Workplace Relations – The Issues - Address to AMMA

Address to the Australian Mines & Metals Association Tasmania Conference, Hobart

A big welcome to Tasmania to interstate AMMA delegates. It’s good not to have to travel to Western Australia for a change.

Any 5 cent piece you can leave behind will be gratefully received by an economy that is being mugged in tandem by Green/Labor Governments from both Canberra and Hobart.

In this State we are witnessing the willful dismantling of our economy by Green/Labor Governments that seem hell bent on making Centrelink the only business left in the State.

Tourism proposals for a cable car up Mt Wellington to a development at Pump House Point are stymied or not encouraged.

In fishing we have a campaign against new investment and jobs based on a fear campaign. When confronted by science and economics we have a Green Senator tell us ‘people aren’t interested in the science and economics … we’re just against it’.

OK – if you’re a Senator. Not so ok if you are one of the 40 plus people hoping for a job when unemployment is running at 7% and heading north.

Even fish farm expansions are being stymied.

And we can turn to forestry where governments that are running up huge debts and borrowings whilst cutting back on health, education and police can find $250 million to close down a viable, environmentally sustainable, industry allegedly in the name of peace.

We have a timber processing company in this State, Ta Ann facing a dishonest Green campaign against its plywood product sourced from re-growth and plantation timbers.

Its product was rejected for the London Olympics. It’s displacement perversely opened the market for Indonesian rainforest timbers – where rainforests are bowled over at the ongoing rate of 3 million hectares per annum. Well done to the Greens!

And Labor remains mute for fear of upsetting their alliance partners.

I’m not sure the mining sector will fare much better. There is however a glimmer of hope – an election of a majority State Liberal Government in March 2014 and hopefully before then a Coalition Government in Canberra.

And if that were to happen – if we were given the privilege of government – AMMA members might just be interested to learn of the Coalition’s approach to matters Workplace Relations.

In the past the Coalition has identified three defining issues – union militancy, productivity and lack of flexibility.

But first let me address the Fair Work Act Review.

The Fair Work Review

On December 20 last year, Mr Shorten finally announced the details for the review of the Fair Work Act. In doing so, he appointed three so-called ‘independent’ reviewers, Professor Ron McCallum, Dr John Edwards and the Hon. Michael Moore, who were given skewed Terms of Reference, asking them to view the issues with blinkers on.

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 Labor 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].

What is particularly interesting is Professor McCallum’s changed tune. In May 2006 just two months after policies ‘dead, buried and cremated’ were introduced the good professor gave a very robust ideological account of the legislation, saying:

“…it will make our workforce docile and bring in a neo-liberal hegemony into this country…”

and

“I fear for this country; I fear for the fact that workers are going to be in a perilous position. We are going to see, I think within a very short time, 30% of working women in part-time employment becoming part of the working poor”

As well as railing against the independent Australian Fair Pay Commission, including the trade union boss and community sector worker who were members as:

“…full of what I would call neo-classical and neo-liberal economists…”

Yet, when it comes to the Fair Work Act after a full two years of operation the good Professor McCallum believes:

“I think this act should be under scrutiny for a longer time…”

By the way the Professor raged against the use of the Corporation’s power by the Coalition but has been strangely silent on its use for the Fair Work Act.

A transparent case of Liberal bad, Labor good.

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. He clearly had not heard of Robert Menzies. It seems that in selecting the reviewers the most important consideration was their predisposition to the Labor school of thought.

The Terms of Reference deliberately left out the vital ingredients of productivity, flexibility and union boss militancy and were clearly skewed to look in a particular direction. Now we 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 realities.

The Coalition has flagged general support for the review with the caveat that we will wait and see what legislation is put up to the Parliament by Mr Shorten. In supporting most recommendations, there are some that we do not support.

Greenfields Agreements

Greenfields agreements in your sector are a vital instrument. If you can’t get the labour force to get the project off the ground – the project doesn’t get off the ground which means that as an economy we all lose out.

The Fair Work Review has made a number of recommendations in this area which is good to get the conversation going and I know that Mr Shorten has been widely consulting on this matter. 

For what it’s worth, I think the there is some substance to those who criticise former Greenfields Arrangements under the previous system, where an agreement could be made with oneself.

I know that in the initial drafting of the Fair Work Act, AMMA fought strongly and won some key concessions from Ms Gillard on Greenfields Agreements, in particular changing the eligibility rules so that every eligible union was not required to endorse a Greenfield agreement. As a result, employers are only required to make a Greenfield agreement with the union or unions that would cover the majority of employees who would be engaged under the agreement.

