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Address to the AMWU conference "employment, industrial relations and labor in opposition"



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1 LEADER OF THE OPPOSITION |

EMBARGOED UNTIL DELIVERY CHECK AGAINST DELIVERY

ADDRESS TO THE AMWU CONFERENCE 1 1 EMPLOYMENT, INDUSTRIAL RELATIONS AND LABOR IN OPPOSITION" PENRITH. 18 JULY 1996

Honoured guests and delegates.

Thankyou for the invitation to speak today. What I would like to talk to you about is the landscape we face in employment and industrial relations under this new government. I know it will be an issue at the front of minds in the AMWU as we go about the task of supporting prospects for employment, wages and conditions and the

right to bargain collectively within the industrial relations system in this country.

Let me begin by saying that one of the major tasks we face in Opposition is that of making it clear to the Australian public and for the record how and why the work situation changed so much during our 13 years in office.

It is a task this leadership is very mindful of - our opponents in a number of the States have unfortunately been rather successful in demonising Labor

administrations - with terrible results for our party in those States. What we have to be very clear about is that they didn't deserve it, and Federal Labor certainly

doesn't .

Yesterday, Mr Costello turned the release of the

preliminary budget outcome into a stunt to justify the Government's excessive and ideologically-driven expenditure cuts. What Mr Costello has to learn is that he is not in Opposition anymore, and he should get rid of

the habit he has of talking the Australian economy down.

The truth of the matter is that with growth of 3.75% for the next three years, the Budget will virtually be back into balance without his massive cuts. That is eminently achievable with the economy they inherited - John Howard has already admitted its fundamental strength.

Yesterday's figures only confirm that the number one economic problem facing Australia is unemployment. The last thing the Government should do is implement an COMMONWEALTH

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excessive and unbalanced program of Budget cuts, which only diminishes the economy's capacity to create jobs.

To help us deal with these current problems and prepare for a return to Government, we must draw on the successes of the past.

It seems like an unbelievable statistic, but under Labor administrations over 2 million jobs were created between 1983 and 1996. What this means is that, over 13 years, including strong upturns and downturns, employment under Labor grew on average by 2.2%.

In the depths of the recession, job growth fell to

negative 1.4% in 1992, whilst at its peak in 1986, it reached 4.6%.

Now not only was this spectacular job growth, but it was absolutely essential. It was essential for the following reason - the labour force grew by an average of 2.2% every year over the same period - exactly the same

amount. This is the second of the twin revolutions in employment in Australia. We experienced a period of huge employment growth at the same time as a corresponding upsurge in labour market growth.

I don't need to tell you that the demographic force behind this labour market growth was the entry of women into the workforce. The male labour force in 1996 is about 20% larger than it was in 1983, but the female

labour force is over 50% larger - it grew by an average of 3.3% a year for 13 years.

The other force was the growth in part-time employment. Nearly half of the two million jobs created since 1983 were part-time, with male part-time employment doubling and female part-time employment increasing (off a much

higher base) by nearly 80%.

This growth in part-time employment was not necessarily a bad thing. Part-time jobs are not second-class jobs: firstly, they are a reflection of changing demographics and attitudes to the labour market - in particular, they

are the vehicle whereby nearly 700,000 women have entered the workforce since 1983.

Secondly, research shows that most people in part-time jobs actually prefer to work part-time. An ABS survey in 1995 shows that, of an estimated part-time workforce of 2.1 million, only 568,000, or 27% would have preferred more hours of work. That is: 73% of part-time workers

actually prefer to work part-time.

Moreover, around 40% of those who would have preferred more hours of work were, for one reason or another, not actively looking for more work. This leaves 340,000, or 16% of part-time workers actively looking for more work -

the definition of underemployment.

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Whatever your viewpoint on how the growth in employment was achieved, one thing is very clear - had we not

managed to produce the employment growth we did, the unemployment rate today would be astronomical. Just to give you an example - had job creation remained at the same level it was when John Howard was Treasurer,

unemployment would be over 2 million higher than it is now, with an unemployment rate of 23 percent.

It was a tough period for a lot of people and for the

Government. The economy had to be opened up to the world, business had to modernise, tariffs came down and unions amalgamated. There was financial deregulation (an adjustment the banks had problems with), a major drought,

a stock market crash and global recession. There was also widespread social change and a technological revolution in the workplace.

