Opening Address to the Norton Rose Australia Employment Conference, Sydney

It was with great hype that Kevin Rudd and Julia Gillard introduced the Fair Work Act. In preparing for today, I took the opportunity to remind myself of some of the speeches of Labor Ministers when they introduced the Bill. The pages of Hansard are dripping with Labor ideology and war stories from their time as union bosses.

Today, many in Labor are still blinded by ideology when it comes to the Fair Work Act. But, now that we have had the chance to see how it has been implemented over the last two and a half years the ideology has to give way to an objective practical assessment. And it is plain for everyone else to see that there is significant room for improvement.

After almost three years, more and more people are saying that Labor’s Fair Work regime has gone too far in providing union bosses, who represent less than 20%[1] of the workforce even more power.

Even some Labor Government Ministers admit our workplaces now run the risk of going backwards.

Former Workplace Relations Minister Senator Chris Evans has agreed that there are problems with Labor’s individual flexibility agreements[2], while Senior Ministers and former ACTU bosses Simon Crean and Martin Ferguson have warned that the current system is in danger of being unsustainable due to huge wage claims with minimal productivity offsets.

Now, even Bill Shorten has talked about problems with Greenfield agreements.

It is good to see that Labor Ministers are starting to wake up to the problems. But as we all know, after you wake up you’ve actually got to get out of bed… and get to work! Waking up is only the start!

The Fair Work Review

On December 20 last year, after months of pressure from the Opposition, Mr Shorten finally announced the details for the review of the Fair Work Act. In doing so, he appointed three so-called ‘independent’ reviewers, who were given skewed Terms of Reference, asking them  to view all of the issues with  blinkers on.

Professor Ron McCallum, Dr John Edwards and the Hon. Michael Moore were appointed to conduct the Review.

For what it’s worth, that is the same Professor McCallum who recently said the Baillieu Government would lose the next election and praised up the Leader of the Opposition Daniel Andrews[3] and who also said prior to his appointment to the panel that only tinkering would be required to the Fair Work Act, which would stay in place for the next decade[4]. Then we have Dr John Edwards, a former political adviser to Paul Keating who went on to write a book titled John Curtin: Australia’s Greatest Prime Minister. It seems that in selecting the reviewers past pedigree was the most important consideration.

The Terms of Reference left out the vital ingredients of productivity, flexibility and union boss militancy and were clearly skewed to look in a particular direction. Despite having the ‘independent’ Office of Best Practice Regulation attempting to allay our fears, documents obtained by my office under Freedom of Information laws revealed that there was real concern within that office and the Department of Finance about the “narrow” scope of the review and the omission of productivity, the impact of union boss militancy and the impact on red tape. Pity this independent body couldn’t admit their concerns up front without the need to FOI them!

Further Freedom of Information requests revealed that Mr Shorten only signed off on the Terms of Reference after political advisers had rewritten them to achieve Labor’s political goals.

Well, we now have the review. And despite it being a disappointing document on so many levels, it’s quite clear that on certain issues the reviewers were mugged by stark reality and it’s interesting, that the Review found:

 

  • Fair Work Australia and the Fair Work Ombudsman should actively encourage more productive workplaces through promotion of best practice, model productivity clauses for modern awards and agreements;
  • Making changes to the Individual Flexibility Agreements to make them more attractive to both employers and employees including an increase to the minimum term of an IFA to 90 days.
  • Changes to the way Greenfields Agreements are reached and provisions for protracted negotiations.
  • Changes to the Good Faith Bargaining provisions of the Act to rectify problems identified in JJ Richards.
  • Changes to the Transfer of Business provisions.
  • Time limits for lodging unfair dismissal applications and general protections claims be amended to align to 21 days.

 

  • The ability for Fair Work Australia to make costs orders against a party that is unreasonably pursuing a proceeding.

These are all things that the Coalition have been drawing attention to  for some time - and for which Labor and the union bosses have attacked us.

Now, when stated in a million dollar[5] Government review one hopes the Government will  give these issues due consideration.

The test for Labor is: given the skewed Terms of Reference and the limited approach taken by the Reviewers, will the Government implement this report as a whole – as it has with the Houston Report on Asylum Seekers – or will it only tinker, within Labor’s ideological confines?

