Flat White

Sorry ScoMo, but this is tepid tinkering with IR laws, not real reform

11 December 2020

2:06 PM

11 December 2020

2:06 PM

When the Prime Minister announced his five-point industrial relations package in May a senior adviser told me “This is not 1996” referencing the reform package introduced by the then minister, Peter Reith. 

And in parliament this week the Prime Minister confirmed this, saying the changes “are modest and practical”. 

He is correct. This is a trepid package that tinkers more than reforms. 

It is not a patch on the workplace changes introduced by the Howard government in 1996 and the later WorkChoices reforms introduced in 2005. 

Yet from the bellicose response from the unions and the ALP you would think grey storm clouds are gathering and that the whole IR system assault. 

Unfortunately, that is not the case — as the structures we have are no longer fit for purpose. 

What the economy needs is wholesale reform, not tinkering at the edges of Labor’s Fair Work Act that has been largely responsible for the collapse of enterprise bargaining and low wage growth  

The changes cover five areas:  

  • Award flexibility — The Bill will allow existing JobKeeper arrangements to continue. “Part-time flexibility” would apply if the employer and employee record an agreement; the part-time employee works at least 16 regular hours but less than 38 hours in total a week; and their shifts are at least three hours long.
  • Greenfields agreements –The Bill will enable the FWC to approve longer-term Greenfields agreements made in relation to the construction of a major project, to specify a nominal expiry date of up to eight years.
  • Casual employment – The Bill is intended to prevent unfair outcomes in situations where employers have to pay an employee twice for the same entitlement. Recent court cases would see employers hit with a $39 billion bill to pay casuals holiday pay etc on top of their existing loadings. It also introduces a statutory obligation for employers to offer regular casual employees conversion to full or part-time employment, unless there are reasonable business grounds not to do so.
  • Enterprise Bargaining –  The Bill extends and slightly amends the existing FWA to simplify the BOOT test in very limited circumstances where a company has been severely impacted by Covid 19. These agreements would be limited to two years and would only be where an “approval of an agreement would not be contrary to the public interest. The FWC will also be required to approve agreements within 21-days.
  • Compliance and enforcement – The Bill criminalises wage theft by employers. The penalties are four years in prison and up to $1.1m for an individual; and up to $5.6m for a corporation. Civil penalties for breaches of workplace laws will also be boosted by 50%, with fines up to $19,980 for individuals and $99,000 for corporations. Bigger businesses will be subject to penalties based on two times the benefit obtained, or up to three times for serious breaches. 

For more detail, you can read the Explanatory Memorandum

These are not sweeping changes and do not go far enough to restructure the operations of the FWA to the detriment of the economy and jobs. 

Yet Labor and the unions have already mounted a scare campaign around the temporary extension and simplification of the BOOT test to make asinine claims that different classes of workers would lose out. 

The change is for two years only – to 2022, and can only be applied in very limited circumstances after going through the FWC. 

The bellicose cri de coeur by unions and the Labor party over this modest measure has more to do with them seeking some relevance. For the unions, it is already being used to try and generate more membership while for the Labor Party and for Anthony Albanese it is a rallying point after a year of political impotence. 

Neither the unions nor the Labor party will drop their faux outrage over these modest measures because they can ill afford to. 

The government has breathed a bit of life into these somnolent organisations and their “outrage” will not diminish over the coming months. 

The changes outlined by Christian Porter are not worthy of the name reform even if they are worthwhile in their own right. 

Despite saying in Parliament this week that “enterprise bargaining is not fit for purpose” Mr Porter’s changes do virtually nothing to restart the process of enterprise bargaining. 

As Porter correctly said the FWA has been a brake on the economy since it was introduced. In 2010, just after introduction of the FWA in July 2009, there were 25,150 enterprise agreements. Ten years later that number of enterprise agreements has dropped to just 10,000. 

These minor changes are not going to kick start enterprise bargaining. 

What is needed is wholesale reform along the lines of the Workplace Relations and Other Legislation Amendment Act introduced by Peter Reith in 1996 and negotiated through the senate with the support of the Australian Democrats. 

This act saw enterprise bargaining take off with its sweeping reforms that were hardly radical. 

You can see the twin benefits of real workplace relations reform, including Work Choices, from the two graphs below which show unemployment falling to just 4 per cent in 2008 while the wage price index continued to rise. 

Real reform equals jobs and increased wages. 

Unemployment rate 

Wage Price Index

There is a stark truth revealed in these graphs. 

After Labor abolished Work Choices unemployment and introduced the Fair Work Act in July 2009 unemployment ticked up, in part because of the Global Financial Crisis while the Wage Price Index tanked. 

It is understandable that unemployment increased during the GFC, but what is revealed here is that the rigidities built into the workplace by the FWA prevented a full recovery of the labour market and coupled with reduced wage growth particularly when compared with the WROLA and Work Choices reforms. 

If the government was serious about reform it could do no better than simply reintroduce WROLA – it is still fir for purpose and would serve the country well. 

But Porter and the government are not keen.  

In a media conference during the week Porter said of his changes that “this is not going to be 1997 politics” and he is right there. 

These changes are not reforms; they are not even a pale imitation of WROLA and nor are they Work Choices despite the claims of the union movement and Labor. 

These changes are just tinkering, nothing more. Which is a pity because the country needs real reform. 

With the political heat that the unions and Labor are going to try and turn on the government surely a more audacious reform could have been undertaken as the heat would have been exactly the same. 

Ian Hanke worked with Peter Reith during the WROLA reforms and also Kevin Andrews with the introduction of Work Choices and is a long term advocate for workplace relations reform.

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