Australia’s Workplace Relations Framework: The Case for Reform

Following Martin Ferguson’s address to The Sydney Institute on Tuesday 8 August, Jennifer Hewett, National Affairs Columnist for The Australian Financial Review, discussed some of the issues he had raised in a brief Q & A. The paper which follows is taken from a transcript of that discussion.

AUSTRALIA’S WORKPLACE RELATIONS FRAMEWORK: THE CASE FOR REFORM

JENNIFER HEWETT SPEAKS WITH MARTIN FERGUSON

As Martin would remember, I am old enough to have been around in the 1980s covering industrial relations when he was still in the union movement. That gave me some experience of how, in many ways, archaic Australia’s industrial relations system was then. But also, to look at it now, what amazes me is how much everything has changed. As Martin said, the changes in the nature of work, the nature of technology, the whole economic picture. And yet, despite those early reforms, we still have this absurdly archaic system and an incredibly complex system of industrial relations law.

In New Zealand, I noticed for example, they got rid of awards years ago and it didn’t seem to have caused any great crisis. In Australia, the whole system seems preserved in aspic. At the same time, the percentage of people in the union movement in the private sector is under 10 per cent. Yet, strangely, in key industries like construction and the Maritime Union union power has not decreased at all. In fact, rather the reverse. Look, for example, at the CFMEU and its control of crucial pinch points of the economy as well as political problems for the government.

For all that, there is a lack of interest, political interest as Martin said, in pursuing industrial relations reform. Not with the modern Labor Party which is, in fact, going in a reverse direction in terms of increased flexibility or interest in productivity. Not with the Liberal government which has now been in power, despite its various incarnations and problems and changes of leaders, since 2013 with very little done in the area rather than restoring the ABCC with great difficulty. This will have some impact and over time will help. On the other hand, a Labor government after the next federal election could abolish it again.

And why has this not got much more public interest? No doubt because a lot of the costs of bad industrial relations practices are hidden unlike the old days of transport strikes and electricity strikes and even beer strikes. These were a fact of life and people would get very agitated about union leaders and strikes. But, they’ve all gone. The hidden costs, in the construction industry in particular, are not obvious to people. Therefore, it doesn’t become an issue. At the same time, you’ve got an era of flat wages growth where people are incredibly aggrieved when they look around and see people getting such high executive pay levels. The targeted reform that Martin is talking about sounds eminently sensible and particularly as it relates to the mining industry. But even that is going to be a very big ask.

I’m pleased that the Minerals Council and others are trying for practical incremental reform. At present, we have a government with many problems on its plate and facing a very difficult situation that it is not particularly persuasive at making a public case. The prime minister’s entire interest is in the prospects of innovation and what it does in the changed economy. That’s obviously his passion but it has been batted back. He has very little interest in broader aspects of industrial relations reform. At the same time, he knows full well that a full scale ACTU campaign, particularly involving unionised sectors of the workforce but people who are trusted, like nurses and teachers, can force a big political price for the government. The nuances of this debate are unfortunately more likely than not to get lost as part of those scare campaigns on either side.

So, Martin, a question. Do you think that the current generation of union leadership is a little different from your generation of leadership in that they’re not quite as interested in the national interest and national economic growth as your generation was? Or is that just a fond memory?

MARTIN FERGUSON: I think it’s a learning process. Go back to the period leading up to election of the Hawke Government. Think about the nation of Australia at the time compared to what we’ve experienced over the 26 years. There was double digit unemployment and double digit inflation.

In essence, we had an industrial war. And there’s nothing like having to go out to a workplace and talk to workers about making them redundant. It was that experience that led the trade unions to decide to enter into a process of reform. Reform on a practical, pragmatic nature, not just on industrial relations but across the agenda to a national health care scheme. To actually means testing benefits and giving greater benefits to the less well off in the community. To improving access to childcare. To actually doing something about keeping young people at school. Trying to get increased numbers into university apprenticeships.

The experiences in the 1970s and 1980s changed trade union thinking. In essence, the current group of union officials have not had the same experience, or gone through the same hardships in terms of how hard it is to actually represent workers and achieve the best possible outcomes. Economic growth in Australia has made it very easy and it’s now getting a bit tough. To think that they can regulate growth in Australia and regulate an increase in wages, is short term thinking that will backfire on the union movement and backfire on the Labor Party if it pursues such an agenda in government. Workers will be worse off.

JENNIFER HEWETT: But, of course, the argument against that is to say, well, the nature of work has completely changed. You actually have more part time workers, a more casualised work force. You’ve got more service employees and they need more protection and more regulation than the system where we had a highly unionised workforce.

MARTIN FERGUSON: The nature of work is changing and will continue to change even further. The tourism industry is a prime example of that. The real growth in Australia at the moment is in the services sector. Industries such as education, health and tourism. Look at the investment in the capital cities at the moment in the tourism sector.

The truth of the matter is that to maintain a full-time job in some of those services sectors, you’re going to have to have two jobs. Hence, we should have a safety net guaranteeing those workers decent wages and conditions. But you also have to have flexibility in the system to enable the employer to employ those people in a full-time job.

People currently focus on the change in penalty rates. This is where the Labor Party needs to think about its current policy position. The decision of Fair Work Australia on penalty rates came after 39 days of a hearing, 143 witnesses, 128 witnesses cross examined and 5900 submissions. Reduced penalty rates on Sundays are 175-150 per cent for full-time and part-time workers over 3 years and on public holidays for casuals from 275-250 per cent and from 250-225 per cent.

But the most important decision of Fair Work Australia, which is not being debated at the moment, is changes in provisions relating to employers who actually employ workers in the hospitality industry on a part-time basis rather than a casual basis.

A simple example is that the current Act, prior to the outcome of this case, effectively meant that once you engage someone on a part-time basis you couldn’t change their employment terms throughout the length of their employment. This effectively means the tourism sector can now change the hours of work, month by month, to suit the seasonal nature of the tourism sector, therefore moving people from casual employment to permanent employment with annual leave, long service leave, access to superannuation and the capacity for example to actually get a loan.

They are the changes that we must debate in a constructive, not a confrontational way. We ought to be prepared to look at a regulatory system which guarantees the less paid have safety netted conditions but also guarantees flexibility for employers to grow their business.

JENNIFER HEWETT: One last point – what do you think is going to be the impact of the CFMEU and the MUA merging?

MARTIN FERGUSON: Firstly, I question it. I don’t think there is a community of interest between the two sectors. I don’t see a community of interest between the forestry worker in the Latrobe Valley and a seaman or a waterside worker. When I was a union official, we actually had to have an argument about community and workers who can easily belong.

But the real fear is in the speech by Brendan O’Connor of recent times, and statements, including the media today. Labor in government, at the behest of the union movement, is thinking about abolishing any conditions holding people back on the right to strike, and the issue of secondary boycotts.

You can imagine, for example, the hospitality industry. We’ll be back to the days of brewery workers deciding that if a particular hotel chain doesn’t enrol everyone in the union there’ll be a blockage in terms of supply of beer and wine by secondary boycott and no capacity for employers to actually bring that to an end.

Similarly, I might add, the CFMEU and the Maritime Union saying to a particular employer in the manufacturing sector, if you don’t do what we tell you, then your product will not go over the wharf. Those are the potential ramifications any merger of the CFMEU and the MUA  combined with is announced policy by the Labor Party in recent weeks.