And Labor needs to legislate now knowing that in principle they have our support.

Any attempt to delay these important changes and make them part of their election platform will be seen as a very blatant attempt to placate the union bosses with the obligatory side deal to not proceed if Labor wins and find an excuse to block it if we win.

Will the Government act in the national interest or the interests of union bosses? I don't hold out much hope.

Let me turn to a couple of key areas that were explored in the Review.

JJ Richards

The JJ Richards case was a very significant decision for a number of reasons. Most importantly, it showed that the Fair Work Act did not faithfully embody what Labor promised before the 2007 election.

Then Opposition Leader Kevin Rudd pledged, hand on heart, that the Fair Work Act would not allow the return of ‘strike first, talk later’[6]. Yet, this decision clearly shows that it does.

The Federal Court’s judgement seems to indicate that the argument advanced on behalf of JJ Richards was understandable and reasonable but for specific wording in the Fair Work Act which entitles unions to obtain protected action ballots in circumstances where most reasonable people would argue that should not be allowed.

The Court’s decision also puts the lie to Wayne Swan’s ignorant intervention[7] when the JJ Richards case first came up, suggesting that this aspect of the Fair Work Act was no different to the previous legislative regime.  It clearly is different and Labor needs to acknowledge the difference and the consequences flowing from that difference.

In another regrettable partisan interference we even had the Department trying to justify Mr Swan’s comments. I trust they are regretting that folly.

Labor is yet to tell us as to whether there was a drafting error or Labor deliberately misled the Australian people – (Given their form on the Carbon Tax, this would come as no surprise.)

Nonetheless, the Review’s recommendation 31 that would prohibit make good on the previous promise and as such is a step in the right direction.

However, this is just one step towards fixing the growing militancy problem.

Strike action is up. Australian Bureau of Statistics[8] figures unambiguously tell us that days lost due to industrial disputation have more than doubled from 117,500 to 257,600 from the year ended March 2011 to the year ended March 2012. Despite this record surge, Minister Shorten tells us days lost are “stable” and we know that days lost doesn’t paint the full picture.

…and we have the ongoing dispute with CFMEU union bosses standing in defiance of a Victorian Supreme Court order and producing posters labelling workers as ‘scabs’. At present, prosecutions are underfoot by the Fair Work Ombudsman against the Maritime Workers Union for doing the same thing in Western Australia.

This behaviour is unacceptable, unlawful and immoral yet the union bosses do it anyway without a word of condemnation from the Government. Indeed, Mr Shorten isn’t able to tell us if the breach of the Supreme Court injunction is illegal, he says it’s for the courts to determine.

Barclay v. Bendigo Tafe

For some time, I have spoken on the Barclay v. Bendigo TAFE case that has worked its way through the legal system to the High Court where Labor has inexplicably intervened on the side of Mr Barclay. It would come as no surprise to you that we in the Coalition don’t believe that just because you’re a union boss, you should be above the law if you do something wrong.

Nonetheless, we do believe that union officials have an important place and should be protected from retribution purely on the basis that they are a union official. But, that does not mean that they should be awarded a superior status purely because of an association with union activities. 

The Review Panel’s recommendation is that changes should be made to the Fair Work Act in this area, to ensure that adverse action is only taken if the consideration around the reason for action being taken centres on – in this example – the employee being a union official is a welcome one.

Where this gets interesting is that the former Minister intervened in the High Court on the side of Mr Barclay, a decision that Minister Shorten has since endorsed.

This means that the Federal Court’s interpretation to date, that Labor’s Fair Work Act as, in effect, absolving an employee engaging in industrial activity or as a union officer from any responsibility and accountability as an employee was as intended by the Government when drafting the Act. This recommendation is a very real test for the Government and for Mr Shorten. Will he act in favour of the recommendation, in the national interest or in the interests of his former trade union boss comrades?

If he does not implement this recommendation and withdraws from supporting Barclay, it will just be another example for all to see that Mr Shorten is former union boss first and Minister of the Crown second. Further, it will mean that the adverse action provisions of the Fair Work Act could make union representatives untouchable, even if they do the wrong thing.

Awarding of Costs

Earlier I briefly touched on the issue of awarding of costs in unfair dismissal cases. I have long thought that this might ensure that vexatious applicants and belligerent employers who have done the wrong thing alike would seriously think twice before pursuing matters.

