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Monday, 17 March 2008
Page: 991

Senator MURRAY (5:47 PM) —There has been a clear message from voters for the abandonment of Work Choices, especially those provisions that have seen a large number of workers have their wages and conditions reduced. The Australian Democrats support the Workplace Relations Amendment (Transition to Forward with Fairness) Bill 2008 as improving the Workplace Relations Act, not least from a fairness perspective. I said on 2 December 2005 in my speech on the third reading that, in passing Work Choices, the coalition were making:

... not just an economic mistake, not just a social mistake, but a political mistake.

I said:

This bill assaults the cultural, economic, social, institutional, legal, political and constitutional underpinnings of work arrangements in Australia. It aims to radically alter our work systems and values.

I also said:

This change would not have happened if the Australian Democrats still held the balance of power in this chamber.

This bill amends the Workplace Relations Act by: terminating the making of new Australian workplace agreements and replacing these with interim transitional employment agreements to run to 31 December 2009; replacing the fairness test with a no disadvantage test to approve both ITEAs and collective agreements; and allowing the modernisation of federal and former state industrial awards.

Some issues that arose for business organisations from the inquiry are: the award modernisation process may not enhance productivity to the extent—or in the medium term—as expected; the ending of AWAs and a poorer substitute will diminish productivity; the abolition of AWAs and the increase in collective bargaining and the greater licence to unions will increase levels of industrial disputation; there must be in place an alternative to AWAs and individual workplace agreements before the complete phasing out of the AWA system—an alternative that would incorporate a proper global no disadvantage test provided by a safety net of awards and employment standards—and a process of acceleration should be delivered to address the significant backlog of individual agreements still waiting to be approved, which is a problem that will frustrate the context in which the bill’s amendments will commence.

The ACTU, in contrast, identified areas where improvements could be made to the bill—for instance, that the bill does not immediately abolish AWAs or provide a mechanism for existing AWAs to be terminated prior to their nominal expiry date where they are found to disadvantage employees. The ACTU is not convinced of the need for a new form of statutory individual contract in the form of ITEAs, preferring instead the individual agreement option provided by over-award common-law agreements. The ACTU is also disappointed that the bill does nothing to improve the transparency of the ability to review the decisions of the Workplace Authority—a dedicated unit needs to be established within this authority to ensure that collective agreements are processed swiftly—and that there are a number of uncertainties concerning award modernisation in the drafting of the bill.

Uncertainties do derive from the draft award modernisation request, which currently expresses the mutually contradictory intention for the Australian Industrial Relations Commission to neither disadvantage employees nor increase costs for employers. On award modernisation, academic Dr Buchanan said that there is a need to see award modernisation as an ongoing process. He stressed the importance of providing appropriate resources to the Australian Industrial Relations Commission. He felt there was a need to be realistic about how much can be achieved by the end of 2009 and he advocated the desirability of recognising the need for a coherent set of categories for grouping together like classes of work to help ensure consistency in defining employment rights and obligations and to help provide a framework for defining common-skill requirements.

Professor Andrew Stewart asked how the minister’s draft award modernisation request might be amended to address the inherent problems with it standardising conditions in any award-reliant industry or occupation without disadvantaging somebody; how the government’s proposals concerning the nonapplication of awards to workers earning over $100,000 annually needs clarifying by way of clear instructions from the Australian Industrial Relations Commission in their determinations; and how appropriate protection might be given to the over 30 per cent of employees governed not by awards or registered workplace agreements but by common law contracts.

The Democrats support the abolition of Work Choices AWAs and we support award modernisation. Academic union and employer witnesses to the inquiry made a case for amendments that would improve the bill and, in some instances, have provided draft wording for the legislative changes suggested. When I saw the majority recommendation that the bill be passed without any other formal recommendation for specific amendments, I recalled the epigram, ‘The more things change, the more they stay the same.’

It beggars belief that, when a range of witnesses make a case for amendments that would improve the bill—including recommendations from such reputable and experienced witnesses as the Australian Industry Group, the Australian Council of Trade Unions, and Professors Buchanan and Stewart—the majority could not find even one change to formally recommend. Admittedly the majority have indicated areas of concern, both technical and substantive, but those do not constitute recommendations. It may not be the case with respect to the members of this committee, but I would make a general point that it is a matter of long regret in our Senate that senators from the government—any government—often seem to feel themselves sufficiently constrained by their party being in government, and a belief that the executives should have passage of their legislation, that they cannot bring themselves to carry through the logic of a Senate review process and that is to formally recommend evidence based changes to a bill.

