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Philips Fox breakfast seminar, Hyatt Hotel, Melbourne, 9 February 1998: transcript of speech.

EOE

Thank you very much for those words of welcome. It's very good to be back and I appreciate the opportunity to speak with you briefly and I am looking forward to the questions as well. Can I also particularly acknowledge Peter Ashley, the Chairman of Philips Fox and members of the firm, clients and others. It is good to see you making a good start to the week, early on Monday morning. The invitation this morning is to speak generally about the reforms that the Government has introduced, the direction of reform, the impact we assess of the first twelve months or so of the implementation of the reforms and of course how could I not complete without a few remarks about the state of play on Webb Dock in Melbourne.

As an example, I suppose of the continuing impact of the reforms that we've introduced, it can be very complicated in industrial relations you know. In fact, in Australia we have become experts at making it complicated and whilst there are of course a lot of technicalities and complexities to be addressed in any human endeavour, I think it's not a bad idea to start by saying that really if we can have a simple system and address the basics of good relations between people at work, then that will actually be an advance to encouraging better employee relations at work. And when I look at our system and the changes that we're making for all the significance of these reforms, I have to say the idea at the core of what we are trying to do is fortunately a very simple idea. And that simple idea is, that if you allow and encourage people at work to sit down and talk to each other about better managing their business and running their business, then we know that they will take up that opportunity, they will improve the way in which their business operates; that will be good for the business concerned, and it will certainly benefit the employees in the contribution and the satisfaction which they take from being in a business.

It really is quite simple, if you want to run a business better, then ask the people who are running it how to do so. Now it is true that from time to time, if you want to know how to better business, you should bring somebody in from the outside. You might bring in a consultant or an accountant or you might bring in a premier legal firm like Philips Fox. Thank you for breakfast (laughter). But in the end, if you want to manage your business better, you have to be responsible for it whether you're an employer or an employee. You have to have responsibility. You must have accountability for these better outcomes. And yet when you look at the Australian system, so often the system has relied not on the people within the business to be accountable for employee relations, it's looked to somebody else to tell them how to manage their business. And so the feature, so distinguishingly Australian industrial relations system has really been these third party interventions. Clearly unions, but not just unions, Industrial Relations Commissions, and of course employer associations as well and Government have all been great interveners telling people basically how to better to manage their business.

Now that is not to say these is not a role for third parties, I think there is. I think for Governments, for Parliaments, at a policy level I think there is a role to say that there should be a set of minimum conditions which in this society we would expect to apply across the board in the employment of people. But we take the view that really the future for better employee relations is actually to refine a system where people are more accountable. And really once people meet these minimum conditions, then above those minimum conditions people should be more responsible than they've been in the past and there should be far less third party intervention. And ladies and gentlemen, quite frankly if you take that simple idea I think I can fairly say to you that that is a common thread running through the changes that we've made.

We've also introduced a rather novel idea for Industrial Relations. And that is to say that when you actually do enter into a deal, you have to stick to it. This is truly novel in the Australian system. And you've put it very well when you sort of suggested that we used to have a system where you weren't supposed to take industrial action but everybody did. And that has been the case for a long, so long in Australian history that we are really as a society quite unused to the idea that it is part that you should stick to it. Well the most recent of that history goes back to Clarrie O'Shea who was the Secretary of Trammie's Union. My former federal Parliamentary colleague, David Connolly smiles at that name, a name well known in federal politics banded around many times. Clarrie was in the clink here in Melbourne and some weak employer paid his fine and he got out and we got a very one sided system every sense.

What we've done is we've more clearly defined when you can take industrial action, and that actually was a big step for our side l think because, however it was a logical step, because if you are going to have a more decentralised, more deregulated system you need to properly acknowledge the rights of the parties and in certain circumstances people should have a right to industrial action. Once you've defined that, you can also define when they should not take industrial action. And when you've defined that logically, you can set up a proper set of remedies for dealing with those people in breaching of their obligations.

So what have we done? We've moved to try and simplify the system so people are more responsible and accountable. And we've moved consistent with that, to better define what you can do and what you can't do. And we've supported all that with a series of reforms to build the basics rights of individuals and groups, collective organisations within the system, by for example, reinforcing the freedom of association provisions of the federal law.

