SPEECH NOTES FOR THE HR NICHOLLS SPEECH - REFLECTIONS OF A NEW BOY
Posted on Saturday, 24 March 2001
Edmund Burke once described a political party as a group of people working for the national interest according to a particular principle on which they all agree. The Liberal Party’s animating principle is freedom: not absolute freedom because freedom can only exist in a context of order, stability and fairness – still, as far as is reasonably possible, individual, social and commercial freedom. Freedom is the “light on the hill” to which we always aspire and the yardstick by which we always wish to be judged.
Our commitment to freedom is based on a hopeful conception of humanity. Liberals believe that most people, most of the time, on most subjects will do the right thing because we are inherently social animals with the desire to cooperate hard-wired in our human nature. There is a certain tension between liberal optimism about human progress and conservative pessimism about man’s fallen nature but both sides can agree on the desirability of freedom either as end in itself or as an important mechanism to restrain competing passions.
As a comparatively new minister trying to come to grips with a complex portfolio, I have found – on both sides of the industrial fence and on the Senate crossbenches – people of good will striving to make the most of a system which often strains common sense. I’m not sure that people inured to the system quite realise how baffling it can seem to outsiders, even one whose first political mentor was BA Santamaria. As a new Minister, I am rather in awe of my predecessor’s achievements as well as being acutely conscious of how much remains to be done. As a philosophical conservative, I’m reluctant to tamper with traditional ways of behaviour but as a political Liberal confronting an entrenched industrial culture, am inclined to exclaim: man is born free but everywhere is in chains.
There are few more heavily regulated activities than dealings between employee and employer. Australia’s workplace relations system assumes that workers and bosses are incapable of managing differences, that workers are always weak and gullible, bosses are always greedy and manipulative, that daily relations need to be governed by complex rules, and that the inevitable disagreements must be resolved by someone else. I’m sure Australians are better than that. Good workers are always in demand. Most bosses try hard to keep the people they’ve trained. Even conceding a few bad apples, do we really need a system that assumes the worst of the people in it?
The sporting metaphor traditionally used to characterise Australian workplace relations depicts two teams in perpetual conflict with an independent umpire standing between a fair fight and an all-in brawl. Because the system was set up in the era of robber baron capitalism, essentially to give unions a mechanism to advance their cause without going on strike, it gives unions the built-in advantage of making the first move through initiating a dispute. It’s like ensuring that one side always wins the toss.
Some say that the provision of labour is so central to personal dignity that it cannot be regarded as just another commodity to be freely exchanged between two people and to be governed by the ordinary law of contract. There’s much to be said for the sentiment that workplace relationships are akin to family relationships – but not for the conclusion that workers and managers should be organised and directed like the partners in an arranged marriage. The more important the relationship, the more important that it should be freely entered into and largely self-directed into the paths of virtue.
The Government takes the view that the ability to sell one’s labour for the best possible price and the most advantageous conditions is a basic human right. The ability to make the best possible use of one’s property is another basic human right. Provided no coercion, intimidation or fraud is involved, and provided minimum standards are met, the Government believes that workers and managers should be allowed to act like adults capable of making their own choices.
The Government believes that human enterprises work best when participants talk among themselves first rather than to third parties. Workers, managers and owners should be talking to each other rather than to unions, employer organisations, commissioners, judges and courts at the first hint of a disagreement. We’re fundamentally opposed to lazy management which would prefer to talk to a union organiser than its own workforce. Since 1996, we have tried to refocus the Australian Industrial Relations Commission on setting minimum standards rather than elaborating all the conditions under which people should work. Above all, we’ve encouraged people to make individual or collective enterprise agreements which suit the conditions of their own workplaces rather than operate under one-size-fits-all industry standards.
Our changes have been founded on common sense values and a pragmatic intuition of what works. The Government will help the 300,000 Victorian workers not covered by federal awards. We will do what we can to stop the so called Victorian Fair Employment Bill because we want a better deal for workers rather than a new $10 million a year bureaucracy. We think that some cures are worse than the disease and that a make-work tribunal for the Victorian Government and Trades Hall is not worth the cost of up to 40,000 Victorian jobs (according the latest ACIL study).