The failings of Work Choices are generally, and rightly, sheeted home to the former Prime Minister, John Howard, and his government, but coalition senators who knew how slim the government’s senate majority was had the power of numbers. Just a couple of coalition senators holding out for substantive changes could have altered the course of that bill. Those that heard the evidence and did not act therefore share the blame. If the coalition senators participating in the truncated charade of the Work Choices Senate inquiry had responded to the widespread criticism of so many witnesses and exercised their conscience vote based on the evidence before them, then perhaps Work Choices would never have been quite the failure it became.

An appalling feature of the Work Choices inquiry and debate was that the very essence of academic freedom was threatened at times by McCarthyist attitudes from some coalition senators towards academics critical of that bill. I protested at the time that such attacks were a discredit to the Senate. The memory of those days obviously still rankles. In this inquiry, Professor Buchanan opened with these remarks:

... before talking about the key issues that I want to get to, I just want to note that academic participation in forums such as these has become a bit of an occupational hazard.

I was pleased that in this new parliament this committee saw a return to the normal courtesy to witnesses and the return to better, more considered and considerate Senate committee processes and practices that were sometimes absent during the term of the last parliament.

My party remains concerned at the continuing exemption of millions of employees that fall under federal law from the unfair dismissal—UFD—protections that are available to employees of large organisations with more than 100 employees. I intend to try to amend this bill so that unfair dismissal provisions for all employees be restored to the act; failing that, at least for employees and organisations with more than 15 employees; and, failing that, in the alternative, at least for employees and organisations with more than 20 employees.

The Democrats do accept that complex, loosely-drafted and costly UFD provisions are highly undesirable. Such negativities are regarded as having particular effects on small business. Both small business and their employees do have a need for rapid, low-cost dispute resolution and for minimising vexatious claims. Recognising that need, the Democrats negotiated changes to UFD law that saw the number of federal UFD applications fall by over 60 per cent from 1996, 50 per cent after our successful 1996 negotiations and a further 12 per cent after our successful 2001 negotiations.

The extent of the UFD problems under federal law was wildly exaggerated. I use Western Australia as an example. There were less than 100 UFD applications for WA small business a year under federal law. The vast majority of UFD applications were actually under state law. In 2003, WA’s total UFD applications under federal law were 316, of which small business constituted just 79, while under state law, in 2003, UFD applications totalled 1,314. While there were 6,954 applications nationally for federal UFD in 2003, only 34 per cent, or 2,153, of those were for small business nationally. I am quoting 2003 figures because the government refused to provide any figures after that, I suspect as the figures were showing how minor the problem was.

The Democrats and Labor never accepted the claim that exempting small business from UFD creates tens of thousands of new jobs. On the job creation front, comprehensive research undertaken by senior lecturer Paul Oslington and PhD student Benoit Freyens at the University of New South Wales School of Business found that ending UFD laws for employers with fewer than 100 employees could create 6,000 jobs, not the 77,000 claimed by the Howard government. UFD is germane to this bill, which intends to introduce greater fairness into the workplace. Curtin University’s Professor Alison Preston was among a number of witnesses who made it clear that a provision for dealing with UFD was an essential element of a fair regime for employees.

I want to turn to individual statutory agreements, ISAs. The Australian Democrats believe a mix of agreement making between employers and employees—collective industry awards, collective enterprise bargains and individual agreements, in all their various forms—provide the necessary flexibility and choice for employment contracts in a modern economy. The overriding proviso is that all agreements must be fair to both employers and employees. A modern liberal democracy should always enshrine fair minimum standards of wages and conditions for workers. A modern workplace relations system must also make a material contribution to Australia’s efficiency, wealth and job creation, productivity and internal and external competitiveness. The Democrats opposed Work Choices AWAs and will be glad to see the back of them.

In her submission, Professor Alison Preston provided a table that indicated that Australian employees are covered by the following broad categories of agreements: federal or state awards, 21 per cent, or 2.1 million persons roughly speaking; collective agreements, registered and unregistered, union and non-union, 44.5 per cent, or 4.7 million persons; individual agreements, statutory and common law, 34½ per cent, or 3.7 million Australians. Of the 3.7 million Australians on individual statutory and common-law agreements, I have seen estimates of ISAs being five to seven per cent of all individual agreements. Whatever, ISAs do not cover more than one in 15 employees at best and, likely, not more than one in 20. Still, at the least, that is more than half a million people on ISAs.

To end the contractual rights of half a million Australians would be a significant step, especially if—and it is sometimes a big ‘if’—the chosen instrument is genuinely a matter of free choice. The assumption is that all Australians on Work Choices AWAs will be happy to see the end of them. That may be so for many, but it is a long jump from there to decide that that means that half a million Australians were also opposed to the very different pre-Work Choices AWAs or that they are all now opposed to ISAs as a distinct class of industrial instrument.