If you then go to the minutiae of what we've actually done, one of the most important things we had to do was remove a lot of the existing third party intervention, namely the very prescriptive set of awards which tells you how to run your business. And so award simplification is at the centre of, or one of the pillars of the reforms that we've introduced. What that's attempting to do is to put some limits on the extent to which the Industrial Relations Commission and the parties can impose conditions upon any particular enterprise. It's not a new idea, Paul Keating thought it was a great idea. His problem has implementation because Paul's idea of implementation of award simplification was ask the unions would they mind please cleaning up the mess for which they were responsible. This didn't get a big, response. That's not to say there hasn't been some. We took a different approach. We legislated award simplification by setting out the criteria which would determine those matters which are within awards and those which are without. And not only have we set the criteria, we also set a timetable and we said we want awards cleaned up and simplified within an eighteen month period. We told the Commission that it should be responsible to supervise that process and make sure it happens. And at the end of eighteen months, if the awards have not been simplified, we've got a clear delineation. At the end of the eighteen months, if you have matters within all award which are outside our criteria, then those matters become invalid as of the 30th June this year. So we've moved to clean up the existing system.

The second thing we've done, we've moved to give people many more choices as to how they can actually cement a deal at work. In other words, what we're trying to do is just to make it much easier for people at work to sit down and come to an agreement. And they're about the move towards a more individual approach. That is certainly true in the sense that we give people a choice to follow up an individual agreement, why shouldn't they be able to? But we are not making that choice. What we've done in this legislation is we've said, here is a smorgasbord of choices. Now if you work out what suits you in running your business, if you want an individual agreement, go for it. If you want to have a union bargain an individual agreement for you, fine, no troubles. If you want to have a collective agreement and have the union be the party representing the employees, again no problems. If you want to have a non-union agreement, if the majority want to have a non- union agreement, that's another choice. In Victoria of course, one of the big changes is that we've completely taken over the Victorian jurisdictions and put then into the federal jurisdiction, an historic referral of powers from a State to the Commonwealth. In other States we have added to our smorgasbord. We've said well if you are in the federal system, but you prefer the state agreement system, well you can have that as well. Well that's another steak you have on the smorgasbord, so we threw that one in plus the steak knives (laughter). And on top of that we've also said well if you don't want an formal agreement, you can have an informal agreement, and in federal law we have a specific provision which says informal agreements are just as good as formal agreements.

We could not have gone further in giving people a choice. And it's very interesting because a lot of people are now starting to take up the choices. Nick, I thought your comments about the evolution of the system and those Words well reasoned and practical, realistic. You don't change the industrial relations system overnight. I mean, it's just unrealistic to say that people are going to have one relationship on a Friday and turn up on Monday because the Parliament has changed the law and have a completely different view of their industrial relations climate and the way in which the operate.

It's an evolving system. But what we are seeing is that as people are given some real choices, their attitudes are changing and in a sense for us it's not to deny industrial relations is an evolutionary business but rather to say that it in this country, we've got to evolve a lot further and a lot faster than what we're doing to meet the climate and the market changes which show the Australian economy as a whole in this basin.

So what have we done? We've simplified the system. We've removed one stroke a lot of existing prescriptions and the Commission before Christmas brought down one of its most important decisions. That was the principles on award simplification. We've moved to make agreement making a lot easier. The AWA's have certainly been controversial, there's no two ways about it, the unions you know absolutely beside themselves at the idea of an AWA. What's been interesting about the AWA is this, not only has there been a significant number of them, but I think just as importantly is that the new offerings of an AWA at work does seem to have a real impact on people's behaviour, particularly the unions. I mean the unions are dead keen to have an agreement a collective agreement of any sort, if there's a smell of an AWA in the air. If you look at the non union agreements, we have a significant number of those compared to the comparable agreement stream under the previous legislation, the Enterprise Flexibility Agreement. For those who follow industrial relations perhaps a bit more closely, they know what an EA is. For in that other EA virtually every one that had been entered into under the previous Government, was a matter of great controversy. If you entered into an EA under the previous Government, the chances are you would be umpteen times in the Commission, the unions would fight you at every point along the way. It would be a matter of public controversy spread across the front pages of the newspapers as you battle to just have a simple deal with your own employees. Now of course all the focus is on AWA's and the non union agreements, the old EA's are now charging along very nicely thank you. And one of the reasons there is that we've said, if a union is to be a party to an agreement, that is fine. But ultimately that is a choice not for the union but the choice for the people who are the employees of the business. If they want to have a union, I've got no problems about that. But, you know we are often being criticised as being anti union. But actually in our legislation we have increased the penalties against employers for coercing a person to either join or not to join a union. So we've actually gone further than the Labor Party in terms of penalties because we genuinely believe you have a choice. If you want to be in a union great. If you don't want to be, that's another choice similarly to be protected.