Until 1994, a union had to be party to every industrial agreement. In 1994, for the first time, the Keating Government permitted agreements to which unions were not party, but only if no union objected. One of the most important Howard Government policies has been the introduction of Australian Workplace Agreements negotiated with individual workers in which unions need have no part. There are now more than 150,000 AWAs and new AWAs are being approved by the Office of the Employment Advocate at the rate of 5000 a month. In addition, some 10 per cent of collective agreements are struck without union involvement because, under the Workplace Relations Act, members have to request that unions represent them in negotiations.
Thanks to a focus on better pay for better work, average weekly earnings have increased by 12 per cent since 1996, after increasing by just 4 per cent in the previous 13 years. Under the Coalition, basic award earnings have increased by 9 per cent, after falling 5 per cent under the former Labor Government (admittedly in the context of a wage/tax trade-off). Post-1996 pay rises are sustainable because they have been based on productivity increases and have not been eroded by higher inflation, higher interest rates and higher unemployment. There are now nearly 800,000 more jobs than in March 1996 and more than half of those are full time. What’s more, industrial disputation under the Coalition (measured in days lost per thousand workers) has been just one third the rate of the former Labor Government and in 2000 industrial disputation was the lowest since records were first kept in 1913.
Still, as Des Moore pointed out in a paper commissioned by the Workplace Relations Ministers’ Council, “we now have an uncomfortable hybrid of the old, highly centralised system and a more decentralised, less regulated system. Yet the trend is surely well established….By drawing on the lessons from our own past, and from those with less regulated labour markets, such a new start would offer the potential for Australia to jump from being well below world best practice to number one”.
At 600 pages, the federal Workplace Relations Act is considerably shorter than the Tax Act but it operates through 2300 awards and 36,000 certified agreements ultimately administered and enforced by its own tribunal, the Industrial Relations Commission, which is about the size of the Federal Court. The federal Act, award structure and tribunal system is replicated in five states – or six, if the current Victorian Government has its way. Around the country, there are 4500 industrial awards (that’s one for every 1500 workers) regulating every thing from the temperature of the water in tea urns, to the number of beds on building sites, to the hours allowed for trade union training. Above all, the system is based on artificial disputes created and then settled by employee and employer organisations to which individuals are presumed to belong but to which they might have as much allegiance as football players subject to the AFL draft.
Despite the introduction of AWAs and the recognition of individual contracts at common law, more than 80 per cent of Australian workers are still “award governed” in that the relevant award (rather than a specific individual contract) is the legal foundation of their employment. Instead of a few “common sense” provisions covering job description, rate of pay, hours of work and leave arrangements, the need to pass the “no disadvantage” test means that even “template” workplace agreements prepared by the Office of the Employment Advocate typically run to 12 pages for a small business and up to 34 pages for specific industries.
Under the Government’s award simplification process, nearly 1500 archaic federal awards (such as the 1993 Algae Harvesting Award) have been scrapped. Another 600 federal awards have been simplified to just 20 allowable matters. Simplification has meant that the Building Award no longer forbids the use of a five inch paint brush, the Hospitality Award no longer stops bar attendants washing tables and the Pastoral Award no longer stipulates that employees shall not ill-use any sheep. On the other hand, the “simplified” Timber Award, though reduced from some 700 to 200 pages, still refers to 23 additional awards and contains special allowances for dealing with charred or wet timber. To ascertain whether a work place is covered by the “simplified” Graphic Arts Award, it’s necessary to know, among other things, whether it’s within the “shops and factories district of Brisbane as constituted under the Factories and Shops Act 1900-1958 of the State of Queensland. There are nearly 1000 awards yet to be “simplified” – and the Government has just lost a Senate fight to have the venerable institution of the union picnic day excluded as an allowable matter under the award safety net (although it could still have been included under a certified agreement).
