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Thursday, 29 June 2000
Page: 18567


Mr REITH (Minister for Employment, Workplace Relations and Small Business) (9:40 AM) —I move:

That the bill be now read a second time.

The coalition's 1998 workplace relations election policy More Jobs, Better Pay contained commitments to further legislative reform in our second term of office.

These commitments were reflected in four pieces of legislation already introduced by the government since October 1998, dealing with small business unfair dismissal exemptions, superannuation, youth wages and multiple reform issues in the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999.

That bill was passed by the House of Representatives on 14 October 1999 but subsequently blocked by the combined opposition of the Labor Party and the Australian Democrats in the Senate.

Since opposing the `more jobs, better pay bill 1999' last November, the Democrats have publicly indicated that they prefer to deal with the contents of that bill on an issue by issue basis, not as an omnibus piece of legislation.

In a speech to the ACT Industrial Relations Society on 6 April 2000 Democrats spokesman Senator Murray said, and I quote:

In my view only technical Bills should be general and broad ranging. Policy Bills should be specific. It is far better for a reformist government to deal with one issue at a time on a specific and limited basis.

And again, in the course of the inquiry by the Senate Employment, Workplace Relations, Small Business and Education Legislation Committee into the bill, the senator said:

It seems to me the Act can be conveniently broken up into major sectors .... I find these kind of omnibus bills can result in a lot of negativity and it is very difficult to progress them.

Taking these sentiments into account, the government has sought to accommodate the preferences of the Australian Democrats by proceeding, other than on technical issues, with an issue by issue consideration of policy matters arising from the more jobs, better pay bill 1999.

The first of these issue bills was a bill dealing with pattern bargaining and related matters which passed the House on 1 June 2000, but which is now also being opposed in the Senate by the Labor Party and, so far, the Democrats.

The government is now in a position to introduce further single issue bills drawn from the more jobs, better pay bill 1999.

The Workplace Relations Amendment (Tallies and Picnic Days) Bill 2000 makes changes to the Workplace Relations Act 1996 which provide for further simplification of federal awards in two areas where industrial matters are more appropriately decided at the workplace level—union picnic days and tallies.

Despite obstruction, the award simplification process under the 1996 act has been beneficial to employers and employees. Since July 1998 all federal awards have only been enforceable in a simplified form. Over a thousand obsolete awards have been set aside, and hundreds of others have been simplified to ensure that published versions of awards specify only allowable matters.

Award simplification has established a fair and streamlined safety net of minimum wages and conditions of employment. It has also facilitated agreement making and more productive workplaces.

Following the decision of the High Court on 15 June 2000 to uphold the constitutional validity of the award simplification process, it is now appropriate for the parliament to enact measures for further targeted simplification. Overly complex and restrictive awards only hinder agreement making and act as a barrier to continued employment growth and workplace decision making.

Award simplification should be a matter of bipartisan policy in this parliament. It was a policy advocated by the former Keating Labor government between 1993 and 1996.

The Labor Party in opposition has, however, regressed in its own support for award simplification. It now has an approach of mindless opposition, like that of the ACTU, to all award simplification. Rather than support simplified awards, Labor's policy—as recently as last Friday's version—is for awards with unlimited content and regulatory detail.

Award simplification, however, remains a formal part of Australian Democrat policy. The Democrats' 1998 industrial relations policy indicated that:

... in assessing the industrial relations policies of both major parties in the Senate, the Democrats will apply and pursue the following principles ... A comprehensive up to date, simplified and useable award system.

Tallies

The bill removes tallies from the allowable award matters. Tally systems determine rates of pay and penalties by inputs rather than outputs.

The award based tally systems which operate exclusively in the meat processing sector are a major disincentive to productivity and efficiency in that sector. This is supported by the 1998 Productivity Commission report entitled Work arrangements in the Australian meat processing industry. That report said:

...there are two forms of tally—head tallies and unit tallies...The simple effect of the unit tally ... is to increase unit labour costs as output exceeds minimum and then maximum tally...Both head and unit tallies are based on inputs—such as the number of heads—rather than a measure of output, such as weight processed, yield per animal, or any other measure of quality. This has implications for the impact of the tally on incentives facing both employees and managements. Unit tallies in particular are complex and prescriptive...

After some 30 years of operation the award tally system is outdated and has been overtaken by technological developments and advancements.

The Cattle Council of Australia, earlier this month, published a paper entitled Australia's beef industry: a new era. That paper said:

...With the focus upon inputs, unit labour costs are increased to a very large degree once the tally has been met. These increased labour costs limit throughput on a given shift and overall in meat processing plants. This also leads to significant under-utilisation of capital, with the effect that labour inefficiencies also reduce capital productivity...”

If individual enterprises wish to operate tally systems they need to be designed and be able to be adjusted, having regard to the circumstances affecting particular plants and to changes in those circumstances. Award based prescription of tallies is therefore unduly prescriptive and a brake on productivity.