In much of Europe, unemployment took off. In the United States, wages crashed.

In Australia, we did better than most - all sectors responded to the Government’s lead, some better than others. Many didn't enjoy the ride, but knew it had to happen.

Partnership between the Labor Government and the union movement was crucial. Labor rejected the feudal approach of the Conservatives, recognising the opportunities for cooperation and bargaining between government, business

and organised labour:

Accord Mark One was signed in March 1983, with a basic agreement to base wage increases on CPI. These early Accords emphasised centralised wage determination and general wage increases.

Later Accords gave the lie to Conservative claims of inflexibility, moving towards decentralised productivity improvements, simplification of awards and enterprise bargaining, beginning with Accord Mark Six in 1990.

Over time the award system took on the primary role of ensuring fair and relevant minimum standards as workplace agreements flourished. But at the same time as we moved towards more decentralised wage fixing, we recognised the

importance of equity and objectivity in the process, making sure there was always a strong umpire, the Industrial Relations Commission.

This cooperative approach delivered results in

unprecedented industrial harmony:

Industrial disputes fell during Labor's tenure. The highest level of industrial disputes in any one year under Labor was still lower than the lowest level under

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Malcolm Fraser. This was good for business and good for workers.

None of the substantial economic achievements of the Labor Government could have been delivered without a progressive, cooperative, intelligent union movement, clear in its understanding that greater prosperity could only be delivered by a careful incomes policy

underpinning low inflation and steady employment growth - faith that was rewarded with tax relief and substantial improvements in the social wage:

• The tax burden was markedly decreased for all workers, with seven rounds of tax cuts for personal income over Labor's time in office. Australia is now the second lowest taxed country in the OECD. The bottom marginal

tax rate was lowered from 30% under John Howard to 20% now, and the tax-free threshold raised.

• Wage restraint contributed to the controlling of inflation, down to a 2 to 3 percent underlying rate on average over the course of the cycle.

• A national superannuation policy has given

superannuation, once the preserve of the wealthy, to 90% of all employees in Australia.

• Wage restraint has been rewarded with huge improvements in the social wage - Medicare, child care benefits, family payments, rent relief, low income rebates and the like. Whilst real average earnings increased modestly by 6.9%, over our period in office, real household disposable income per capita rose by 21%.

• We also made sure that necessary wage restraint did not impact unfairly on the lowest income families via a raft of assistance measures: family payments up to $121 a fortnight for each child, parenting allowances of up to $280 a fortnight for low income families as well as $500 million annually in rent assistance and

access to a Health Care Card, with all associated benefits.

The economy we inherited from John Howard in 1983 was a disaster: inwardly-focused with high tariff walls to the outside world, high taxes, high unemployment, high interest rates, 2 million people without health cover and

massive industrial conflict.

This was an economy heading for the rocks, with a new era of global competition dawning rapidly.

We turned this situation around 180 degrees and have delivered a strong economy back to him. And throughout this period of massive adjustment, we have been able to

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advance simultaneously the goals of equity and

prosperity.

So what is the vision of the new custodians of the

Australian economy?

The Coalition Government differs from Labor in its approach to employment in two main areas:

Firstly, the Coalition does not believe that Governments must set targets for the reduction of unemployment. We were very explicit when in government about our targets for unemployment. Most importantly, we had committed

ourselves to an unemployment rate of 5% by the turn of the century. The Coalition scoffed at our 1993 target of 500,000 jobs in three years, but we exceeded it by over

40%, creating well over 700,000 jobs during that period.

Likewise, we would have made 5% by 2000. With slowing growth in the labour market out to 2000, and assuming we only managed to grow jobs by slightly more than the

average 2.2% we managed over 13 years, we would have achieved our target. None of these assumptions are radical, they are even rather conservative if you consider the excellent state of the economy revealed by

recent growth figures.

John Howard will not commit to targets, instead he speaks of 1 getting small business going1 as the engine room for jobs. In this, he is basically paring back Labor's entire job creation strategy to one plank - and he will have a hard time outdoing us on that one plank too: 70% of the jobs created since 1993 were in small business.

The second area where the Coalition differs from us is in the area of intervention in the labour market - labour market programs. They are anathema to John Howard, as he has demonstrated by reversing his promise not to cut

their funding. Just after Parliament rose for the winter recess, the Coalition announced its cuts to programs such as SkillShare - as we all know a highly successful scheme to get the long term unemployed back to work by providing them with skill training.