I am very keen to get feedback on this. That is, the proposition of having Fair Work Australia examine papers submitted by both the applicant and the respondent and after that stage, having the parties liable for costs to be awarded if they proceeded against the initial advice.

It would mean that Commissioners would need to examine papers and provide a short certificate advising parties of the prospects of success and noting that from this point forth, costs could be awarded.

Sadly, there are some vexatious applicants who try and milk the system and their former employer. Also, there are some employers who do the wrong thing and unfairly dismiss a staff member. It’s important that we have a system that ensures that workers who are treated unfairly are looked after, but what we don’t want to see is a system that encourages people to pursue an outrageous and unmeritorious claim.

Despite the union bosses’ hysterical response to my comments – but not to the comments of the Fair Work Reviewers, we are yet to hear any arguments against this idea.

Individual Flexibility Agreements

Another area where we are yet to hear a strong case against is that of Individual Flexibility Agreements.

The former Minister, Chris Evans, finally identified after two years of denial that the 28-day period where either the employer or the employee could pull the IFA is a disincentive for their use.

In both of the Illustrative Examples provided in the Explanatory Memorandum in the Fair Work Act, you can see that the 28-day period is a disincentive:

You may remember ‘Danae’ at ‘The Pax Designs Pty Ltd’ who negotiates an IFA so she can pick up her school children three days per week. In this example, it stands to reason that Danae would want the agreement to last for the school year at the very least, and the ability for the employer to terminate the agreement with just 28 days’ notice would not provide any security in that arrangement.

Likewise, ‘Josh’, the membership consultant at a gymnasium who wants to leave early to coach his under 12’s footy team would want his IFA to be in effect for at least the footy season – including the finals.

If I were running a small business, and I made an IFA with an employee who wants to finish work every day at 4 pm so they could pick up their children from school but starts work each day at 8am – if I were to invest in advertising that my shop was opening up at 8 am, I would want the security that the employee will want to keep that arrangement into the future. Otherwise, if it were to be pulled you know who will be doing the work.

So it is clear that there are disincentives for both employers and employees – and their families. The review panel’s recommendation that the 28 day period be extended to 90 days goes some way to providing certainty, albeit at glacial speed.

Some have suggested that there’s even further room to move arguing that IFA’s could last for up to 3 or 4 years – the same length of an Enterprise Agreement – given it is also subject to Labor’s own Better Off Overall Test. This means that the IFA has to meet the same high-bar that Labor has set for all other EBA’s. If the employee is better off overall – using Labor’s own test - why shouldn’t employees be able to negotiate with employers an arrangement that fits in with their family or personal commitments that is of benefit to both parties?

I look forward to continuing consultation on this issue.

On consultation, can I say that I think it is good on issues of national importance that we have government, employers and employees working together to try and gain good outcomes. If elected, we in the Coalition would continue the dialogue but we would also ensure that small business and independent contractors are in the room. If you’re going to genuinely tackle the big issues facing our nations, you genuinely need to engage all involved. I am alert that in our last period in office, to some extent we dropped the ball when it came to a dialogue with all involved – including the trade union movement. If I were Minister, that would not happen again.

Penalty Rates

Another area of contention is that of penalty rates.

We have already made it very clear that, should we be elected, the determination of Modern Awards will stay with the independent tribunal – Fair Work Australia (or whatever it’s called by then).

We don’t believe that the Parliament should be in the business of legislating on each and every Modern Award – rather, that it should provide a safety net and then let the tribunal work out the details.

However it is important that Fair Work Australia both in the current review and in future reviews take a common-sense approach.

What we don’t want to see is young Australians in particular being priced out of the labour market. The recent changes to penalty rates have taken a significant toll on the viability of businesses and has seen an adverse impact on employment.

Let’s be clear, lest I be misrepresented, the Coalition has always believed in a fair day's pay for a fair day's work and that workers who work unsociable hours or long shifts should have that acknowledged in their pay. We do believe in reward for effort.

At the same time we are very cognisant of the practical problems being experienced by small business and workers and we encourage Fair Work Australia to take a common sense approach.

