07/09/2011 - 10:30

Growing case for IR reforms

07/09/2011 - 10:30


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Employer groups are mounting an increasingly compelling case for industrial relations reform.

AUSTRALIAN Industry Group chief executive Heather Ridout was widely considered the Rudd Labor government’s biggest supporter in the business community.

She has served on a number of advisory groups and was questioned at times for arguably being too close to the government.

Against the backdrop, Ms Ridout’s critique of Labor’s Fair Work Act warrants close attention.

In a major speech delivered earlier this week, Ms Ridout delivered a well-researched and carefully considered analysis of the Act, which replaced the Howard government’s WorkChoices legislation.

The latter was, of course, a significant factor in the Coalition government’s defeat, so much so that current opposition leader Tony Abbott has repeatedly ruled out industrial relations reform for fear of being branded a latter-day supporter of WorkChoices.

Premier Colin Barnett has also been shy of tackling industrial relations reform, even though his former workplace relations minister Troy Buswell commissioned a report that advocated change.

Mr Barnett argues that the business community wants a period of stability, after many years of changing rules and regulations.

That may be true in some cases, but the feedback from business groups seems to tell a different story – their members want change.

The silence from political leaders has left business groups, including the Chamber of Commerce and Industry WA, the Australian Mines and Metals Association and now the Australian Industry Group, to take the fight up to the federal government.

The business lobbying comes ahead of a review of the Fair Work Act from January next year.

Ms Ridout has put forward what can only be considered reasonable advocacy of incremental reform.

“Ai Group operates in the real world and we are not advocating a wholesale revamping of the legislation, but some sensible changes need to be made aimed at removing barriers to productivity growth,” she said.

The core of her argument was summed up in the following comments.

“Arguments that employers are failing to take advantage of the bargaining provisions of the Fair Work Act to increase productivity largely miss the point.

“Yes, there are occasions when employers and employees will want to negotiate specific provisions aimed at improving productivity but, more often, what leading employers want is legislation and industrial instruments which allow them to focus on productivity improvement every day. 

“They want legislation and industrial instruments which do not impose barriers to productivity improvement such as clauses which impede outsourcing, or restrict the use of contractors, or prevent individual flexibility arrangements being negotiated with employees, and so on.”

Ms Ridout backed up her advocacy with some powerful examples.

One business owner contacted her to explain that his expensive machinery sits idle in the evenings, even though he has plenty of demand for his products and had intended to employ workers for an afternoon shift. 

However, under the Fair Work modern award system, the afternoon shift loading applicable to his glass manufacturing workers increased from 15 per cent to 50 per cent, and as a direct consequence he has decided to leave his machinery idle after the day shift, and to import the glass products he would otherwise have made.

Like many pieces of legislation, the devil is often in the detail when it comes to industrial relations.

Take the provisions that relate to the employment of contractors.

Prior to the Fair Work Act coming into operation, enterprise agreements and awards were not permitted to include provisions that restricted the use of contractors or on-hire labour.

Under the current legislation, unions are typically seeking a clause that requires consultation with them before contractors can be engaged, plus they want a requirement to pay “site rates”.

“In reality this often means that contractors who do not have an agreement with the union do not get any work,” Ms Ridout said.

Another concern she raised was the ability of unions to disturb workplace arrangements that are supported by the majority of employees in a workplace.

With the Greens holding the balance of power in the Senate and advocating far more interventionist IR policies, the imperative for Labor and the coalition parties to find common ground could not be stronger.



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