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Monday, 1 December 2008
Page: 11817


Mr KEENAN (10:05 AM) —I rise to discuss the Fair Work Bill 2008. This bill was introduced last week by the Deputy Prime Minister. I see that the government have devoted the whole week to this debate, and I expect that they are going to engage in extended mutual backslapping and self-congratulation. But, whilst the House will spend the week debating workplace relations, it is only this side of the House that will actually address the central issue in this portfolio—that of job security.

I fully expect government members to echo the Deputy Prime Minister in their approach to this bill and in their approach to this policy area—an obsession with workplace regulation and the role of unions within the system and a callous indifference to Australians who have recently become unemployed or who will be made unemployed over the next two years. Just as Australians understand that the Labor Party stands for deficits, they also understand that Labor stands for unemployment. The Deputy Prime Minister risks becoming the empress of unemployment.

Twelve months into the Rudd-Swan government, we see the Labor Party reverting to type. After inheriting the best economic situation of any incoming government in Australia’s history, they have comprehensively begun to squander this legacy. We see it in the discussions this week about the deficit. They have managed to take a $20 billion surplus and, within 12 months, they have begun softening up the Australian people for further budget deficits.

And so it is on the employment front. The government has inherited the best situation of any incoming government in Australia in the past three decades—a situation of practically full employment. When the government changed in 1996, when the legacy of the Keating government was one of mass unemployment, who would have thought that by 2007 Australia would find itself in that situation? I want to take a few moments to remind the House of the previous government’s legacy on jobs, participation and employment, because it is the best legacy of any Australian government in the past three decades. I want to go into some detail about this legacy, because it is now the Rudd government’s to squander. Between March 1996 and November 2007, more than 2.2 million jobs were created. Of these, over 1.1 million were full time and almost 950,000 were part time. As of November 2007, 10.6 million Australians were in work—a record high. Over 7.6 million are now in full-time employment and three million are in part-time employment. The unemployment rate in October 2007 was an astonishing 4.3 per cent, which was a 33-year low. In December 2002, under the Keating government, the unemployment rate in Australia peaked at 10.9 per cent, which left one million Australians out of work.

The number of long-term unemployed in August 2007 was 66,700. One of the proudest boasts of the Howard government is that it slashed long-term unemployment by two-thirds—the number of very long term unemployed stood at 33,500 in August 2007. The number has fallen sharply, by 138,100, since its peak in November 1993. As I said, the long-term unemployed are of course the most difficult people to get into work. Whilst these 2.2 million jobs were being created there was an increase of almost 21 per cent in real wages. This compares to the 1.8 per cent decline in real wages under the Keating government. In real terms, average equivalised disposable household income was 10 per cent higher in 2005 than it was two years previously and 34 per cent higher than when the Howard government came into office.

At the nadir of unemployment, during the Keating government, in February 1991 the retrenchment rate was 6.5 per cent. It fell to 4.6 per cent in February 1996, when the Howard government took over. Since that time, the retrenchment rate has continued to decline. It stood at 2.2 per cent in the year to February 2006. Consequently, retrenchments were 59 per cent lower under the Howard government than they were under the Keating government in 1991. During this time, whilst these jobs were being created and whilst retrenchments were declining, the participation rate reached a record high of 65.2 per cent under the Howard government, compared to a rate of 63.5 per cent when the Howard government came to office in 1996. The participation rate of Australian youth—that is, people aged between 15 and 24—ranks second highest amongst OECD countries. The female participation rate is 57.6 per cent, well above the 53.7 per cent rate in March 2006, when the government changed. The number of working days lost to industrial action has also markedly declined. The number of working days lost per 1,000 employees has fallen from a high of approximately 105 in December 1992, when Labor was in government, to 80, the lowest quarterly rate ever recorded by the ABS.