Quite apart from the fact that these schemes were

demonstrably successful in participants attaining an unsubsidised job on completion, they were important in other ways:

• They share the available work experience and training equitably amongst the pool of unemployed, even if they do not result in employment immediately.

• They raise the skill level of participants, increasing their chances in the job market further down the track.

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• They have been shown to increase the motivation and self-esteem of participants - a vital contribution when dealing with the terrible social effects of

unemployment.

• And finally, they were a concrete expression of our determination as a Government not to leave the

unemployed behind as the economy improved, and our commitment to their long-term well-being.

What the Conservatives have decided to offer the unemployed instead is a revolution in Industrial Relations. In accordance with their belief that market solutions are the only solutions, they are racing as fast as they can towards labour market deregulation.

There are, of course, quite obvious theoretical problems with free marketeering in the labour market, not the least of which is that labour is not just another

commodity. It is not desirable to 'clear1 labour markets the same way you clear the copper market, by dropping the price until suppliers leave or demand picks up.

But I want to focus on what the Government is proposing right now:

We have spent a huge amount of time scrutinising the Coalition's Workplace Relations Bill because we believe it goes to the core of employment equity in this country. Bob McMullan has done a magnificent and diligent job on

this legislation so far - we have had a whole raft of speakers in the debate on this Bill and we will be

proposing 33 5 amendments - so we have done our homework here.

What we are talking about is deeply flawed legislation. Let me summarise our objections for you, under seven headings:

1. The Bill breaches the Prime Minister's "rock-solid guarantee" that no-one will be worse off under this legislation, by undermining the three pillars which guarantee protection for wages and conditions - the Commission, the award system and collective bargaining.

It also provides for Federal awards to be overridden by State Enterprise agreements with lower wages and conditions and it opens the door for lower wages and conditions for young workers. It will break promises.

2. The Bill discriminates against those disadvantaged in the marketplace - junior rates are to be retained in awards and agreements. Apprentices or trainees could receive even less, with no pay for off-site or out-of­ hours training. The Commission will have no power to order equal remuneration for all employees or set minimum or maximum hours for regular part-timers. It

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has no protection for the most vulnerable - casual and part-time workers, women, migrants and young people.

3. The Bill ignores the unequal bargaining power of employees and employers. It assumes employees have free choice to enter or not to enter into Australian Workplace Agreements. It also requires employees to bargain over existing secure conditions. It does not

recognise the legitimacy and desirability of employees organising and bargaining collectively: individual workplace agreements may have primacy over collective agreements and industrial action outside the statutory

right to strike may be severely punished. Its

assumptions bargaining about the are flawed.

relative power of labour in

4. The Bill diminishes the role of the Australian Industrial Relations Commission by introducing 36 limitations on its powers, including denying the right to review individual Workplace Agreements and limiting the award making power to just 18 conditions. It

curtails the powers of the umpire.

5. The Bill undermines the award system. Awards are confined to 18 prescribed matters and exclude issues such as superannuation, occupational health & safety and study leave. Paid rates awards are also abolished.

It weakens a central pillar of Australian Industrial Relations.

6. The Bill provides no framework for managing and reducing industrial disputes. Prevention and settlement of disputes has been removed as the central object of the Act and furthermore, the Commission's capacity to act is limited to the 18 matters.

Meanwhile, penalties for industrial action are to be increased by up to one thousand percent with new

injunction powers and secondary boycott provisions being introduced. The management of disputes will deteriorate.

7. Finally, the Bill is poor legislation in a technical sense. It has removed provisions designed to ensure our labour standards meet our international

obligations, and it contains some constitutionally dubious elements such as a judicial function for the IRC in unfair dismissal cases. Furthermore, it is 300 pages long and very complex. So it appears to be

poorly thought out in a very basic sense.

We will oppose it.

Before I leave the topic of Coalition policy, I must address one of the more ill-considered pieces of policy they have come up with recently. I

I am speaking of the Government's changes to the

migration programme. There was always a lot of argument

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about migration numbers when we were in government, and the effect these had on Australian jobs.

I have to say, this was all too frequently misguided. Migrants arriving in Australia do not generally crowd out jobs for Australian citizens. We all know that if a newly arrived migrant gets a job, he or she will thereby have a greater income, income which increases the demand

in the economy generally, and creates more jobs for everyone.

