Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Speech to the Australian Industry Group National Personnel and IR Group Conference



Download PDFDownload PDF

Parliamentary Secretary for School Education and Workplace Relations

Senator the Hon Jacinta Collins

Australian Industry group National Personnel and IR Group Conference

Wednesday 24 October 2012

Introduction

Thanks Stephen.

Looking at the program for the next two days I see you are covering many important issues that go to the heart of the health our economy.

Your twice yearly conference is a great way to pool your considerable expertise and share your knowledge.

The Australian Industry Group plays an essential role in the national economic debate.

Previously under the leadership of Heather Ridout and now with Innes Willex, governments of both persuasions always look to the Australian Industry Group for advice and counsel on how we can grow this country.

I’m looking forward to hearing your views today and continuing that productive partnership.

Today I wanted to give you a snapshot on how I think the Fair Work Act is operating, a few points on productivity and also the latest from the Fair Work Act Review.

Benefits of the Fair Work Act to the economy and dispelling myths

The Fair Work Act was passed into law in 2009 and has been a fair and efficient system.

One which balances the interests of both the employer and employee.

People had high expectations for the Fair Work Act.

The task of realigning our workplace laws after WorkChoices was a complex task.

The Government, with the help of groups like the Australian Industry Group, had to design a system that maintained Australia’s competitiveness at the same time as providing a safe and fair workplace.

So several years on how did it work out?

Well if you look at the figures, it worked out well.

The most recent figures from DEEWR show that more than 16,000 enterprise agreements covering more than 2.2 million employees have been approved under the Fair Work Act.

Enterprise agreements made under the Fair Work system also continue to include a range of provisions to improve productivity in the workplace.

As at 30 June 2012, more than 48 per cent of agreements include a commitment to improve productivity.

There is no doubt these provisions have gone some way to stabilising productivity outside of the mining sector - a topic I will touch on later.

Almost 95 per cent of agreements provide for the flexible engagement of employees, and more than 72 per cent provide flexibility in hours of work.

And it’s good news that businesses and organisations continue to invest in training and staff development.

Almost 90 per cent of agreements contain provisions relating to training.

This evidence on agreement making and productivity shows that this Government’s workplace relations policies are delivering productive, competitive and fair outcomes for Australian employees AND employers.

Productivity has dominated the policy debate this year.

And it is important. Increased productivity lifts real incomes and provides us with a better quality of life.

And despite some of the doom and gloom you may hear about the prospects of our labour market and alleged impacts of the Fair Work Act on business, the results so far and outlook for the future are strong. More than 800,000 jobs have been created since this Government was first elected in 2007.

This is an outstanding achievement, given the rest of the world continues to grapple with soaring public debt and heavy job losses.

Also as a result of the steps the Government has taken in partnership with business, the outlook for our economy is bright.

The growth forecast is hovering around trend over the next two years; and the unemployment rate is expected to remain low, at 5 to 5 and a half per cent.

While some challenges remain for the Australian economy and labour market, Australia showcases a combination of solid growth, low unemployment, low interest rates and contained inflation.

These achievements are quite remarkable and are a direct result of business and employees working together to build the Fair Work Act and the broader economic and national interest.

Release of the Fair Work Act Review Report

There has been a keen interest in the progress of the Fair Work Act Review across all sectors.

Despite the different views of the groups involved, we value the feedback and considered it carefully in our deliberations.

The Australian Industry Group and its members have been closely involved in the Review, both through the Review Panel’s consultations when developing its report and Minister Shorten’s consultations when formulating the Government’s response.

The Independent Panel that conducted the review found that the Government got the balance right with the Fair Work Act.

It found the legislation is working well, meeting its objectives and delivering fairness to employers and employees. The Panel also found that the Fair Work legislation balances fairness while continuing to ensure business competitiveness.

The Review Panel made some key findings based on the evidence available to them.

Firstly, there have been a significant number of jobs created since 2007, despite the global financial crisis.

Secondly, there has not been a blow out in wages or unit labour costs or decreased competitiveness.

Thirdly, the Fair Work Act has a robust safety net with 122 modern awards compared to thousands under the previous system.

And finally the Fair Work Act is not bad for productivity and is not responsible for the recent slowdown in productivity growth. The last finding is worth elaborating on.