Bill Shorten’s Debate and Policy

You may be aware that Mr Shorten has been calling for a debate on industrial relations in recent times. He’s gone as far as to suggest that I am in a witness protection programme. While I am flattered by his attention, his over exuberance has badly misfired. In recent history, Labor have regularly announced their workplace relations policy during the campaign. Also, Mr Shorten overlooks the fact that he has not announced his policy yet. So we have Mr Shorten in a typical Labor fashion saying “Do as we say, not as we do”.

In fact, since the last election we have released a number of policies in this space, including greater transparency and accountability for registered organisations, Indigenous Training Centres and policies to drive job creation.

Despite Labor’s condemnation of our policies when we release them, Labor manage to implement pale imitations just a few months later.

My message is simple, if you want Coalition policies, you need to elect a Coalition Government.

There are still three reviews of the system that are taking place and we want to see how these play out.

In secret documents revealed under FOI, the Coalition has exposed a number of policy changes Labor is working towards outside of the terms of the Fair Work Review – all surprisingly drafted by the union bosses.

Before we release our policy, the Government should come clean on its policy and the changes it is planning on making to the Fair Work Act.

The Minister has 19 staff and a department of thousands – yet he can’t manage to produce one document of policy in this space. We’ve released 3.

We will have a policy in good time before the next election that allows the Australian people to fully digest and understand what we’re proposing. Our policy will be pragmatic and practical. It will solve the problems and it will be plain and simple. We know that there are more than a million independent contractors in our nation and that 96% of businesses in Australia are small businesses – that don’t have armies of HR professionals. So our policy will be understandable so that any Australian worker, small business owner, independent contractor or any Australian employer could pick up and understand it.

It will be a policy that is a part of a holistic approach to the economy centred on job creation and cutting the cost of living for Australians.

On the other hand, you have a Labor Government which spend its time fulfilling the union boss wish list.

This is a government which says to workers, if you are not a member of a union it is because you haven’t had the opportunity to join so we need to give the union bosses more power to force themselves on people. That is wrong.

Only a Coalition Government can empower workers and employers to reach their full potential because we know that a strong economy leads to a better business environment and the stronger the business, the more benefits for workers.

The only honest broker in the IR space is the Coalition. We are the only party that are not hopelessly compromised by the influence of a minority group – the union bosses.

Instead of Mr Shorten’s 'one liners', it’s time he came clean with the Australian people and answered the very serious questions that still hang over his head:

  • Is the Fair Work Act a faithful statutory embodiment of what Labor promised before the 2007 election?
  • Why should union bosses have more rights when they represent less than 20% of the workforce?
  • Why should union bosses not face the same penalties and fiduciary obligations as Company Directors?

And while he answers questions, he might like to answer a very simple one: Does he accept the Fair Work Australia findings on Craig Thomson?

The truth of the matter is that Mr Shorten doesn’t like the tough questions. That’s why his average time to respond to Questions on Notice in the Parliament is more than double the Senate’s 30 day rule, with some remaining outstanding for as long as 180 days…

…and when he does respond, it’s usually a short response based on spin rather than a substantiative answer to the question.

Conclusion

Governments of all persuasions make mistakes. There are things that are done, which with hindsight you would do differently.

We have recognised our own mistakes.

Labor has helpfully recognised our mistakes too.

The community has recognised our mistakes as well.

The challenge for Labor is to shed their union boss shackles and recognise their own mistakes as we in the Coalition and in the community are recognising them.



[1] 6310.0 - Employee Earnings, Benefits and Trade Union Membership, Australia, Australian Bureau of Statistics, August 2011

[2] Senator Chris Evans, Address to the Australian Labour and Employment Relations Society, 7 October 2011

[3] Bailleu likely to lose election: McCallum, AAP, 13 August 2012

[5] Answer to Question on Notice EW0051_13

[6] Address to the National Press Club, Mr Kevin Rudd MP, 17 April 2007

[7] Interview with Wayne Swan, ABC AM, 2 June 2011

[8] Industrial Disputes Australia, Australian Bureau of Statistics, March 2012

About Eric

Eric Abetz has been a Liberal Senator for Tasmania since 1994 and has served in a range of Leadership, Ministerial and Shadow Ministerial roles.

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136 Davey Street
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(03) 6224 3707

Senator.Abetz@aph.gov.au

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