A full bench of the commission, last year, decided as part of award simplification hearings that it would delete the tally system from the major federal meat industry award. It decided to replace the tally system with a provision allowing for the implementation of an incentive payment system at the enterprise level as an alternative to payment based on time worked. It found that the appendix to that award, which set out the substance of the tally provisions, was:

...replete with matters of detail or process more appropriately dealt with by agreement at the workplace or enterprise level...the provisions prescribe procedures which restrict or hinder the efficient performance of work...tally values based on time and motion analysis of the way work was performed 30 years ago are unlikely to be accurate now...the provisions are incapable of rational application to the variety of plants which make up the modern industry ...

The removal of tallies from awards is long overdue and has been widely advocated within industry and by policy makers across the political divide. As related by the Deputy Prime Minister and Minister for Transport and Regional Services to parliament on 26 June 2000:

...for a short period only, (the Australian Labor Party) got realistic about this industry, and their spokesman, the then Minister for Industrial Relations, Mr Peter Cook, in 1992 said `We ought to get rid of the tally system.' Peter Cook was not able to...deliver. Do you know why not? The ACTU said no. Peter Cook said, `This will produce more jobs. This will save jobs and produce more jobs. It is an important reform. But the ACTU said no.'

Why did the ACTU say `no'? The answer lies in the quote from an article in the Journal of Industrial Relations (MA Jerrard, March 2000), which described the tally system as:

...the method by which the union controls the pace of throughput of the plant in a shift

However, neither the Labor Party nor the Democrats have called into question the commission's decision to remove tallies from the major federal meat industry award. Apart from this award, unit tally systems also exist in a number of other federal meat awards. Removal of tallies as an allowable matter will expedite the modernisation of these awards.

As the National Farmers Federation said on Tuesday 27 June 2000:

The statutory obligation of the meat industry tally system is also critical to creating a more flexible and export responsive meat processing sector.....We welcome the Bill that will make meat industry tallies a non-allowable Award matter as this will bring a clean and final end to a system that has no logic and which hampers productivity.

Union picnic days

The bill further amends the Workplace Relations Act 1966 to specifically exclude union picnic days from the allowable award matters. The effect of the amendment is to ensure that an award cannot provide for employees to observe, or be paid for, a union picnic day.

Union picnic days as part of the award safety net are an anachronism. Union membership is less than 20 per cent in the private sector in today's modern labour market, and union picnic days are very isolated in their incidence and observance. Union picnic day, if it is to be observed, should be the subject of local agreement at the workplace level. There is no basis on which it could be sensibly said that the observance of union picnic day is a necessary and relevant feature of a modern award safety net.

This point has been acknowledged not just by the government but also by the Australian Democrats. In his report in November 1999 to the Senate Employment, Workplace Relations, Small Business and Education Legislation Committee Senator Murray said:

... much has been made of the fact that awards still contain anomalies in them. For example, I agree there is little to justify keeping union picnic days in awards.

Two-thirds of federal awards presently contain no union picnic day provisions, including 60 of the top 100 awards.

In introducing this bill, I am clearly indicating that the government is determined to proceed on an issue in respect of which there appears to be Democrat support. The government is prepared to consider amendments to refine the detail of the changes proposed by the bill, if it is the detail that is the barrier to the bill's passage through the parliament.

The limited measures in this bill will continue the award simplification process in an appropriate manner. They will ensure that awards meet the requirement of a genuine safety net of fair and enforceable minimum conditions, with primary responsibility for these industrial matters being determined at the workplace level.

Of course, this matter has already been before a Senate committee. However, the government would welcome further Senate scrutiny, provided that such a committee will review the bill in order to achieve a fair and streamlined safety net of wages and minimum conditions of employment.

The right of the coalition to implement its workplace relations mandate, subject to constructive Senate review, is a principle that has been acknowledged by the Democrats—and one that they should now act upon.

On 15 June 1996, the then Leader of the Australian Democrats—now Labor shadow minister Kernot—said on the issue of workplace relations:

The Democrats accept that the government has been elected to govern and that it has its right to present its legislative program to the parliament for consideration. But the Democrats have been elected to do a job, and that is to closely scrutinise legislation to ensure that it is fair, and workable and the best solution to an identified problem.

She went on to say:

... the Democrats have no intention of being obstructionist in this Senate. As we have done for 15 years of holding balance of power, we will carefully review legislation, suggesting ways to make it work better if possible.

Adopting a just say no attitude to this bill would not only be inconsistent with the proper role of the Senate as a house of review but also breach the principle under which the Democrats themselves marked out their past approaches to these issues, certainly at least until 1997. I therefore commend the bill to the House and I present the explanatory memorandum.

Debate (on motion by Mr Swan) adjourned.