So what we are seeing is a real shift in approach in attitude and we are seeing a big build up in those numbers. In the compliance area we have also made some very significant changes. In the Trade Practices Act of course we've bought the secondary boycott provisions and we also included a ban on primary boycotts affecting international trade. I refer to this as the Cheryl Clauses because they were the subject of a lot of close negotiation as were all of the other matters with the Democrats. I actually never thought we would get the ban on primary boycotts through. My first meeting with then Senator Kernot was actually at 4 Treasury Place and this was at the start of a process of long negotiations. And she had her advisers with her and I had my team of advisers. And I thought well you know there's two ways to do this, we could spend a lot of time talking to each other and we'd go through every clause, or alternatively Cheryl and I, we'll whip it through no worries at all.

So when she arrived that morning at 4 Treasury Place with her team, I said Cheryl would you mind if you and I just had a bit of a chat beforehand? And she said "Fair enough". So she came in. Well I had worked out a list, I suppose in the Bill, it was a big Bill, and there were a lot of changes in it, but I reckon there were about 25 or something like that big ticket items. And some of them, we put in the there basically for Cheryl and her job was to find them and get us to take them out. And I said to Cheryl 'This is what I'll give you and this is what you'll give me and we can do it here and now basically". That was my first proposition. Or alternatively if you would like to go through every clause, we would be delighted to do that. I though that the thing that she hit would me with was on the primary boycotts because for those of you who follow the political debate, the thing that we had only ever talked about in our policy was the return of the secondary boycott provisions of the Trade Practices Act. And later on in the discussions about the primary boycotts I said 'Well I think we should have it. You know I fought to the nail to get those primary boycott provisions in." And I said to her 'Cheryl, if you don't support these primary boycott provisions, do you know what everybody is going to say about you, they are going to say you're supporting the MUA because everybody will see these provisions affecting international trade as principally aimed at the MUA. They're not actually, but that is how it will be portrayed." And she said "that's fine, I'm going to vote for those." Good on you Cheryl. And as we go to the next election campaign, we should have posters and it will be Kim Beazley in the middle, a pathetic embarrassed, stunningly silent figure on the question of industrial relations and bound hand foot on one side will be John Coombs and on the other side will be Cheryl and the Cheryl Clauses. And that's going to be fun within the Labor Party.

We today have the lowest level of industrial disputes in Australia for thirty years. It is an amazing figure, it is the lowest level of industrial disputes in Australia for thirty years. And there are obviously more than one explanation for that, but I tell you what, one of them is very clear and that is because if you take industrial action in breach of the relevant provisions, including the Trade Practices Act, then there are heavy penalties and remedies to aggrieved employers. We also introduced these new provisions known as section 127. These have worked like a charm. This is a very effective provision, section 127 allows an employer to go along to the Commission and get an order to tell people to go back to work. Now you know we've been criticised by the basis that we have gutted the Commission. In reality we gave the Commission a power to which it should have had years ago which I think most people sort of thought it should have been able to have anyway and namely it's the umpire. Because imagine if you're umpiring a grand final but you don't have any capacity to award a free kick. You know this would be a bit of a free for all if it were a footy match but because in the Industrial Relations Commission, they are used to a free for all, the fact that the umpire had no whistle didn't seem to rate a mention. We have given the Commission a power to tell people to go back to work and people have been using it. The employers have been knocking off 127 applications basically from the day that the legislation was introduced. And what's been happening is the service they get from lodging these applications, in a lot of cases people have been going back to work. The unions have taken the attitude well why run the gauntlet. If there's a 127 application we might as well go back to work now. And so whilst on a technical level the number that's been actually issued is relatively minor, the reason is that people have, and unions in particular, have not been prepared to take them on. And that has seen I think a significant change in the attitude of the parties to take industrial action. These things are all relevant in of course the waterfront dispute and I'll come back to that in a moment but that has been a very successful aspect of the new law.

