The Opposition’s Approach to, and Predictions for, Industrial Relations

Speech - Thomson Reuters Workplace Conference


 22nd November 2010

I thank Peter Schwab at Thomson Reuters for this opportunity. 

The topic of my address was billed as 'The Oppositions Approach to Industrial Relations'. I have decided to make a very slight change to this topic. As well as our 'approach to' industrial relations, I will also talk about the Opposition's predictions' for the future. 

As we come to the conclusion of 2010 and the first full year of Labor's Fair Work system, we are seeing several developments which provide a valuable insight into what we might expect in our workplaces over the year ahead and beyond. 

I want to highlight some of these developments and then discuss what they might mean for Australian workplaces. 

Predictions are notoriously hard to make and I confess the Coalition does not possess the proverbial industrial relations crystal ball

But in an era of industrial relations policy under a Labor Government, there is actually no need for a crystal ball; instead we can comfortably rely on the industrial relations crystal ball. 

But that is no handicap because under the Labor Government, there is actually no need for a crystal ball; instead all we need is a rear view mirror. 

I say this because industrial relations under Ms Gillard involves looking to the past, going backwards, and focussing on what has happened before. 

It is further evidence that the sloganeering of 'moving forward' was nothing more than focus group developed rhetoric that so flourishes under Labor. 

It is easy to visualise Julia Gillard and Chris Evans sitting in the front of some industrial relations type policy car. The car, jammed in reverse with Chris Evans yelling at Paul Howes, (you know, author of Confessions of a Faceless man, or should that be Confessions of a man less face?), the ultimate back seat driver, to duck his head so people can't see him driving the agenda. 

But first, a debrief on the Coalition's workplace relations policy in the recent election. There were three central aspects to that policy. 

The first is that WorkChoices is dead, buried and cremated and to mangle the analogy further, the ashes are scattered. Despite what others may assert, this remains our policy. 

The Coalition does not support workers being worse off. Indeed we want to see workers have the freedom to get ahead in a way that ensures that no one is left behind. 

Some speakers may refer to the Coalition, WorkChoices, our Leader Tony Abbott and perhaps, if they are really struggling, even me, in a way that paints us as some type of threat. 

In fact, at a conference earlier this year in Sydney, one of the speakers there stated that the biggest threat to workers and employment conditions was Tony Abbott. This was ironically at almost the same time as it was becoming apparent that in several sectors the modern award process was leaving thousands of workers under conditions that were substantially lower than those under their previous awards - a clear breach of Ms Gillard's guarantee that 'no worker would be worse off'. 

The Coalition was at the same time publicly highlighting the cause of these workers whose conditions were being stripped by modern awards, and calling on the Government to fix the problem. The unions were strangely quiet. 

The second aspect of our policy was that the Coalition will fight to retain the Australian Building and Construction Commission. 

Just like outworkers and the TCF sector, the building and construction sector has a unique history and set of problems that necessitates the existence of special workplace laws. As there are special laws to protect outworkers from exploitation, there is a need for workers on construction sites to be free from intimidation, harassment and thuggery. 

The recent KPMG/Econtech report about the benefits to the Australian community and economy arising from the reforms to the building and construction sector make compelling reading. In short we all benefit from this agency. 

I recently moved a Motion in Parliament asking the Senate to note the good work performed by the ABCC, a Government agency, and its staff, obviously Government employees. 

Amazingly, the Government voted against this motion. They actually voted against recognising the efforts of the Commonwealth's own workers. I wonder how they felt when they heard this news and what does this tell them about their future?

For our part, the Coalition recognises the work of the ABCC and we applaud it and in particular its workers who undertake their tasks under constant threats and intimidation. 

The third aspect to our policy at the last election was that we would not change the Fair Work Act in our first term of Government. If any changes were required, we would take them to the electorate in the subsequent election. 

The Fair Work Act, we said, is still too new and we want to have an even larger body of operational 'on the ground' evidence to evaluate before determining what changes might be required. 

There are many things about the Fair Work Act that deserve to be applauded. I, for one, noted early on how it is written in a way that is much easier to read than the Workplace Relations Act, something I am sure all those present today also appreciate. 

Indeed apart from a few exceptions, there was also a noticeable lack of public advocacy for change to the Fair Work Laws. Indeed Labor didn't announce any policy and ours was minimalist. 

Had there been a significant public outcry about the implications of these new laws, perhaps our thinking may have been altered. But there was not. 

It is therefore up to workers and those that employ them to make the public case for any future changes. If they do, we will of course listen. 

Our approach to IR is under pinned by the belief that IR is both a social policy and economic policy area. A job is vital to a persons self esteem, physical and mental health and those with whom they live. IR is vital for our economic health as well. 