I want to comprehensively highlight this legacy, because it is a legacy the new government can either protect or destroy. The Howard government has an unparalleled economic legacy, and its stunning success in creating jobs and lifting the standard of living through real wage increases is perhaps the most impressive aspect of this economic legacy. Yet we are now seeing the new government beginning to reverse all of these gains, and the opposition is deeply concerned that the Fair Work Bill will accelerate this slide. We have been left in a position where we have no choice but to accept government assurances that they have done their basic due diligence on this piece of legislation. No information has been made public on the likely effects of these changes on employment, industrial action, productivity or any other economic indicator. It is unclear that the government have undertaken any analysis, as you would expect them to do on such a major policy change in the way our labour market operates.

Extraordinarily, the government have exempted themselves from their own requirement to provide a regulatory impact statement. The Minister for Finance and Deregulation outlined these requirements in the House just six months ago, but the government have completely ignored them in framing this piece of legislation. When the Minister for Employment and Workplace Relations has been asked in the media about the effects of her industrial relations changes, she has refused to answer questions about what advice has been sought. Her response is along the lines of, ‘We understand the effects of our policies,’ yet it is not clear whether this understanding is based on rigorous analysis or just a hunch.

There is an emerging government pattern in all of this, and we saw it again over the weekend with the Council of Australian Governments announcements. They spend money and they quote a figure as to how many jobs that spending is going to create without providing any justifying information whatsoever. Take the case of the COAG announcements over the weekend. In the case of those COAG announcements, they said that extra spending was going to create 133,000 jobs. Take the economic stimulus package, with $10.4 billion spent: there was the announcement that accompanied that funding, saying that an extra 75,000 jobs would be created. Again there was absolutely not a shred of credible analysis to back this up. It does not automatically follow that extra government spending will lead to job creation. Poor labour market regulation can make any extra spending redundant. But of course the opposition has been left with no choice but to take the government on trust that these laws will not contribute to unemployment or have wider negative impacts on the economy.

It is clear from the legislation that, far from implementing the ALP’s workplace relations policy as announced by the ALP in the lead-up to last year’s election, this bill goes way outside of that policy on several very important fronts. In some cases, such as compulsory arbitration and pattern bargaining, the minister has completely reversed what Labor said the new government would do. These backflips are without a doubt the worst aspects of this bill. I want to highlight some of the areas where the minister has gone against the commitments that she made prior to the last election and indeed the commitments that she continued to make right up to just before this legislation was introduced. Take the issue of compulsory arbitration. Right from the outset, when the Labor Party announced their policy last year, compulsory arbitration was ruled out. On 30 May 2007, in a speech to the National Press Club, the minister said it was completely untrue that Labor’s new body, Fair Work Australia, would re-empower union bosses and introduce both compulsory arbitration and centralised wage fixing. She went on to say:

Under Labor’s policy there is no automatic arbitration of collective agreements. Our policy clearly states that no one will be forced to sign up to an agreement where they do not agree to the terms.

Later on in that year, in September, the minister was asked a direct question: would compulsory arbitration be part of the Labor system? The minister responded:

As we’ve said in our policy … there are a very limited number of circumstances where you need the industrial umpire to step in and resolve a dispute.

She went on to say:

… in the ordinary course people who are collectively bargaining at their enterprise level, all of that bargaining will happen at the enterprise level, they will either strike an agreement or not strike an agreement.

In other words, she was saying that it would be left up to the parties to make a judgment. Later on, again in a speech to the National Press Club, on 17 September 2008, the minister said very explicitly:

Compulsory arbitration will not be a feature of good faith bargaining.

This breach of faith as to the policy that was announced and the commitments that were consistently made later on in the year is perhaps the most outrageous of the government’s broken promises evident in this bill and it was done in the most blatant way to appease the union movement. Compulsory arbitration was ruled out in ALP policy commitments made prior to the last election, and the Deputy Prime Minister consistently ruled it out right up until 17 September this year. Then, just before this policy was announced, the minister backflipped in a speech that she made in Melbourne a couple of weeks ago. We now see a proposed system in which bargaining and negotiation have the potential to end with an adversarial and arbitrated outcome.

