Industrial relations is the one area of public policy that traditionally marks a major fault line between the Coalition parties and Labor. It is also one area of policy where neither side finds it easy to defend itself against accusations that it favours one interest group over the public good.
It is especially problematic for the Coalition since its disastrous WorkChoices experiment. Five years since the November 2007 federal election, the Coalition is still struggling to shake off the stigma of WorkChoices.
Labor has been particularly effective in maintaining the line that should an Abbott-led Coalition government win, its real modus operandi will be to pursue a far more radical agenda, with WorkChoices as the blueprint. Rather than being “dead, buried, cremated”, they have prosecuted the case that WorkChoices is waiting to be resurrected, rebadged and re-instated.
This view has resonated for a number of reasons. To begin with, the WorkChoices reforms were introduced at a time when the economy was strong – at the height of the mining boom and at a time before the world financial crisis gave us a real sense of just how fragile our economic good times might be.
Profits were at record-high levels, but many employers still sought to take unfair advantage of the freedom and flexibility afforded by WorkChoices, stripping penalty rates and other entitlements from employees.
Now, as the mining boom enters a new phase and the world economy continues to look weak, insecurity has become a major political issue for whoever wins office. Both sides appear to be aware of its importance. So far in this election campaign, Labor has managed to take the running – around disability insurance, 457 visas, and job security.
The view that Coalition policies will only add to job insecurity has not been helped by its supporter base in the business community. The Australian Mines and Metals Association and a number of major employers, for example, have urged a radical overhaul of the Fair Work legislation along the lines of WorkChoices.
The spectre of WorkChoices
All of this has only served to heighten the expectation a Coalition government would bring back some version of Work Choices, albeit without that Orwellian title. So, once again, Labor had managed to wedge the coalition on IR – and all because of its form in introducing WorkChoices.
Not surprisingly then, the release of a Coalition IR policy was eagerly awaited by almost everyone. For some, it was to bring the hope of significant reforms; for others, a possible weak link to expose in the upcoming election campaign.
Nor was it surprising that yesterday’s launch of the Coalition’s IR policy was intended to neutralise Labor’s position in all these respects. The policy announced appears to be framed around the political lessons from WorkChoices: any reforms intended to cut business costs by undermining worker entitlements would be political suicide.
Importantly, the Coalition will retain most provisions contained in the Fair Work Act: minimum employment standards, penalty rates, and the “Better Off Overall Test” intended to protect workers from unscrupulous employers.
It will surprise – and disappoint – many employers that a Coalition government will not touch the current unfair dismissal protections or the general protection provisions in the Fair Work Act. Both of these provisions have caused so much agitation among employer groups and many employers, especially small business.
There are also other policy promises intended to allay any fears of a return to “slash and burn” approach taken under WorkChoices.
Not only does the new policy highlight the Coalition’s commitment to its paid parental leave scheme, it also promises to introduce new provisions ensuring workers who receive unpaid wages recovered by the Fair Work Ombudsman are paid interest on recovered wages.
No Fairwork reforms - for now
Like Labor’s own Fair Work amendments now before Parliament, it will also extend the Commission’s jurisdiction to deal with workplace bullying, albeit in a different form.
It also promises to implement a series of recommendations made by the Labor-appointed Fair Work Review panel in 2012.
The Coalition has also promised to seek no further reforms – with the exception of any minor amendments and “house-keeping” amendments – for the remainder of its term of office. The decision to do so will perhaps be the most singularly important step it takes in neutralising the WorkChoices bogeyman in the upcoming election.
Indeed, it all looks as if the Coalition has accepted that the Fair Work Act provides a fair balance between protecting worker rights and ensuring business can work to improve productivity and remain competitive.
There are, however, a number of significant amendments foreshadowed in the Coalition’s policy, some of which involve a partial return to WorkChoices. These elements, which the Coalition expects (probably correctly) to have little electoral impact, centre on reforms that restrain union access to the workplace and their position at the bargaining table.
Right of entry restrictions
A Coalition government will, for example, re-introduce the WorkChoices provisions restricting union right of entry, and will place further restrictions on their ability to take protected industrial action. The policy will amend the legislation to prevent unions taking protected industrial action before any negotiations have taken place. A Coalition government will also extend the powers of the Fair Work Commission, but only to intervene where unions delay “Greenfield agreements” and to determine whether industrial action is unreasonable.
One of the more controversial elements will be a plan to rework the current provisions around Individual Flexibility Arrangements (IFAs). IFA provisions were originally introduced by Labor as part of the Fair Work reforms.
Under the Fair Work Act, every workplace agreement must include an individual flexibility arrangement clause. These were intended to allow individual workers to create tailored flexibility arrangements with their employer.
At the time, they were framed as a means to ensure employers retained the flexibilities associated with AWAs, but without the capacity to undermine conditions. If a workplace agreement includes no such provision, then a “model clause” is read into the agreement.
Not surprisingly, many unions have ensured that agreements contain “union-friendly” IFAs. Under its proposal, however, the Coalition will remove the capacity of unions and employers to include restrictive IFA clauses. This move will no doubt be presented as re-introducing a weak form the much maligned — but little used — AWAs.
But the Coalition is hoping that such suggestions will be countered by the fact that IFAs will be subject to the “better off over all test” – supposedly ensuring no worker will be made worse off.
It has also promised to reintroduce the Australian Building and Construction Commission – a central part of the Howard government’s IR system – a move that is clearly designed to rein in the militant elements of unions in the commercial end of that sector. A resurrected ABCC will sit outside of the Fair Work institutions, albeit with some external oversight of how it uses its more draconian powers.
Following the alleged corrupt and criminal actions of officials in some unions, the Coalition has also vowed to more closely regulate the internal affairs of unions, and place greater external accountability and scrutiny on their affairs. Union officials, many of whom have no legal or business education, will face the same fiduciary duties as company directors.
All in all, it seems like a clever designed piece of policymaking – especially in an area that has been a source of so much controversy and heartache for both sides of politics.
WorkChoices has been recast in the image of Fair Work. Ironically, the Coalition’s version of the Fair Work Act is likely to look very much like the system first envisaged by Paul Keating in his controversial speech to the Australian Institute of Company Directors in 1993, in which he predicted we would evolve towards a system in which awards and tribunals payed a minimal role, with employers, unions and employees directly determining wages and conditions.
The end of IR wars?
Is this the end of the “IR Wars”, then? Does this policy shift represent the beginning of a new period of consensus between the major parties around industrial relations? Unlikely.
Employers have already begun to voice some degree of dissatisfaction and disappointment. Clearly, they expected deeper and more profound reforms. The disappointment will not be limited to the big end of town. The policy contains very little that will directly address the demands of small business. It promises them little more than a helpline, a fact sheet and a mobile phone app. Small business too has expressed its disappointment with the new policy. There will, as a consequence, be ongoing pressure on the Coalition to push ahead with a more radical agenda for reform.
This type of reaction was no doubt anticipated, as the Coalition’s new workplace relations policy also commits an Abbott government to a new review of the Fair Work system to be undertaken by the Productivity Commission, which will inevitably focus on efficiency and competitiveness rather than the protective function of industrial legislation.
Just how radical Abbott’s second term reforms will be — and how much further they will go — can only remain to be seen.