Under the Constitution, the Federal Government’s industrial relations power is limited to measures necessary for the settlement of disputes extending beyond the limits of any one state. To begin the award-making process, unions typically serve a “log of claims” on as many businesses as possible stipulating what they hope to achieve. The current Shop Assistants Union ambit claim seeks six weeks annual leave, four weeks bereavement leave, four weeks compassionate leave, two weeks conference leave and six weeks education leave every year. In the 30 weeks left for work, it seeks a rostered day off every fortnight, a day off a month to attend union meetings, ten minutes break every hour, and two days shopping leave – no doubt to spend the Christmas bonus of five weeks pay. And that’s the claim of a highly responsible union. The Metal Workers Union claim seeks 10 weeks annual leave, 12 weeks compassionate leave and 12 weeks special leave and, in the 18 weeks left for work, minimum all-up pay including allowances of $3200 a week. By definition, neither of these ambit claims is unrealistic because the High Court once decreed that “fanciful” claims could be struck out.
Regardless of how odd some of this seems, it would only really matter if it impeded workers from making a living and managers from improving their business. If the system actually worked, fretting over the formal institutional arrangements of workplace relations would make as much sense as introspection about the nationality of the head of state.
Unfortunately, the system does hold back workers and frustrate managers. Between 1980 and 1991, while Britain de-regulated its labour market and Australia pursued the “Accord”, UK productivity increased 1.3 per cent a year compared to just 0.6 per cent in Australia. Between 1984 and 1995, real wages in the UK rose by 3.3 per cent a year, compared to just 0.1 per cent in Australia. The Accord was supposed to keep strikes and wages down and profits and productivity up. In the very short term, centrally-directed wage restraint might have helped business cope with some of the former Labor Government’s other changes (such as de-regulating the finance market, privatisation, and floating the dollar) but it also helped perpetuate the “big brother” mentality which has long held Australia back.
At the core of most union-initiated industrial disputes is concern for unions’ prerogatives rather than workers’ pay and conditions. Some of the biggest disputes of the past two decades (at the South East Queensland Electricity Board, Robe River, and Rio Tinto) have been over questions of “industrial governance”. The 1998 waterfront dispute was ostensibly to protect the wages and conditions of crane drivers earning, on average, about $80,000 a year for a 27 hour working week. The fact that crane drivers are now earning well over $100,000 a year (admittedly for somewhat longer hours) shows that it was really about the Maritime Union’s iron control over manning levels and work practices. The fact that average crane rates are up from 15 to 25 an hour (with a world record of 55 lifts an hour on one shift) while average port costs are 15 per cent lower shows what can happen when common sense begins to replace confrontation.
The most significant recent industrial flash point has probably been at BHP in the Pilbara where the company offered individual contracts to workers previously on a union-negotiated collective agreement. Because moving to contracts involved more flexible hours, BHP could afford pay rises for contract workers. The difference between a collective agreement and an individual contract is not that one is negotiated by a union and the other is not – because unions can be bargaining agents – but that most unions haven’t learned to cope with workers on contracts. As far as the unions are concerned, this dispute is not about workers’ pay and conditions but about union “rights” to a monopoly over workplace bargaining.
Before any legal recognition of non-union agreements, union membership had begun to fall from over half to under a quarter of the work force. Instead of making union membership more attractive, the ACTU is now seeking new ways to force people into unions. Last year, it became official ACTU policy that non-union members should pay “bargaining fees” (or compulsory union levies) in work places covered by collective agreements. Any other business which tried to charge people for services they had not requested would be in breach of fair trading legislation. Notwithstanding its conclusion that such a levy was an attempt to “coerce” people into joining the union, the Industrial Relations Commission recently found (subject to appeal) that it was not in breach of freedom of association provisions.
The real question here is not so much “are unions above the law?” but why is there so much law in the first place. Industrial law came into being at the height of class war antagonism mostly as a way of demonstrating to workers that the system was “on their side”. Where unions have real support, industrial law has rarely stopped them achieving what they want. Where unions survive through habit and inertia, industrial law continues to give them a representative role to which they have no right.
If workers believe that their safety is at risk or that they’re unfairly missing out on the rewards of their work, they should talk to the boss – just as the boss should take staff into his confidence if the business is in trouble. If that fails, workers should be entitled to take proportionate industrial action aimed at their employer. Under no circumstances should sabotage and intimidation, coercion and unconscionable conduct be acceptable because they take place in the course of an industrial dispute.
