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Monday, 28 November 2005
Page: 92


Senator MARSHALL (6:24 PM) —I am sure that Senator Johnston made that contribution simply to distract me from the comments I wanted to make about the Workplace Relations Amendment (Work Choices) Bill 2005. It was a rather infantile contribution to this debate. I note that he did not at all go to the substance of the content of the 600-odd pages of the bill. He simply wanted to go down the low road as usual, attacking individuals, quoting people out of context and simply repeating some of the rhetoric that this government has been making about the Work Choices legislation since it first flagged its policy position.

Senator Murray dealt with the issues about the 1996 legislation, the way it was amended and how, in his words, I think, it ripped the ideology out of that bill. So I will not repeat all that for Senator Johnston’s benefit, but if he actually listened to the contribution of some senators who have an involvement in industrial relations he may be better informed and it may assist him in making a better and more informed contribution to this very substantial bill before us today.

My comments today, which may not indicate the full extent of my outrage at the policy thrust of the Work Choices legislation, will largely be about the threats to principles which have helped sustain the social, political and economic fabric of the country for more than a century. That has been my particular focus as a senator for Victoria over the past seven or eight months. In light of what I have learnt over those months on a number of Senate inquiries and, indeed, on an inquiry we did last year on proposed regulation of the building and construction industry, I want to spend much of my time today looking critically at the premises underlying the government’s Work Choices policy and its legislation.

The point at issue is always: can the challenges ahead, in coping with the pressures of the global economy, justify the tearing up of arrangements which have protected the rights of employees for 100 years? The answer is that they do not. The principal responsibility of government is the wellbeing of all citizens. Of course, it is true that prosperity and security are essential preconditions for this, but the most desirable outcome of good policy is most appropriately measured by the extent of the wellbeing of those who live in very ordinary circumstances. It is to be measured by the way our laws ensure the protection of the interests of those most in need—and most people in this place would never be in need of such protections, and perhaps the majority of those opposite rarely encounter people who do.

There are three issues I want to address in particular: the economic debate over industry productivity, the claims about deregulation and the anti-union campaign. First, the big economic issue. It has been claimed that productivity is declining and that this is the result of labour input inefficiencies. The argument is complex, but it is worth noting that no economists have supported the government on this issue, apart from those employed to write the OECD reports and who obtain their research assistance and direction from the Treasury. Is it any wonder that of course they support the government’s position? But 151 leading academics in this field told the committee of inquiry into this legislation in a written submission that the comments from authorities on which the government relied are not based on empirical research. Very little of what the government argues for can be backed by research. For instance, Professor Mark Wooden—hardly someone who can be described as traditionally sympathetic to the labour movement—has told us:

... the existence or non-existence of unlawful dismissal legislation has got very little to do with the growth of employment and that it is dictated by economic factors.

The government has run its campaigns on the premise that if something is said often enough people will simply come to believe it.

There are some things that are not mentioned in submissions made by employer organisations and one of them relates to expectations of profits. In large companies there is a continuing concern about shareholder dividend and it is this which influences arguments about labour productivity. There are other elements bearing on productivity, such as the availability of capital and the quality of management. If commodity prices fall, we can expect to hear much about declining labour productivity in the mining sector, although they seem very happy about it now. I simply make the point that labour costs are only one factor in productivity and may not be the reason why companies are unprofitable.

Sitting suspended from 6.30 pm to 7.30 pm


Senator MARSHALL —On closer analysis of the government’s arguments, we believe that for most businesses the issue is profitability rather than productivity. The way to increase profits is by reducing wages. This will result, if unchecked, in an underclass of working poor that is a characteristic of workers in the service industries in the United States. The sheer size of the American work force and the wealth of its middle and higher income groups protect the economy as a whole from the adverse consequences of having a low-wage labour sector.

We are not so well placed to afford to pay our lowest paid workers less than they now receive in real terms and there are social welfare implications for us which Americans do not concern themselves with. No-one in government will talk openly about this problem or discuss the implications it has for the economy, such as purchasing power being reduced. This is one of the many debates that have not occurred in relation to the Work Choices legislation.

We have a fair idea of what some of the consequences might be by considering the experience of New Zealand, which deliberately went down the path of bringing collective bargaining to an end through the Employment Contracts Act 1991. The result was a downturn in the economy and an accelerated rate of emigration. Since the policy was reversed in 2000 a recovery has been under way.