This is only one of several significant policy backflips that the minister has made. On union rights of entry, a fundamental part of the industrial relations system, the minister and the Prime Minister were at pains to point out, prior to the last election, the following. This is what they said in a joint press release:

Federal Labor will maintain the existing right of entry provisions. Right of entry rules remain.

Later on, at a press conference on the day of the press release, the minister confirmed that, saying:

We will make sure that current right of entry provisions stay. We understand that entering on the premises of an employer needs to happen in an orderly way. We will keep the right of entry provisions.

Again, after the election, the minister confirmed this was still ALP policy. In a speech to Master Builders Australia on 28 May this year, she promised ‘to retain the current right of entry framework’ and went on to say that this promise ‘will be kept’.

What we find now is that, whilst cosmetically the right of entry provisions are being retained, once you look at the detail you see this is a complete misnomer. As with most of the minister’s promises, you need to actually look at the detail. When you do, it inevitably exposes deceit. When you read the detail of the right of entry provisions contained within this legislation, you see the actual effect is to give the unions the best organising conditions they have enjoyed for decades, a point apparently confirmed by the minister in the ALP caucus when she was discussing this bill. Unions can now enter a workplace that uses non-union collective agreements, whereas before they could not. One or several unions can now enter workplaces where they use an agreement made with another union, where before they could not. Unions can now access non-union-member records, where before they could not. This is of course quite extraordinary. Unions can walk into any workplace, even when they have no members in that workplace, where before they could not. Restrictions on where unions can hold meetings have been loosened. Unions can now bargain with an employer about right of entry, where before they could not. Unions are now default bargaining agents, where before they were not. Unions are likely to be automatic parties to most new enterprise agreements, where before, under the old system, they were not. Unions get an automatic and privileged seat at the bargaining table, with disproportionate powers, where before they did not have these. Restrictions on who can go to the industrial umpire, Fair Work Australia, favour those represented by a union. So how can the government genuinely assert that this bill retains the previous right of entry provisions when, in looking at its detail, you see it favours paying off Labor’s debt to the union movement?

There are only a handful of measures left in this bill that will allow a workplace to keep unions out where they are not wanted. The same has been done with arbitration and right of entry. The same has been done with pattern bargaining. Previously in Labor’s policy and subsequently throughout this year, the minister ruled out that this legislation would contain a return to pattern bargaining. Indeed, the minister was asked during a doorstop on 1 May 2007, ‘Is pattern bargaining going to be a reality under your policy?’ The minister responded:

That is completely untrue. Pattern bargaining, in the sense of having industry-wide action, is unlawful under Labor’s Forward with Fairness plans.

She reconfirmed it on 30 May 2007:

Pattern bargaining is a term used to describe bargaining across the whole industry. That’s not what Labor’s policy is about.

Later on in the same year, she made a speech to CEDA and said:

The Minister and the Government—

of course, this goes back to the previous government—

will make all sorts of silly claims about Labor’s system. That it’s about centralised wage fixing and arbitration—it’s not. That it allows for pattern bargaining—it doesn’t.

She reconfirmed on The Today Show prior to the last election. She issued press releases saying that Labor will make pattern bargaining impossible. This has been reconfirmed by other ministers. The finance minister confirmed to The 7.30 Report earlier on this year:

We do not accept that pattern bargaining is legitimate.

Yet, in this legislation, we see a significant U-turn on pattern bargaining. Again, it has been disguised and hidden within the detail in the same way as union right of entry. You always need to look at what this minister does as opposed to what she says.

Special bargaining provisions contained within this bill allow for pattern bargaining by another name and will have the dangerous effect of creating artificial wage outcomes and reducing the relevance of the safety net. This will damage small businesses and those workplaces that rely on the safety net as a source of employment conditions, and it will force them into bargaining against their will. The end result of this is that it costs jobs, it costs time and it reduces genuine productivity. A return to pattern bargaining by stealth is indeed a dire outcome for Australian workplaces, particularly as Labor presides over the lowest level of business conditions in 14 years.