It has been put to me and I look forward to feedback that good faith bargaining should commence only where negotiations are initiated by the employer. The employer should not be forced to the negotiating table under good faith bargaining for Greenfields Agreements because after all the project is yet to get off the ground.

In this scenario, it has been put to me that it could stand to reason that if Fair Work Australia finds that a union is not bargaining in good faith, by refusing to come to the table at all, the employer should have the option of initiating negotiations with an alternative union. Or, apply to Fair Work Australia for approval of the agreement based on the BOOT and NES. This may be preferred to arbitration to determine the content of the agreement.

But as I said, I welcome any feedback on these suggestions that have been put forward.

While I have given in-principle support to the majority of recommendations in the review, there are some that defy what is in the national economic interest, Greenfields Agreements is such an area and I am hopeful that Mr Shorten will act to create a more fertile environment for new projects. But if the Mining Tax is anything to go by, perhaps I shouldn’t hold my breath. 

JJ Richards

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

Then Opposition Leader Kevin Rudd pledged, 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 judgment accepts that the argument advanced on behalf of JJ Richards was understandable and reasonable but for the 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.

Labor is yet to tell us as to whether there was a drafting error or Labor deliberately misled the Australian people. Their silence is interesting.

Nonetheless, the Review’s recommendation 31 is a step in the right direction.

I take this opportunity to congratulate AMMA on its preparedness to fund the appeals in this case.

Permitted Matters

The matters that may or may not be included in an enterprise agreement have been hotly disputed in submissions to the Review and in the media. Indeed, over the last year it seems that every long and drawn out negotiation has centred around the content of agreements. Be it paid shower-time, an onsite gym or a new hangar.

The Fair Work Review’s observation that:

“the matters pertaining formulation… accords a fair balance between the prerogative of management to manage and the reasonable desires of employees to jointly govern their terms and conditions of employment.”[1]

is frankly wrong.

When you have companies, for example Qantas, who are forced into arbitration to settle a protracted dispute – who then beat all three of the unions – it’s clear that there are problems.

Any reasonable person would say that the construction of a new hangar is not something that should be negotiated as a part of the employer-employee relationship. This is something that the Licensed Engineers acknowledged by reaching agreement with Qantas almost immediately after entering conciliation.

Likewise, I have been monitoring with some interest the Brookfield Multiplex Case, and I think that most Australians would say give ‘contractors a fair go’. And that clauses dealing with the limitation of the use of contractors should not be permitted. And nor should right of entry clauses above and beyond the Act nor the promotion of union membership.

One suggestion that has been put to me is a return to the Common Law position of ‘matter pertaining’, as enunciated in the Electrolux Decision.

It is now very clear that there are serious problems around permitted matters which give rise to protracted disputes and give rise to false expectations as to that which might be achievable. We are all ears for a solution.

Union Militancy

Up until a few weeks ago no-one knew Myer was developing a new Emporium. Now thanks to the CFMEU we all know about it.

The Grocon Dispute has witnessed the deployment of hundreds of police at great expense to taxpayers just so people can get to work.  The violent attacks on police and police horses in Melbourne are to be condemned in the strongest terms.

This is something that Bill Shorten to date has refused to do, apart from the non-specific statement that “I condemn illegal activity”, and when asked if the CFMEU is engaging in illegal activity he lamely tells us it is for “the courts to decide”.

And Ms Gillard tells us, “Everybody should take a step back from the brink”. Very unsubtle code for Grocon not to enforce its Court ordered injunctions. No matter what the employer will always be found at fault somehow by this Government.

Make no mistake, the scenes we are seeing in Melbourne are as a direct result of the CFMEU being emboldened by the abolition of the Australian Building and Construction Commission.

You might wonder why Labor were so keen to take the tough cop off the beat. It’s simple:

  • While Bill Shorten was in charge of the Australian Workers Union, courtesy of prosecutions by the ABCC, more than a hundred thousand dollars in penalties against the union and its officials were awarded; and
  • The CFMEU bosses donated $1.7 million to the Australian Labor Party in 2010-11 alone.”

As well as abolishing the ABCC, Bill Shorten and Labor – with the backing of the Greens and militant union bosses – changed the laws governing the building and construction sector:

  • reducing penalties for breaching the Fair Work (Building Industry) Act from $22,000 to just $6,600 for individuals and from $110,000 to $33,000 for corporations;
  • narrowing the circumstances under which industrial action by building industry participants will be considered 'unprotected'; and
  • stopping FWBC from prosecuting parties for breaches of the legislation where the parties have settled or discontinued a matter.