In a recent case before the industrial commission, two union organisers had shoved and pushed management and staff whose premises they were entering – and the Commission found that they had acted improperly. However, the Commission also found that an Office of the Employment Advocate press release announcing that it was taking action against the two organisers had been “prejudicial, tendentious and partisan”. To re-phrase Churchill, this strikes me as a refusal to be partial as between the fire brigade and the fire.
In the community, there is a tendency to distinguish between industrial and non-industrial criminality because the former is in a good cause. A former ALP MHR, Brian Courtice, recently detailed corruption allegations inside the Australian Workers Union involving slush funds, membership padding, and pre-selection fixing – but this was OK because that’s politics and Peter Beattie’s Government deserved another term. Dissident elements in the Construction, Forestry, Mining, and Engineering Union are circulating a “samizdat” document alleging bribes, kickbacks and standover tactics in the building industry but people seem less interested in stopping crime than in stopping a comeback by former Builders Labourers Federation activists. This tradition of assuming that unions are too strong to be expected to obey the law gained a degree of official recognition in the 1988 Hancock Report and led to union exemption from the anti-secondary boycott laws. This meant that the Maritime Union could instantly close Australian ports when the former Labor Government announced the possible sale of the Australian National Line – and it was perfectly legal.
In a changing world, no battles are ever finally won and all improvements are essentially provisional. In the early 1990s, Labor figures such as Paul Keating and Bill Kelty began to concede, at least rhetorically, the need for enterprise bargaining based on a recognition that without profit and productivity there could be no employment and no higher pay. Their successors, unlike the Bourbons, seem to have learned nothing and forgotten a great deal. Labor’s current policy is to abolish individual workplace agreements, scrap the Office of the Employment Advocate, allow industry-wide strikes, turn contractors into employees, impose a $500 a year union tax on non-unionists and exempt unions from the provision of the Trade Practices Act.
When union officials such as Sharan Burrow talk about “good faith” bargaining and partnerships in the workplace, they mean cooperation between bosses and unions, not between managers and individual workers. If Kim Beazley became prime minister, the ACTU would once more be the ghost at the Cabinet table and union heavies would once more do their deals at Kirribilli House. In all probability, the last three ACTU presidents would actually be sitting at the Cabinet table. This generation of union officials are bureaucrats rather than activists and would far rather legislate for de-facto compulsory unionism than do the hard yards “selling” the benefits of membership. Under these circumstances, the HR Nicholls Society would not be concerned about the slow progress of reform but with workplace relations rollback.
Since 1986, this society has reminded governments that freedom is indivisible and that it’s hard to sustain a de-regulated economy with a highly regulated labour market. At times, freedom is messy, awkward and inconvenient. Freedom means the freedom to make mistakes, at least within limits. A free society will never be perfect and the enlargers of freedom exist in a constant state of tension with the advocates of an ideal. The Nicholls Society is fated to exist in a permanent state of disappointment with governments which never entirely live up to their principles. Even so, you are entitled to reflect with pride and satisfaction on the difference you have made.
Gerard Henderson told your 1986 conference that “the key to industrial relations reform is to make it legal for employees and employers to reach their own agreements about work conditions and work practices – free from the interference of trade unions or industrial tribunals. This should be combined with incentives which encourage profit sharing and employee share acquisition”. Fred Chaney told your 1987 conference that the Liberal Party’s industrial relations objectives were: “prosperity through productivity, more jobs, industrial harmony, workplace flexibility and reduced union power”. Legislative reform often seems painfully difficult and is then subject to de-construction by the Industrial Commission, the Federal Court and the High Court. In front the sun rises slowly, how slowly/But westwards, look, the land is bright.
Managing workplace relations is always unfinished business. Over the next few months, the Government will continue to push for incremental legislative improvement, further encourage employee share ownership and promote the possibilities of extending the most liberal industrial jurisdiction through use of the existing corporations power of the Commonwealth. The risk is not that this Government has run out of reform but that an alternative government would undo all that has been achieved.