We believe that the most important element in any workplace is the human element - the workers and those that employ them. We want to help people get ahead. We need to ensure that no one is left behind. We need a strong and enforceable set of fair minimum conditions and standards and ensure that workers and business have the right to genuinely agree on employment conditions that suit them both. We need workplaces that are safe. We need workplaces that are innovative and where productivity is not stifled. We need workplace laws that encourage jobs and economic growth. 

This is what we believe in and these principles remain central to our thinking. 

Let me now return to Labor's system and what lies ahead. 

There are emerging developments that are aligned to events in the industrial relations past - an era Australians hoped was well behind them. 

In late 2009, for example, we saw a return to the bad old days of the Christmas strikes. This phenomenon had not happened for years but they were back under Labor's laws. It was a return of the industrial relations ghosts of Christmases past. 

First there were the postal workers who went out and threatened to stop your Christmas presents being delivered on time. However this probably wasn't too much of a problem as it was followed shortly by the bus drivers, so you couldn't get to the shops to buy the presents in the first place. 

Then we had the aircraft engineers who wanted to slow down the flights for holiday makers, and this was complemented by airport security staff who wanted to slow things down as you made your way on to the flight. 

Unsurprisingly, there are now reports that similar rounds of strikes are, magically, predicted for the month of December. Just a coincidence I'm sure!  Again, it looks like those unions involved in the ransport sector will be at the forefront disrupting our holiday period. No-one saw that coming I bet! And, for some - like Tooheys' union - why wait for Christmas? 

So my first prediction is the return of the Christmas strike, a prediction on which I will (on behalf of the Australian community, our economy and productivity) be very happy to be proven wrong. 

My second prediction is the return of the unrealistic wage claim and associated inflationary pressure. 

Throughout 2010 we have seen several unions make wage claims during bargaining that, by any measure, were, at best ambit, at worst deliberately provocative and reckless to our economic wellbeing. 

Many will remember the crippling strike action in the off-shore oil and gas sector, conducted by unionists already earning $130k per year, in support of a claim for an additional $100k per year. Would any of you present today, as individual workers, believe it would be appropriate to walk into the office of your employer and demand for your wage to be doubled or you will go out on strike? We should recognise that approach does not represent common sense, nor does it have the national interest in the equation.  

Although this is an extreme example, it is a worrying sign of things to come. Many unions have already flagged their plans for wage claims that are above existing growth levels and unrelated to productivity. 

Another prediction is that these types of ambit claims will be most prominent in those sectors which are either the recipient of significant government subsidy, or which are experiencing significant growth or expansion. 

The NBN Co (also known as 'school halls on steroids') will undoubtedly be a victim of these claims. 

Already we have seen the unions flag a 5% increase claim which is likely to be at odds with whatever is contained in the Government's top secret business plan. In fact, what little we do know about the plan for the NBN is that they have only factored in a 2.5% yearly margin for increased labour costs. 

We can all see the problem there. 

My side of politics strongly suspects that the NBN will exceed the $43 billion we are told it will cost and contributing to this will be wage and labour cost blowouts. 

The mining and resources sector, one of our country's vital growth sectors, will also be a victim to ambit wage claims. 

Already under attack by Labor, with its ill-conceived mining tax and with many current agreements due to expire in the next year or two it is clear that unions will have Government support in their claims. 

I also predict that business compliance costs will continue to increase under Labor and the Fair Work system.   

Already, we are seeing this occurring and the trend will continue in the wrong direction.

The recent report about the Fair Work regime from Australian Human Resources Institute confirmed that

  • 66% of Human Resource Managers spend more time to IR issues;
  • 57% said the Fair Work Act has made their job more difficult;
  • 74% have experienced an increased need for legal advice;
  • 53% report it now costs more to deal with IR issues;
  • 29% say it is more difficult to manage disputes;

This is bad news for bigger business that employ Human resource managers but this is particularly bad news for small business (the sector without specialist HR Managers) a sector that only the Coalition recognises as the real engine room of the Australian economy. This will, I predict, continue to manifest itself in a number of ways. 

First, levels of unfair dismissal claims will continue to rise and the existence of 'go away' money will become even more prevalent. 

Claims for unfair dismissal have increased by 63% in the first 12 months under the Fair Work termination provisions, reaching a total of 13,054 claims. This is, almost the same number as was recorded in 1995/96. 

We will also see the continued growth of 'go away money' arising from these claims. Recent Senate Estimates hearings revealed that three out of four claims involve the payment of some type of go away money, with almost one in three of these involving settlement amounts of between $2000 and $4000. 