I do also want to say before turning to the waterfront. Whilst we have been generally pleased with the introduction of the new laws and their implementation, I also want to say to you that consistent with that evolutionary approach that we've always had, we think that more needs to be done. We've not been sitting idle however during the last 12 months. In the allowable matters list, namely our instructions to the Commission about what awards should contain or otherwise, we had twenty matters. One of those matters was superannuation. In Australia we have two lots of prescription about superannuation. We have superannuation laws, federal laws and we have award prescriptions about superannuation. Our view is can we just have one law, one set of prescription. But we have already just in the time before Christmas, introduced a bill to remove superannuation from the list of allowable matters to thereby bring back to the Commission's jurisdiction from twenty to nineteen.

We've also introduced some technical amendments to the Workplace Relations Act to make it easier to operate and really as a result of our experience in the first few months. One of the those areas has been with respect to Australian Workplace Agreements. We would like to make those as easy as possible for people. Not to go as far as some employers have put to me. Some employees say to me if I want to have a deal with my employee, I should be able to basically write about it on the back of an envelope and anything that's got more paperwork associated with it, and that is that is just far too complex. I have to say to you that I don't agree with that. I think where people after employee relations, the employees are entitled to a proper process and some reasonable protections through that process. But I do think over time, we've got to make sure that AWA's are as easy as possible. We've started that process and I think in future we've got to go further.

And in the area of the unfair dismissal, we have had again I think a very significant impact on the approach to unfair dismissals. In the federal jurisdictions the number of unfair dismissals has been reduced by fifty percent from that which we inherited. That is because we have made a lot of practical changes. For example, we've got a filing fee. One of my favourite stories I suppose about the impact, I always a bit worried about $50 being whether it was enough to deter unreasonable applications but I suppose we were belted down a bit by the Democrats, we might have started at a $100 and they got us to $50. Gee we had some long sessions with them. The week after we introduced the unfair dismissal application fee of $50, some bloke turned up at the Brisbane Registry I think it was and he lodged his application and the person said that's $50 and that made him really hesitate. And then the person said, and also there's quite a few other changes and you might like to get some advice about it. You know he came back to register the next day, he had obviously had some advice and the first thing he said to the clerk behind the registry, can I have my $50 back?

We've introduced a change to the onus provisions of that law. We now have a system where costs can be awarded against applicants. I am pleased to announce that an employee won a case the other day, on unfair dismissals. I am waiting for the ripple to go through the room, this is big news. The system that we inherited has been biased, an unfair system. And employers have been saying to themselves, well gee, I mean l'd give somebody a job but I'm not sure if it's worth the risk.

We have also introduced some really practical measures. For example, under the old system, you could employ somebody but there was no statement as to what would be considered a reasonable probation period on employment of somebody. Now can I just give you a simple piece of advice. When you're employing people, you must tell them that they are on probation for three months. Under the Act you can tell them, the probation period is three months and it's fixed. You must do that for all employees. I do it for people, that I employ from the time since we reformed the Act. Because it means that within that three month period you can deal with those people without having to face an unfair dismissal application. And I think it's very important because a lot of employers have been deterred. We are going one step further for small business, we want to remove that unfair dismissal jurisdiction altogether for new employees and that bill is currently in the Parliament. It's been rejected once and we're going to put it up again in March and if it's rejected twice we are going to keep up the political pressure on the Labor Party and the Democrats in the Senate.

Beyond that, more reform is still necessary and we are keen to build on what we've done to evolve the system further and as we go to the next election, we will have a platform of further reform. My invitation to you is to take up the opportunity to respond by advancing your views about other changes that you think would assist in development of the system.

Now let me now turn to my preoccupation of the last few days. Believe it or not, there's a dispute down at Webb Dock just down on the bottom of the Yarra here not far from us. Ladies and gentlemen there really is a very compelling case for reform. It is true that when Labor was in office they made some attempt to reform the waterfront. But it's also true that when they say productivity was at appalling low levels and they paid a very heavy price, some of it with your money, in total $420M to get a marginal change. And then failed to put in a process of dynamic change to try and improve my continuing process of the productivity of the Australian waterfront. It seems to me that the case is compelling for Australia to have an efficient waterfront. We have something like a $120M worth of goods which go across the Australian waterfront. We have a lot of those goods in containers and in the container traffic we have a diversity of products. But certainly things like elaborately transformed manufactures which is a growing part of Australian business with the rest of the world. And in a world where just in time deliveries are increasingly important as well, we really must do a lot better. In the port of Melbourne the cost of removing a container is roughly $200 a box. The farmers objective is to reduce that by half to $100. Well, lets say they won't reach their objective. Let's say they get half way. If you could save $50 a box in the port of Melbourne which has a million containers a year, that is a $50M enhancement to the bottom line of the pockets of people who are in the export/import business. That is a massive improvement in those viability of Australian businesses.