Having said that, crowding out is still possible. You have to calculate carefully - and it all depends on skills. Where you can make an argument for crowding out is where arriving migrants compete with Australian

citizens in particular skill areas. It is an extremely complicated balancing act, and one we devoted a great deal of time and effort to in government.

On this front, I think the Coalition has got it wrong. They are cutting the Family Reunion Programme and boosting skilled migration by 5000. Quite apart from the effect this will have on skilled employment amongst

current Australian citizens, this move can be seen as a cheap compensation for cutting out training programs for Australian citizens. We need to keep that indigenous training capability and resources, and we need to work on

expanding it - it has all sorts of positive flow-on effects throughout the employment market.

I mentioned earlier the fact that free marketeering doesn't work in the labour market. It seems a glib

comment, but in fact it goes to the heart of the

difference between ourselves and the Coalition, and in some ways we are fortunate, as it provides one of the platforms upon which Labor will build its next election victory and subsequent government.

It is simply this. People are not commodities. It is worthwhile recalling Keynes in this context, because one of his more famous comments is about how we labour under economic misconceptions - as he said, at some point in

time we will all find ourselves the slave of some defunct economist.

The Conservatives' defunct economics fails to recognise the social importance of work - a vital importance which goes far, far beyond the determination of the price at which it is bought and sold.

Employment is of course the centrepiece of social well­ being in this or any country. It is the means by which people are socialised - it provides the security, both material and psychological, which sustains our social

fabric.

The costs of unemployment are massive:

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Firstly, and most immediately, unemployment means a huge loss of potential national income as well as the

debilitating loss of personal and family income and the decline in living standards.

It has an effect on income in future periods too.

Employers generally prefer to employ people who are already employed - they tend to discount the suitability of unemployed people, and their wages with it.

There are two vitally important things about secure employment: firstly, it allays your anxieties about the future - and that is even more important in an age where so much is changing so quickly. Secondly, employment is

in a very real sense an entry ticket to basic social institutions: stable relationships and family life, community, housing, and retirement income. We are a society based around gainful employment.

When we have high and persistent unemployment, we are disenfranchising huge swathes of the population and creating social problems for ourselves. This is why we in Government introduced Working Nation - a record level of commitment by an Australian Government to helping the unemployed, and the Job Compact, which aimed squarely at

the most disadvantaged - the long term unemployed.

We need to continue to steer a middle course between the European and American models. The Americans have entrenched a huge number of working poor with low

unionisation and a constant erosion of wages, skills and conditions. Many European countries have focused on high-paying full-time jobs for the fortunate and very high long-term unemployment for the rest.

In recent times, even the US Federal Reserve has modified its anti-inflation stance, recognising that employment should be allowed to grow as the economy recovers, rather than slapping it down again with a pre-emptive strike. Inflationary fears are subsiding.

I believe we need to commit ourselves to a few basic goals to steer our course for employment in Australia:

Firstly, we must commit ourselves to strong economic growth, which encompasses a wide range of policy

requirements. This will go a long way to solving

unemployment, as the participation rates are predicted to flatten out after the boom we have experienced and about which I have already spoken.

Secondly, we must commit ourselves to education and training for young people and all employees, to make them more employable and better able to compete in a global marketplace, but also very importantly to help them

increase their wages over time.

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Finally, we must address job security. This must be one of the great challenges for Australian government in the future. We must not be just economic managers, we must also be socially aware. We must generate job growth, productivity improvement and hence job security. We must be cooperative with labour, not combative. This will be

one of the biggest points of differentiation we in the Labor party will have with those in the Coalition.

At this point, I would also like to express our support for the ACTU's current wage claim for low-paid workers. It is vitally important that such safeguards are

maintained in this new climate of Industrial Relations.

We will commit ourselves over this period in Opposition to establishing a new form of relationship with the union movement which is appropriate to its time, as was each of the Accords. Economic growth, job security and job

creation will be key objectives of this relationship.

A diversified, skilled workforce, with unemployment at 5% or less, will be more secure in their jobs and more

optimistic in outlook.

Many social problems will be reduced by achieving this goal.

It will be a central goal of the next Labor Government.

I look forward to working with you all in pursuing it.

Thankyou.