There is fundamental dishonesty behind the failure of the government to debate the economic arguments. The government are unable to admit that they believe that wages are too high, especially in the small business sector. It is for this reason that they foster AWAs and want the unions out of the negotiation processes. Yet the rhetoric is always that wages may well increase and that, for reasons that are never stated, increased wages are likely to come as a consequence of employees accepting an AWA because the stats demonstrate that AWAs increase wages. If employers are supporting the Work Choices bill because it will enable them to pay less for labour and young or naive employees will support AWAs because they have been told they will receive more pay, we are in for some trouble or at least some serious dissatisfaction in some form.

But how do we know that the intention of the Work Choices legislation is to drive down real wages? It is because employers have in fact told us so. The committee had COSBOA, which is an association of small businesses, clearly tell it that their object when they use the Work Choices legislation will in fact be to flatten wages and eliminate penalty rates. They seek to have work force flexibility 24/7, with no penalty rates across the board. The restaurant and catering association went further. They actually claimed that wages were already too high in their industry and they also sought to eliminate penalty rates. It is not a very long step to take to assume that, if they believe wages are too high and they seek the elimination of penalty rates and more flexibility 24/7, they intend to drive wages down.

We have had Minister Macfarlane already indicate previously that the purpose of the Work Choices legislation is to make our wages competitive with those of New Zealand, which on average are 25 per cent less than they are in Australia. In summary, there seems to be little evidence of the government’s Work Choices policy being informed by either economic theory and practice or appropriate foreign models of success. The government’s workplace relations policy is more a case of adopting hope over experience and faith over reasoning. This will be evident in what else I have to say.

The second area I indicated that I want to talk about is deregulation. We have a government that emphasises its pursuit of deregulation. As things are never what they are claimed to be in this field of policy, the consequence is that we are becoming increasingly regulated. Simplification of the Workplace Relations Act has required an amendment bill 700 pages long. It is full of stipulations about how details must be administered, and the result is that legal costs associated with interpretation of the laws and their enforcement are likely to rise considerably. We know this because the lawyers, in contrived sorrow, have told us so. This bill is worth millions and more to industrial lawyers.

The government is highly selective in what it wants deregulated, just as it puts particular connotations on words like ‘flexibility’ and ‘choice’. Flexibility in employment arrangements means that employers can force employees to sign AWAs which strip them of their overtime and other bonuses in return for working flexible 38-hour weeks at times required by the employer rather than at times negotiated. ‘Flexible’ may not be the word which best describes such an arrangement from the viewpoint of the employee. A ‘choice’ may not be first choice for an employee but simply a direction from an employer to work at odd times of the day. The price of choice and flexibility must be paid by those on the shop floor. The real benefits of choice and flexibility go to employers. This is what the altered balance of power, based on individual agreements, means in practice.

I will refer to two matters which are relevant to the issue of deregulation—and where better to start than with AWAs? The instrument chosen by the government which best represents deregulation and flexibility is the AWA. The conditions surrounding the AWA are to be more severe on employees as a result of the abolition of the no disadvantage test. The reduction in the number of allowable matters for negotiation is one more compounding problem, for we know that, even under the 1996 act, there were AWAs registered which did not meet the no disadvantage test. Under the new amendments, the Office of the Employment Advocate will not even have to certify them as meeting the requirements of the act. A statutory declaration from an employer will simply be sufficient. This is ludicrous, especially as the only form of redress is common law action by the employee.

We had some AWA brokers before the committee that was inquiring into this legislation. They are people with an eye out for opportunities to help small businesses without personnel management skills to design and draft AWAs for them. This is an unregulated type of business and it raises all kinds of opportunities for dishonest and unscrupulous collusion between employers and brokers. During the workplace agreements inquiry in September, the committee heard evidence that some employers and some legal advocates were prepared, even in an open environment such as the Industrial Relations Commission, to construct processes and outcomes for AWAs which were quite misleading just so they could get an agreement certified. If this happens in an environment where the commission’s documentation is on the public record, what will happen when these same sorts of legal advisers are dealing with the Office of the Employment Advocate, where everything they do is in secret, where there is no longer a no disadvantage clause and where only a simple statutory declaration is required.

