was to abolish Work Choices and to build a modern balanced system that helps build long-term productivity growth while protecting the interests of working families. This legislation is the first order of business for the government. That is why it is the first bill that this government has introduced into the House. I commend the legislation to the House. (Time expired)