Another free kick that is gained by the union movement within this legislation is that the unions are allowed to demand bargaining fees from non-union members. The rights of non-union members to have their own voice in the bargaining process are now vastly limited. In some circumstances, they may be forced to pay for the right to not be a union member. How this is genuinely moving forward and how this is fair is anybody’s guess.

On the transmission of business rules, a very important part of workplace relations on which the government remained mute prior to the last election, we find they have slipped in another provision that is anti jobs and anti growth. Employers who now buy a business with employees will also be forced to buy the agreement that covers those employees. This is a change from the previous system. There will be no option to create a new or more appropriate agreement, regardless of the state of that business. So when you buy an agreement with inefficient or uncompetitive employment practices, you are completely stuck with it. Of course, this may compel some potential purchasers not to take on the employees who will pose an impediment to business sales and acquisition. Basically, you will not be able to sell a business that has these uncompetitive arrangements. This business will ultimately just have to go to the wall. This legislation will not give you the option that was available under the previous legislation where a new owner could come in and restructure and make the company competitive again.

As we have announced in the past, we will not oppose the passage of this bill through the House but we do reserve the right to make amendments in the Senate after the Senate committee has conducted a full inquiry. We will make amendments where we believe that we can improve this bill. We are particularly concerned about some of the areas I highlighted, where the government has gone well outside the mandate that was granted to them by the Australian people at the last election. We urge all parties with an interest in this legislation to make a submission to the Senate inquiry.

We have been required to make our decision not to oppose this legislation in the House without the depth of information that you would expect when you come to judge a reform of this nature. Of course, it is going to be very easy to judge the effects of this legislation over time. You can do it very simply by looking at things like the unemployment rate. Has the unemployment rate fallen or has it risen? How many Australians are now in work? Have the drivers of growth—small and large businesses—been given the confidence and the tools they need to employ people with certainty? Ultimately, of course, they are the drivers of employment growth. Is the Australian economy losing more or fewer days to industrial action? When Australians leave school or university, do they have a reasonable prospect of finding a job? The employment portfolio is one that lends itself to reasonably simple judgments about how the minister is performing. There are simple and obvious keys to performance, and the opposition will be holding the minister and the government to account for their performance in these key areas.

The government have, I think, rather inexplicably devoted a whole week of this House’s time to their proposals to change labour market regulation, yet they have not been frank with the Australian people about what these changes might mean for them. Rather than engage in a week-long party of self-congratulation, they need to start to focus on Australians who are about to lose their jobs. Their approach to workplace relations so far has been typical of the Rudd-Swan government: all spin and no substance. Because they now realise they have a problem with unemployment—that unemployment is rising and will continue to rise—suddenly we see the government start to relate all their decisions back to job creation. Of course, a few months ago, everything they did related back to controlling inflation, although they have now dropped that rhetoric and they have moved on to saying that everything they do relates back to job creation. I am assuming this is in line with the Prime Minister’s self-declared war on unemployment. This is a reminder that the government have a political strategy but no economic strategy. The opposition’s position is that we take the government on trust that the measures we are discussing here today are not going to hurt the Australian economy. We will be examining the evidence presented to the Senate inquiry into the bill, and we reserve our right to make amendments to improve the way this legislation might function.

These are the real and relevant questions that the government needs to answer: how can the government guarantee that this bill will not cost jobs and will not lead to increased levels of disputation in Australian workplaces? How can the government guarantee that this bill will actually improve productivity and employment growth? And, most relevantly, can this government keep control of the union bosses now that this bill has given them a new privileged position and disproportionate powers and access to Australian workplaces?

The worst possible employment outcome for any single Australian is that they cannot find a job or that they will lose the job that they have. Yet we are discussing a major change to the workplace relations legislation without one skerrick of analysis as to whether this bill will make that outcome more or less likely for average Australians. The impressive Howard legacy that I outlined at the beginning of my speech is at stake when it comes to changing our workplace relations system. From this moment forward, the government must take absolute responsibility for the changes that it makes, and it must take absolute responsibility for any subsequent rises in unemployment.