AWAs were bad enough under the Workplace Relations Act before Work Choices. They will be even worse following the passage of this legislation. Their problem is not so much the instruments themselves, because we have no difficulties with common-law contracts, but the processes involved in making and approving AWAs. As one witness told our workplace agreements inquiry, the current system does the opposite of what it says it will do—it is not fair, it is not free, it is not effective bargaining, there is no employee choice and everything is done in secret. And that was before Work Choices. Bear in mind that in reality most AWAs are offered on a take it or leave it basis, regardless of the cosmetic safeguards that have been written into the legislation. Young workers are especially vulnerable in these circumstances.

It is worth noting that there is not a single workplace flexibility that could not be negotiated under the current act. All it requires is genuine agreement making between the parties and that it meets a no disadvantage test against the award. If people want to average their hours over a 12-month period, they are free to do so, but the no disadvantage test ensures that penalty rates and shift allowances that may have been applied through that period have to be compensated for and included in those agreements. If people are required to work public holidays, those public holiday penalties need to be included in the global no disadvantage test. That is simply disappearing. So much for the government’s guarantee about public holidays.

During the inquiry into this bill, it became quite clear—and the Department of Employment and Workplace Relations admitted this—that if you are on the fair pay minimum, which is all that this act provides for, and if you are directed to work on a public holiday, you are required to do so. You do not have the right to take that public holiday. If you are directed to work on that public holiday and do not turn up, you simply will not get paid for it. If you are directed to work on it under the fair pay minimum, you will be paid a single rate of pay. You will not be paid penalty rates for that public holiday. All of this is on the public record, and the department has admitted as much. What is worse, if you fail to turn up on the public holiday because you want to take it, dismissal can effectively be the result, because dismissal for not turning up for work is not an unlawful matter under this legislation.

Let us again look at the spread of hours over a 38-hour week. You have the ability under this Work Choices legislation to average your 38-hour week over a 12-month period. We have already seen some examples where, under the existing legislation, agreements have been entered into for those sorts of arrangements to take place against the no disadvantage test so people were compensated for those arrangements. But we have already had examples given to us that, where people owed the company money—that is, they had worked fewer than the average of 38 hours a week—or had worked more than the average of 38 hours a week, it was at the sole discretion of the employer to determine when those hours would be made up, used or worked in advantage. In the Bunnings case in particular we saw that when workers had gone over their average of 38 hours a week they were given blocks of one hour at different times of the day as time off. They were not given it in usable time such as days off; they were simply given hours off here and there and effectively had a split shift. So, if there was a down period in the middle of the day, people were simply told that they were off pay for that period.

One of the other so-called protections under this act is duress. The reality is that duress is clearly not considered to be a condition of an employment offer for insisting on an AWA. Therefore, if an employer says, ‘My employment conditions will be an AWA or nothing,’ that is not considered duress by this act. There has been a lot of debate about what constitutes duress for existing employees. The department admitted again during our inquiry that that particular provision is ambiguous at best. But, even if it is not ambiguous, the practical reality in the workplace is that when unfair dismissal protection is removed you can simply be sacked for any reason that is not unlawful. Unlawful reasons are a very narrow description of discriminatory type reasons.

In the committee Senator Barnett challenged Professor Peetz about a radio interview he conducted, in which he said that employers would be able to sack someone for simply chewing gum. Professor Peetz explained that he did not say that employers would sack people for chewing gum, but it was clearly possible under the legislation. Again we had some debate about that, and Senator Barnett asked Professor Peetz to withdraw it because it was wrong. Professor Peetz said that it was not wrong, and clearly that was the case. Senator Barnett indicated that he was wrong, and employees under those circumstances would have recourse to the Australian Industrial Relations Commission. It just so happens that on Friday we asked the department, DEWR—


Senator Abetz interjecting—


Senator MARSHALL —your department, Minister Abetz—whether that was the case. They confirmed that, absolutely, you can be sacked for chewing gum, that chewing gum would not be a discriminatory reason. They then went on to say that, if you wanted to use that example, you technically could be sacked for earning your employer too much money. That is my point exactly: there is no reason, unless it is in the narrow field of discrimination, why you cannot be sacked.


Senator Abetz —Why would they do it?


Senator MARSHALL —That is a very good question. If employers want to apply duress to an employee, they can do that when they have this sort of power because there is no recourse to the Australian Industrial Relations Commission. It staggered me that during the inquiry Senator Barnett was under this complete misapprehension and had a quite astounding lack of knowledge about the effects of this bill. So there is no real, practical protection from duress under the Work Choices legislation—none whatsoever. When you have an environment where employers have that sort of bargaining power and that sort of ability to determine the outcome, there is no such thing as practical protection from duress under this bill. (Time expired)