Interestingly, one in four claims made resulted in no 'go away money', or any money at all, which might be considered a good thing. But it does not take into account the compliance costs involved in dealing with the claim, especially by small business. 

It has been suggested to me, and I wouldn'-t dispute this as it would appear to be quite conservative, that the average cost of dealing with a claim for unfair dismissal is approximately $5000 - and this excludes the 'go away money' aspect. 

These costs do influence businessmen and women when making decisions about whether or not to grow and expand, to take on new workers or not. 

Secondly, as the so-called award modernisation process continues to take effect, employers are finding it increasingly hard to deal with the effects of transitional provisions. 

Even Fair Work Australia, when handing down its decision, acknowledged that its division 2B decision would result in 'significant increases' to wages from February 2011. 

Other examples abound - But lets turn to the political front. 

There will be a lurch to the left in the debate about the general future of industrial relations policy. This will be driven by the Australian Greens and, to a certain extent, the left of the Labor party. 

The Greens will take steps to abolish the ABCC, the construction industry industrial relations watchdog, on the back of the huge financial backing the Greens received from the construction unions including the ETU. The ABCC is therefore now in real jeopardy. 

Labor too has held a long term hatred of the ABCC. In the last Parliament they introduced legislation to dramatically water down the powers of the ABCC. They have not yet re-introduced that legislation and I predict that they will wait until the make up of the Senate changes after July 1st 2011. 

The Coalition supports the retention of the ABCC and so far we have opposed the attempts to have it removed or its powers curbed. 

The Greens will also push Labor in relation to their desire to increase the standard casual loading to 30% and place a limitation on casual employment of not more than three months before mandatory conversion to a permanent status. 

There are obvious cost implications to business of such a proposal. More importantly, it ignores the fact that many workers themselves enjoy being engaged and paid on a casual basis. It suits many people, particularly those re-entering the workforce or those who wish to work irregular hours. 

Fundamentally, however, these types of ideas erode the ability of an employer to exercise managerial prerogative and make decisions about how to best utilise staff in their own business. 

The Greens will take steps to introduce national industrial manslaughter legislation, allowing criminal charges to be brought in circumstances where there is a workplace death. 

Safety is extremely important in our workplaces and the Coalition is a strong believer in workplace health and safety. But, unlike the Greens and Labor, we also recognise that safety is a shared responsibility between everyone - workers and employers alike. In addition, we don't believe that it is possible to ensure that every workplace is 100% fool proof. 

Employers shouldn't automatically be found guilty where they have done as much as they can to make a workplace safe, unlike in NSW where employers are legally guilty until they prove themselves innocent. 

More relevantly elements of the trade union movement have bastardised the important area of safety as a means of achieving industrial outcomes by threatening to close down workplaces under the guise of safety unless other demands are met. 

So in this context, the Greens industrial manslaughter proposal can only be seen as giving unions another option with which to achieve industrial relations outcomes. This phenomenon will increase. 

The Greens also believe that there should be no exemptions from unfair dismissal laws, not even for workers serving a probationary period, casuals or those only employed for a set period. Everybody should be able to bring a claim, according to the Greens, and they want the remedy to be reinstatement back to the workplace, unless there are exceptional circumstances. 

The Coalition recognises that there are bad employers and that workers should have avenues of recourse available to them if they are badly treated at work, but, there must be a balance. 

Would you listening today be so keen to grow and employ new staff in your business if you knew that you could be bogged down in a tribunal for months for sacking a worker, even if they have been employed for only one day? 

The Australian Greens believe that workers should be able to engage in strike action at any time, for any reason, and without any warning. The ramifications of this are obvious. But of even more concern, is that the Greens believe that strike action could be taken for any reason at all. And this includes issues that are not even vaguely related to the workplace. 

So under the Greens proposals, workers in an abattoir in my home State of Tasmania, could go on strike action in support of trade union activities in Portugal. Workers in the mining sector in WA could take strike action in support of anti-whaling protests, or ambulance drivers could go on strike to protest against genetically modified foods. 

As unrealistic as this might sound, these are potential realities and I predict that the industrial action provisions of the Fair Work Act are in danger of being watered down further than they currently are. 

So too will existing right of entry provisions, as the Greens also want to remove all barriers for unions to enter workplaces, and in fact they want provisions to strengthen the right for unions to enter a business and recruit members. 

So in short - fasten your seat belt. It will be a wild ride with the Greens and Labor seeking to out compete each other for the Trade Union dollars at the next election. 

This is the current landscape, or to coin a phrase 'the new paradigm' Who knows we may even need to rely on the House of Representatives to protect against the excesses of the Senate. Who would have thought? 

Happy Christmas and all the best in your endeavours in 2011.


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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