There is the misconception that the recent drop in productivity is due to workplace laws.

Economic evidence tells us otherwise.

The Reserve Bank recently concluded that the main reason for slowing productivity was due to a significant drop in the productivity of mining and over-investment in utilities by the states.

The RBA estimates those factors account for 70 per cent of the overall decline.

This is an important finding and illustrates that in the vast majority of this country workplaces are running productively.

We also know that productivity is bouncing back.

With these factors in mind the Panel concluded that the Fair Work legislation is operating as intended and in accordance with the objectives of the legislation.

They also provided us with some good suggestions on how to get it operating even better.

The Panel made 53 recommendations to improve the operation of the legislation while maintaining fairness in the workplace, but didn’t support the need for wholesale change.

This is a testament to the integrity and structure of the legislation. Government response to the Fair Work Act Review

Since the release of the Fair Work Act Review Report on the 2nd of August this year, Minister Shorten has consulted a large number of stakeholders—including employer organisations and small business representatives.

The Government announced its initial response to recommendations of the Fair Work Act Review last week.

The proposed approach was welcomed by the National Workplace Relations Consultative Council when they met in Melbourne.

The Minister acknowledged the value of the discussions leading up to the Government’s response.

He said that from those discussions, it was clear that there is broad support for around one third of the Review’s 53 recommendations; while it is also clear there are different views on the remaining recommendations.

The Government decided to proceed with amendments to the Fair Work Act that had broad support

However we will continue to consult with stakeholders, including the Australian Industry Group, on the remaining recommendations.

It is certainly not the case that certain recommendations were vetoed by the unions.

Changes for immediate implementation include recommendations covering unfair dismissal and structural arrangements for Fair Work Australia.

We have heard from business that the unfair dismissal provisions of the Fair Work Act are a concern.

We believe that the Act strikes the right balance between allowing employers to manage underperformance and protecting good employees from unfair dismissal.

While the Government believes the unfair dismissal system is working very well, we accept the proposition that we need to provide certainty for small and medium sized businesses.

That is why we are aligning timeframes for unfair dismissal and dismissal-related general protections claims at 21 days.

We are also making some changes relating to Fair Work Australia’s ability to dismiss applications and award costs.

These changes will help clean up some of the vexatious behaviour we have seen at the margins.

The Government will introduce these amendments to Parliament this year.

Centre for Workplace Leadership

The Government has also announced the establishment of a new 12 million dollar Centre for Workplace Leadership.

Ensuring that Australian jobs and workplaces of the future continue to lift productivity is a key priority for the Government.

We can do this by boosting workplace leadership capability.

For too long the workplace relations debate in Australia has focused on conflict between unions and employers and the transactions involved in setting pay and conditions.

This has meant that ongoing, daily relationships that occur at the workplace have not been given the attention they deserve.

There is a substantial and growing body of evidence that shows that leadership, workplace culture and management practices have a significant impact on workplace performance, productivity, profitability and innovation.

Working across all industries, sectors and regions of Australia, the Centre will improve the leadership capability in workplaces of all sizes, including businesses outside of our capital cities.

There will be a significant focus on assisting small and medium enterprises.

The strategic direction and priorities of the Centre for Workplace Leadership will be informed by an Advisory Group comprised of noted community leaders, including from business, unions and experts who are committed to building Australia’s leadership capability.

This Advisory Group will provide expert advice to Government and to the Centre on the key issues and strategies that will help the Centre reach and assist workplaces across the country.

Conclusion

What I have outlined to you today is the Gillard Government’s record in delivering a balanced workplace relations system.

It is a system of which we are proud.

However, we know there are challenges ahead.

There still remains global economic uncertainty and significant headwinds.

To continue to enjoy the economic growth of the last few decades we need to focus on productivity and importantly continue to get the balance right in the workplace.

The Government appreciates the key role of employer associations like the Australian Industry Group in helping us to achieve this goal.

We don’t always see eye-to-eye on certain issues but I know we share a common goal and that is to grow the economy and create opportunity.

We will continue to seek your advice and counsel through important forums like the Committee on Industrial Legislation, to get the best results for both Australian businesses and Australian workers.

Enjoy the rest of the conference.

[Ends.]

For more information

Media Contact: media@deewr.gov.au Non-media queries: 1300 363 079