Special Report - Combatants shaping up over IR reform proposals

Kevin Andrews is hardly a household name in Australia but that will change over the next few months.

The federal Employment and Workplace Relations Minister is likely to become as well known as another Kevin, Construction, Forestry, Mining and Energy Union boss Kevin Reynolds.

The two men represent opposing sides in what is shaping up as a defining period in Australia’s industrial history.

Mr Andrews is pursuing what he calls a “once-in-a-generation opportunity” to reform the workplace relations system, triggered by the federal Coalition winning control of the Senate.

This will enable the Howard Government to enact legislation that has repeatedly been defeated.

It plans to use the ‘corporations’ power to establish a unitary industrial relations system that will cover up to 90 per cent of Australian workers.

Special measures are planned for the building and construction industry, which Mr Andrews describes as “an industry (in) which criminality and lawlessness is common”.

Union leaders have vowed to fight the planned reforms, while sitting on the sidelines will be the state governments, which will be largely impotent in this looming battle.

The Federal Government has not spelt out the full details of its reform plans but Mr Andrews has clearly signalled the intent and direction of reform.

In a recent speech he provided a historical perspective on the planned reforms, which clearly place increased employment as the main objective.

“The goal of the system in 1904 was simply to conciliate and arbitrate the rights of existing employers and employees,” Mr Andrews said.

“One hundred years later, the goals of our workplace relations system must be much broader.

“They should be focused on creating work for those who want it, ensuring that the system encourages and rewards productive and efficient work practices and adequately reflects the national nature of the modern Australian economy.”

In support of this goal, he plans to use the ‘corporations’ power to bring 85 to 90 per cent of employees into a unitary workplace relations system.

The exceptions would be state government employees and people working in a sole trader or partnership structure.

Within the planned unitary system, Mr Andrews aims to “remove the complexity and third party interference with agreement making and simplify the process”.

This indicates a desire for more direct negotiations between employers and their staff.

He sees awards having a much less prominent role, as a “genuine safety net of minimum terms and conditions”.

“A one-size-fits-all approach is inappropriate and to continue to hanker for a system of detailed industry wide awards is unrealistic,” Mr Andrews said.

This also marks a fundamental shift, since awards presently embody a comprehensive range of terms and conditions – with a result that awards documents run for dozens of pages.

Mr Andrews plans to review the current “ambit and adversarial process” for setting the minimum wage.

Government critics see this as code for cutting the minimum wage, especially when Mr Andrews says “an emphasis on fairness only leads to regulatory excess and inefficiency that reduces productivity and discourages job creation”.

In relation to building and construction, Mr Andrews said the Government would do “all that is necessary” to reform the industry. Specific measures include:

• six-fold increase in penalties for unlawful industrial action to $110,000 for body corporates and $22,000 for others;

• potential for uncapped compensation payments to those affected by unlawful action;

• granting power to building industry taskforce inspectors to initiate prosecutions; and

• establishing a permanent commission to regulate and police the industry.

Adding to the regulatory bite, these measures will be applied retrospectively “so that it will apply to any unlawful industrial action taken by building unions as part of the current bargaining campaign”.

Mr Andrews last week urged the construction industry to resist union pressure to break their current agreements. He said the industry was being subjected to “intense industrial pressure by the CFMEU to sign up to new but outdated agreements, which put the vested interests of unions ahead of the future welfare of workers and the industry”.

The Chamber of Commerce & Industry of WA agrees with the thrust of the planned federal reforms but policy director Bruce Williams is keen to see more detail before passing judgement.

“We have a concern the Federal Government may not be politically committed enough to areas that need reform,” he said.

Mr Williams said the CCI’s priorities included fundamental reform and simplification of awards, which amount to “massive regulation in the detail of the employment arrangement”.

“They are incredibly detailed, incredibly complex and basically a blockage to the efficient running of a business,” he said.

Mr Williams said the system should move away from compulsory arbitration so that employers and employees could find their own solution.

Specifically, he believes the workplace agreements instituted by the Court Government (and reversed by the Gallop Government) provided the best model for national reform.

Mr Williams agrees with plans to change minimum wage setting.

He said Australia’s high minimum wage was denying employment opportunities, and increases in the minimum flowed through to all award wages.

Surprisingly, Mr Williams acknowledges that people cannot live on the current minimum wage.

Hence, the onus would be on the Federal Government to also reform the tax and welfare systems to lift the living standards of low-paid workers.

He suggests that Australia should adopt the UK system where an expert panel including economists sets the minimum wage.

Another change backed by Mr Williams is some “fine-tuning” of wage bargaining arrangements.

He said a current problem was unions flouting the prohibition on industrial action during the life of an agreement.

A prime example was the dispute at the Worsley alumina refinery, which commenced just a few months after unions signed a new three-year enterprise bargaining agreement.

Unfair dismissals is another area where Mr Williams would like to see change, specifically the introduction of full or partial cost recovery.

He said the current ‘no cost’ system led to many “questionable, very marginal” cases that cost employers time and money.

UnionsWA secretary Dave Robinson said he would judge the federal proposals against four criteria – will the system protect workers, does it promote fairness and equity, does it enable collective bargaining and does it allow workers to be organised.

“When you look at what is being talked up for the national system, it would not meet those tests,” Mr Robinson said.

The proposed federal reforms come against a backdrop of rising industrial action in Western Australia, which for the past two years has a worse strike record than the rest of the country.

WA Minister for Employment and Consumer Protection John Kobelke said most of the disputes in WA involved private sector companies under federal jurisdiction and there was nothing the State Government could do.

Mr Williams said the real problem in WA was the Government’s “hands-off attitude towards union misbehaviour”, which encouraged further disputes.

Specific State Government measures criticised by Mr Williams include the abolition of the building industry taskforce, removal of penalty provisions from the building industry code of practice and entrenching ‘right of entry’ rules.

“That some of the trouble spots come under federal industrial coverage only reflects that major employers have moved out of WA’s hamstrung state jurisdiction,” he said.

“The Labor Party’s obstruction of industrial relations reform legi-slation in the Senate has denied the federal jurisdiction the protection and compliance framework needed.”

In the meantime, employers are turning to the courts to seek both relief from industrial action and clarity as to their rights and responsibilities.

Hotchkin Hanly partner Michael Hotchkin, whose clients include BGC, said he had detected a greater willingness on the part of employers to take the fight up to the unions.

“From the instructions I have received over the past six months, I am aware of a greater desire to resist the militancy of the CFMEU,” Mr Hotchkin said.

Mr Andrews is keen to see a more spirited response from employers, and the unions are bound to respond in kind, which means Australian industry and business face a lively period in industrial relations.

Strike Snapshot

• In the past two years, Western Australia has a far worse industrial record than the rest of the country.
• WA lost 107.6 working days per 1,000 employees in the year to September 2004.
• The year to September 2004 was the worst year for industrial disputes in this state since the year 1996.
• Australia lost 57.6 working days per 1,000 employees in the same period.
• The first two years of the Gallop Government was a time of industrial calm throughout WA.
• WA lost 36 days per 1,000 employees in the two years to December 2002.
• Australia lost 41.4 working days per 1,000 employees in the same period.