The only way to fix the problem is to restore the ABCC which helped the building and construction industry to increase productivity by 10%, provided an annual economic gain of $6.2 billion dollars per year; reduced inflation by 1.2 per cent, increased GDP by 1.5 per cent, while the number of working days lost annually per 1,000 employees in the construction industry fell from 224 in 2004 to 24 in 2006.  At the same time, building costs fell by 20-25% and long project delays were dramatically reduced.

Reading the Open Letter from workers on the Grocon site says it all:

“We have no argument with our employer, and do not support the blockades against our workplaces.

All we want is to be able to go to work and be allowed to provide for our families and loved ones.

We have been unfairly singled out for abuse, threats and intimidation by the very organisation we pay our Union fees to, in an argument which is not of our doing.

We only ask that we be allowed the same basic rights our Union leadership enjoy, to be free to access our places of work without the lies, threats and abuse, and without fear of reprisals.”

If elected, it would be one of the first acts of a Coalition Government to restore the ABCC with all of its former powers. Australians have the right to go to work without a police escort and without the fear of a union boss threatening violence or intimidation. Families shouldn’t have to live with the worry of their bread winner being attacked and victimized by Union thugs when they go to work.

As well as the abolition of the ABCC, the union bosses have been emboldened by the Fair Work Act and some aspects of the Review seek to provide them with even more power. There seems to be this thought that if you’re not a member of a union, it’s because you haven’t had the opportunity to do so.

The Coalition believes that reasonable right of entry rules should apply but not just so the union bosses can run rampant. It should be seen as a privilege that requires special treatment, not something to be bargained with as a threat and disruption to workplaces.

I note the CFMEU have overnight finally agreed to abide by the law. Grocon’s principled stand is to be applauded. Regrettably, the same cannot be said of Mr Shorten’s involvement.

Let me turn to productivity.

Productivity

Just earlier this week, a Cilento Executive was reported in The Financial Review saying:

“You are starting to see issues in the [resources] sector where… incredible wage rises are being demanded, in some circumstances 30 per cent, and they are not being matched with productivity gains. That’s just unsustainable: that’s not politics, that’s reality.”[2]

How can you possibly expect a business or its employees to reach their full potential if you have huge wage increases unrelated to production. Ultimately it will end with no business and no jobs.  Everyone loses.

The Australian Business Foundation recently put out a paper which, in my view, correctly defined productivity as:

“…using human and physical resources in ways that produce more output and value.

It’s not just about cost cutting and minimising the use of inputs like labour and capital. It is also about producing the same things in better (smarter) ways, or about using inputs to produce better (higher value) goods and services.”[3]

The reality is, that the vocal Union bosses, and by definition therefore Labor, fail to understand, that if you have a business at prime fighting weight that is more and more profitable, employees in turn receive job security and better wage growth.

What we don’t want to see is continued unsustainable wage growth or demands for 30% wage increases without offsets to allow for businesses or the economy to reach a greater potential.

So while I understand, particularly in the mining sector, the labour component is generally miniscule in relation to the overall capital cost of a project, for the sake of our economy and the flow through effects, I ask that you accept your responsibility to limit wage increases and ensure that there are offsets. While it may be well and good for the mining sector at the moment ultimately large wage increases will come at the cost of jobs. This is especially so for the rest of the economy.

While the Coalition accepts most of the Review of the Fair Work Act, there are some very serious areas of concern. One of the first is the Review’s regrettable and inexplicable intervention on the issue of productivity.

If productivity is not important, then why is it a key performance indicator of the Act? And why did Ms Gillard make it one of the Act’s objectives?

Finally flexibility

I am on record previously as to the Coalition’s approach.

Workplace Agreements are not on the agenda but workable Individual Flexibility Agreements will be.

Subject to the worker being better off overall in their IFA, it is hard to justify limitations. The ‘one size fits all’ approach stifles innovation and takes an arrogant approach to the individual aspirations of workers.

Conclusion

There is still much work to do in the industrial relations space, but rest assured that the Coalition is listening to the problems and assessing the solutions that are being offered.

We encourage Labor to swiftly implement the non-controversial aspects of the Fair Work Act Review.

They will enjoy our support.

Enjoy your conference, enjoy Tasmania, as we in Tasmania especially enjoy the wealth you provide our Nation.



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

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

[1] P.159, Fair Work Review

[2] Directors’ take on IR and more, p.21, Australian Financial Review, 3 September 2012

[3] Productivity and the Fair Work Act, Australian Business Foundation, 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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Contact

136 Davey Street
Hobart  TAS  7001

(03) 6224 3707

Senator.Abetz@aph.gov.au

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