STONE the crows! Suddenly it’s the 1960s with centralised wage fixing and unions using the courts to stop competition.

Last week, Fair Work Australia jacked up the minimum wage for all awards and the National Tertiary Education Union announced it was going to law to stop the University of Newcastle doing more business with a private education provider.[1]

Both actions are awful for Australia. It is easy to understand why a union hates the idea of a university using a private partner who may not employ its members. And it is impossible to oppose people on the minimum wage collecting a few more quid – let’s see any of us manage on the new rate of $569.90 a week.

But since when did the courts get to administer the economy?

Since the electorate decided that we should start reconstructing the old arbitration system at the last election is when.

Of course many voters did not know this is what they were doing by voting against the Howard Government’s largely de-regulated industrial relations system. But it is what we have now got with Fair Work Australia, which is the old arbitration commission under another name.

The last Labor government ended the idea of an independent arbiter fixing wages and conditions. Before then our industrial culture, in place for close to a century, assumed labour and capital were inevitable enemies and that the state in the form of quasi courts had to protect the former from the latter by uniform wage judgements across industries that paid no heed to the specific

circumstances of every workplace.

It was an idea that did not work even when Australia sheltered behind high tariffs, making productivity improvements in individual enterprises all but impossible. And it broke down when globalisation ensured unproductive economies cannot maintain wages and conditions unrelated to what is happening in the rest of the world.

Paul Keating and a generation of long-gone union leaders understood what had happened and what they needed to do. According to Paul Kelly:

The 1990s recession gave life to two ideas formulated by Paul Keating and Bill Kelty that would touch the lives of most working Australians: enterprise bargaining and industry-based superannuation. These were the death knell of the old unionism and the old Labor Party. They dictated a reinterpretation of Laborism by harnessing enterprise culture and the share market to employee advancement.[2]

But Australians have a deep-seated sense of fairness and have always liked the idea that the state should protect the people on the bottom of the pile from those at the apex of the economy. Historian Babette Smith believes it dates from the First Fleet when Governor Arthur Phillip ordered equal rations for all in the starving Sydney settlement:

The fair go test cuts in right at the bottom; it’s a foundation issue. The thing about Australia is that values come from the core of ordinary people, our egalitarian society is enforced from below. [3]

And so the electorate is either happy, or at least not upset by the return of the old arbitration system. This does not mean the voters have adopted unionism and collective bargaining.

Despite the undoubted success of the ACTU’s campaign against de-regulating employment, union membership increased by one per cent to a fifth of the workforce in the year to last August. In the private sector, with less of a rights-culture than the public service, just 14 per cent of workers were union members.[4]

But most of us do not object to the assumption that a court (which is what FWA thinks it is) should regulate some wages and establish conditions across industries.

Certainly the award system is not what it once was. Where a third of workers had their pay set by the system in 1995 just 17 per cent were covered in 2008.[5] But those covered are the lowest skilled and least educated, the people with the poorest productivity and as such most exposed to unemployment when circumstances change.

Nor are all of them reliant on their wages to survive. Those with families qualify for welfare benefits (which generally decline as earned income increases), young people combining work with study live with families and benefit from household incomes much larger than their own.

The award system is good for the career paths of union officials and public servants who want to work in a centralised industrial relations system. But it is bad for workers and employers with specific circumstances, which do not suit notional national averages.

And the way productivity improved in the 1990s and employment expanded through the last decade demonstrates that deregulating industrial relations generates jobs.[6]

But competition is inherently unfair, at least for the losers and it inevitably offends some people. Like NTEU officials, who do not like the idea of private providers getting involved in higher education. [7]

Never mind that deregulation creates new business and helps universities expand what they can offer. And never mind that competition can deliver better products for student consumers.

Neil Shilbury, the head of international private education provider Kaplan wants to establish a for profit university in Adelaide with a business plan based on delivering a better education than the public system. [8]

The NTEU wants to stop Navitas with a ruling by Fair Work Australia and what is the betting that even if FWA throws the union case out this time sooner or later it will decide it has jurisdiction over the issue. And once that precedent is set others will follow.

There are not many unionists in Australia, but if the industrial relations industry has it’s way this will not stop it’s members re-regulating the economy.


[1] recovered on 13 June 2010, Paul Bibby, “Unions to Fight Private Firms Push into Unis”, Sydney Morning Herald, 8 June 2010

[2] Paul Kelly, The March of the Patriots, (MUP 2009) p 134

[3] “Fair Go Ethos Key to Stormy Debate”, The Australian, 1 May 2010

[4] “Employee Earnings, Benefits and Trade Union Membership”, recovered on 13 June 2010

[5] David Rozenes, “An Overview of Compositional Change in the Australian Labour Market and Award Reliance”, Fair Work Australia, 2010 at recovered on 13 June 2010

[6] In the 1990s productivity grew at 1.8 per cent a year, more than twice the rate in the 1980s. Dean Parnham, “Productivity Growth: Are we Enjoying a Miracle?”, Productivity Commission, 2002 at recovered on 13 June 2010 . Unemployment was 7 per cent in 2001, fell to around 4 per cent in 2006 and while most of the G20 economies are in trouble is now 5.2 per cent, Australian Bureau of Statistics, The Labour Market During Recent Economic Downturns” (March 2010) @ recovered on 13 June 2010, ABS, “Labour Force, Australia May 2010” recovered on 13 June 2010

[7] According to the NTEU’s national policy resolutions for 2009, “growing profits have been achieved by a ‘horizontal slicing’ of the full-fee paying undergraduate student market, using a largely casualised workforce employed on below industry standard arrangements (often staff already employed in the ‘partner’ university) to deliver essentially the same curriculum using all the resources of the partner university (for a ‘royalty ‘fee’) recovered on June 13

[8] “Commercial Campuses ready to Fill Gap”, The Australian May 5 2010