The easy demonisation of the many possible versions of ISAs by the very evident failings of just one version of them—Work Choices AWAs—is indefensible from a policy perspective, despite its political success. Common-law agreements put employees far more at the mercy of employers than do fair ISAs that are fairly and properly regulated. With respect to employment matters, Australian common-law precedents are often rooted historically in English master-servant concepts, often with a bias towards master, which is the very criticism levelled against Work Choices AWAs.

Unions often portray themselves as champions of human rights. They do have a long and proud history of standing against tyranny of one sort or another, and yet campaigning against ISAs as a class of industrial instrument in favour of individual common-law agreements represents a diminution of human rights. My eye was caught by an article on a charter of rights recently. The President of the New South Wales Bar Association said on page 34 of the Australian on Friday, 14 March 2008:

It is abundantly clear that human rights are not adequately protected under the common law ...

The common law is unwritten law based on custom or court decisions. Statute law is the law laid down in acts of parliament. Statutes provide certainty. So why regulate industrial relations by statute at all? Why not just let the common law apply to the whole industrial relations process, including collective agreements? The answer is that the common law is inadequate. Common law is not precise, as it comprises accumulated and varying judgements and judicial principles established only on a case-by-case basis. Statute is much more precise. Statute is easier for the parties to an agreement to administer and comprehend but, if a dispute gets serious, statute does make a difference when courts have to adjudicate. Precise statute leads to precise judgements; imprecise common law leads to imprecise judgements. Statute also allows contract disputes to be resolved in fast, low-cost, easy access tribunals—as in the case of industrial relations—instead of the slow, costly courts. Furthermore, statute can ensure easy enforcement and penalties for transgressions. In industrial relations, statute provides much greater protection, flexibility and easier usage than the common law. Statute is able to add protections and precision denied by common law. This is why workers compensation laws for protection in case of work injuries are now almost completely regulated by statute law and not by common law.

There are three basic types of individual employment agreement in Australia: individual agreements based solely on statute; individual agreements based on common law but with awards applying to them, which are hybrid statute-common law agreements; and individual agreements based solely on common law. Labor are proposing the hybrid type of individual agreement. They are proposing two classes of individual agreement, arbitrarily divided, on what basis no-one knows: one for those with above $100,000 earnings, where supposedly completely flexible common-law agreements apply but are subject to statute through the yet to be finalised national employment standards; and one for those with below $100,000 earnings, with stronger statutory protections and a reference back to the applicable award. It is important to understand that employees under pure common-law individual agreements are the most exposed to employer prerogative.

The policy lines are clearly drawn. Of the political parties, only the Democrats had believed that properly enforced and regulated ISAs must be underpinned by the applicable award—with awards restricted to allowable matters and not open ended—subject to a global no disadvantage test. After the 2007 federal election, I am discovering that our position seems to be becoming a mainstream position. Intriguingly, this bill, as some witnesses to the inquiry pointed out, does seem to offer a permanent and fairer ISA regime going forward—at least until the substantive bill due later this year is introduced—so perhaps Labor’s position is less antagonistic to ISAs than was previously thought. Time will tell.

There is one basic point to decide on: do you need ISAs to provide protections and choice to employees that the common law does not provide—in which case, Labor would be wrong? Of course, always recognise that the coalition’s model of Work Choices AWAs was a disgusting travesty of that fairness principle. A great weakness of Labor and others is to argue that collective agreements are the alternatives to individual common-law agreements. That assumes that the choice between the group and the individual is always present. That is not so. Where individual agreements are likely to pertain, or are the preferred choice, the only alternative to the common-law agreement would be an ISA. Otherwise, the only choice left is a Hobson’s one—an individual common-law agreement or nothing: take it or leave it. Labor and the unions must surely understand that, along with certain strong provisos—statutory provisions are fair; fairness provisions are oversighted and enforced by an active regulator; ISAs are underpinned by a credible safety net of wages and conditions; and ISAs are subject to a global no disadvantage test referenced back to the applicable award—ISAs will provide much greater certainty and protection than individual common-law agreements.

There remains the question of disputation. If one part of employment contracts is the process of agreement making, the other half is the resolution of disputes. The great insight of the Australian industrial relations system was to find a mechanism for the resolution of disputes. This has been a great contribution to this country’s advancement. How much cheaper, quicker and more satisfactory is having a statutory instrument in dispute referred to an industrial relations tribunal than to the courts—which is not the case with common-law agreements? The Democrats recommend that Labor design an individual statutory employment agreement system as an alternative to individual common-law contracts, because good statute will be better in all cases than the common law.