I like the bloke I heard on radio the other day a really classic practical example. His name was Jack Schmidt and he runs the Yanco Stockfeed business in the Riverina. And it's not a bad effort, he is putting stockfeed into containers sending them all the way up to the dairy industry in Japan. And he's their supplier, good on him. And you can imagine in the Riverina, a business like that supports a lot of other businesses. And not just people who are on the land but people in the town who supply the agricultural equipment and more. So that's a very important little business to call. And yet he said that in terms of his container costs, that he was at a forty five to fifty percent disadvantage to his American competitors. Now you can't run a business if you're just going to hand off a forty or fifty percent plus advantage to your competitors. And particularly for no reason. I mean I am also the Minister for Small Business. I mean its pretty irksome on the small business community. They work their guts out for what fifty hours a week plus, lucky to get a decent take home pay at the end of the week. And yet you've got some wharfie down here on the port of Melbourne who might be a crane driver on $90000 a year who is officially at work for 50.3 hours a week but on the actual figures coming out of that operation, he's lucky to spend 14 hours a week in that crane. I mean this is quite frankly a great racket at everybody else's expense.

The wharfies, it was very good of them the other day, as part of their public relations campaign to remove four boxes of kiwi fruit. It was good of them but even when they're doing it for themselves, they just can't resist over manning any operation. They had to move four boxes onto a truck, they had one forklift driver although I suppose even they had to move that, they had to have a foreman and would you believe they had three clerks to count four boxes (laughter). Chris Corrigan told the story that he has been so exasperated in dealing with these people, that his Darling Harbour operation, he offered it to the MUA for them to run. Well John Coombs is not that silly. He wouldn't employ himself (laughter). Chris Corrigan I'm told passed him across the dollar of saying he'll give them the dollar for to take over this operation. Corrigan says he's got $450M worth of assets and yet he can't make a viable concern with the work practices that we have today. It's no wonder. Someone said to me yesterday, did you know they're taking four hour dispute stop work meetings at a P O operation this week? So what? These blokes take a four stop work meeting at the drop of a hat every week. They have the second worst industrial relations dispute record of any industry in Australia. Before Christmas, they were threatening to close down the whole port of Botany because the employer was refusing to recover the billiard table would you believe. And people find this amazing. This is par for the course for these guys. This is a daily event. You can not run an operation on the Australian stevedoring operation because the MUA runs it. They tell you who works, when they work and when they get paid. And if you know I wouldn't mind these guys for they're average of $74,000 to $90,000 you know up to $135,000 a year return remuneration, I wouldn't mind quite frankly so much that at least they put in a decent effort.

You know Australian ports on an apples by apples comparison don't rate well. Not only are we unproductive, we are not reliable. Australia was voted as the least reliable port of any by the International Shipping Group last year. It's the worst place to come to. It's, by the MUA's point of view, it's not even safe for their own employees. Per capita it's the least safe industry to work in, a reflection of poor employees. And as a result of all that, we can't do better than Mozambique would you believe. We can't do better than Manilla. I mean why can't we at least run our ports as efficiently as New Zealand. Surely it's not too much to ask. And it's been this way for a long time.

I was in a studio the other day. When you're a politician and you go on TV, they make up your face. And if you do really well, they'll take your face off after (laughter). I was talking to a person about the reputation of the MUA. And this person she said she knew somebody in the MUA. And I said, what's it like? And we had a long discussion. I think it was the first time she had heard that crane drivers got $90,000 but I didn't ask her about her own relationship with the other of course but I guess maybe they hadn't told her what they were on but anyway. What was said to me by this person is you know that the trouble is if you were in the MUA, they don't have a good reputation and she recovered you know when you go to a function and you tell somebody you are in the MUA, you know that they say, they say how many TV sets have you got at home.

I think it's time for reform there is no question about it ...