The release of the Productivity Commission’s five issues papers on Australia’s workplace relations framework has already fanned inevitable claims from the federal opposition and unions that it will pave the way for a “return to WorkChoices”.
This highlights the political dangers associated with the review: the Abbott Government may well be heading into the next federal election carrying the weight of some contentious proposals for industrial relations reform. Even now, Premier Campbell Newman is facing difficult questions about possible changes to federal workplace laws in the context of the Queensland election campaign.
The issues papers explore options for change – and poses questions for stakeholders – in relation to key aspects of the Fair Work Act. These include minimum wages, statutory minimum standards, awards, penalty rates, enterprise bargaining, industrial action, unfair dismissal, general protections and the new anti-bullying provisions.
It is clear that the PC review will involve a more far-reaching assessment than the 2012 Fair Work Act Review under the previous Labor Government, which business groups regarded as something of a whitewash.
But will the PC necessarily recommend extreme deregulation of the labour market, as critics of the review process (and of the Abbott Government’s intentions) claim?
Carefully crafted
The issues papers seem to have been carefully crafted to consider the arguments and counter-arguments on each of the key issues, including the views of employer bodies, unions and other interest groups.
The PC indicates that its overall approach is intended to maximise the wellbeing of the whole community, not particular interest groups, and to address the social as well as the economic aspects of workplace laws.
However, there is also evidence that the PC review will challenge some long-standing tenets of Australia’s system of workplace regulation.
This is made clear from the outset, with the PC stating:
Australia appears to give more weight than other Anglo-Saxon countries to elaborate rules about WR processes and, most particularly, to the centralised determination of wages and conditions for many employees. (Issues Paper 1, page 9)
Minimum wage
On the minimum wage, the PC says that: ‘No nation aspires to be a low-wage economy’ (Issues Paper 1, page 15). However, it raises the question of how to achieve the high productivity required to sustain higher incomes.
A series of queries are outlined which suggest there will be a fundamental reconsideration of:
• the appropriateness of Australian minimum wages (e.g. do they fail to target poverty and inequality by lowering employment?);
• the current process of minimum wage-setting by the Fair Work Commission.
The National Employment Standards, which set minimum conditions for all employees such as four weeks’ annual leave, will not be subject to holistic analysis. But the PC asks whether the NES entitlements impose costs on employers that exceed the marginal benefits of hiring employees, with adverse implications for employment.
Modern awards, which establish more detailed employment standards on an industry or occupational basis, are also in the PC’s sights. It raises questions about the efficiency and regulatory burden of awards, and whether they “lock in” a pre-determined backdrop of minimum requirements for enterprise agreements. The PC goes so far as to invite views on moving away from awards to “reliance instead on other safety nets in the WR system” (Issues Paper 2, page 13).
Penalty rates
The role of award penalty rates will be one of the most contentious issues addressed in the PC review. This is a major gripe of employer organisations, particularly in retail and hospitality employment, while the union movement seeks to defend existing penalty rate provisions as a key workplace entitlement.
The PC has opened up for consideration a choice between accepting penalty rates as an inherent principle of employment regulation; or regarding premiums for weekend and evening work as a matter of choice for individual enterprises and their employees – that is, penalty rates would be “market-determined”. (Issues Paper 2, page 15).
Further, the PC asks:
Were penalty rates deregulated, would wages fall to those applying at other times or would employers still have to pay a premium to attract labour on weekends and holidays? (Issues Paper 2, page 16)
Interestingly, the PC issues paper on the bargaining framework seems fairly moderate, given the extent of employer agitation about the current “union-centred” bargaining laws. That said, the PC seeks views on several aspects which provide important protections for employees in the negotiation of enterprise agreements, including the procedural steps that employers must follow and the “better off overall test”.
Hotly-contested issues such as greenfields agreements for new business ventures or projects, the permitted content of agreements, the role of “protected” industrial action and individual flexibility arrangements will also be addressed. And while the PC does not invite consideration of a return to individual statutory agreements (AWAs under WorkChoices), it does want to explore whether there might be a greater role for individual employment contracts which operate under the common law.
Unfair dismissal
The PC also intends to explore a wide range of features of the current protections against unfair dismissal and other forms of adverse action against employees, and the interaction between anti-bullying provisions and workplace safety laws.
Overall, there is much in the issues papers for unions and federal Labor to latch onto in their campaigning against further workplace reform. And it will be interesting to see how the Abbott Government responds to the PC’s final recommendations (due by 30 November 2015).
Putting the politics to one side, the PC review is an important opportunity for the presentation and analysis of evidence on the operation of the Fair Work Act since 2009. In that sense, the PC’s report could enable us to move beyond slogans in the debate over IR reform … but I doubt that it will.