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antipodea watching: Australia's industrial relations war (p2)

by myriad Wed Jul 6th, 2005 at 11:58:46 PM EST

[cross-posted at Booman Tribune and Daily Kos]

In my last diary, I painted a brief picture of the major Industrial Relations changes the Howard Government intends to legislate.

This diary is long, as a result of going through those changes in detail, and offering some analysis in terms of the underlying factors and facts relating to these changes.

I don't apologise for the length, as this is without doubt the most major, fundamental restructuring of Australian working life proposed in probably 50 years. This is Howard's attempt to turn us into, once again, a cardboard cut-out of the US system, focussing on all the bad bits for individual workers, on breaking the back of the unions, and handing all the control to big business. It offers a nightmare vision that must be fought, and I fervently hope, denied.


In my last diary,  foreshadowed the major Industrial Relations battle shaping up in Australia, as the Howard government tries to introduce the most radical changes to the system seen in decades. More specifically, it is not unreasonable or hysterical to call these the largest and most fundamental attack on workers rights in Australia for a generation.  The Industrial Relations battle goes to the heart of the ideology of the Howard government, and arguably demonstrates more clearly than any other policy what, after 10 years in power, Howard's vision for the country is. Indeed, Howard refers to his cherished Industrial Relations reforms agenda as "an article of faith for the Coalition [conservative] parties".

So if it's such a fundamental tenet of Australian conservative faith, why is Howard only introducing it now, after 10 years in power? There is one straightforward answer, and a slightly more sophisticated one. The straightforward answer is because in the last election in October 2004, the conservative Coalition parties of the Liberals and Nationals gained a majority in both the House of Representatives and Senate. The slightly more sophisticated answer is that in winning a historic fourth term, Howard became Australia's second longest serving PM, and in what is commonly perceived to be his last term, is now moving into the mode of what political legacy he wants to leave. The fact that the IR laws are his idea of a positive legacy speaks (distasteful) volumes about the man.

So let's first up take a look at what the specifics of the proposed changes are (and I'll do my best to translate across the Atlantic, without making this the longest diary ever).

The Key Changes

As I noted in the previous diary, the Australian Industrial Relations Commission (AIRC) would no longer be the chief arbiter of industrial relations. It would be replaced with instead a "Fair Pay Commission" (I kid you not, there is little Howard doesn't know about Orwellian double-speak) which would set - and then the government would legislate - the minimum wage. At present the AIRC is made up of representatives from the unions, small and large business, government, academia and the law. The Fair Pay Commission's proposed structure is heavily biased towards business representation. Linked to this, the state IR systems would go, replaced by the new Federal framework, which would cover 85% of workers (the remaining 15% would most likely be state public servants, but in all honesty that's a guess from me).

The AIRC would remain, but essentially gutted of all real power, and radically reduced in size. The most critical change here is that the AIRC would no longer be the arbitrator of disputes. Instead, employees or employers with a claim would have to take it to court. One of the beauties of the current system is that the AIRC provides cheap, readily accessible hearings. For individual and small numbers of workers to now be faced with having to go to court to get unfair dismissal claims heard, for example, is a terrible, unjust blow.

In the case of negotiated agreements, the current `no disadvantage test', through which the AIRC determines before certifying any employment agreement that the worker(s) are not worse off than if the workers were under their entitled award conditions, will be scrapped and replaced by a much weaker and broadly interpretative `standard' arbitrated by the proposed Fair Pay Commission.

Businesses of up to 100 employees would be exempt from Unfair Dismissal Laws. Under current Australian law, an employer cannot dismiss a worker in a ""harsh, unreasonable or unjust" manner. What this means in practice is that an employer must prove their grounds for dismissal, and follow proper procedures (eg disciplinary, probationary, counselling etc.) in doing so for their dismissal to be upheld as legitimate, should the dismissed employee challenge it. It has long been argued that the fear of unfair dismissal claims has prohibited many small businesses from hiring new staff, a claim that is controversial at best, highly dubious at worst. Because most agree that the resources required under this procedure are beyond truly small business, businesses that employ 20 people or less are currently exempt.

But the Howard Government proposal makes a mockery of any reality-based decision by defining a small business as up to 100 employees. To give you a sense of perspective, 99% of Australian companies employ 100 people or less; and this proposed change is creating real fear that large companies will segregate themselves into semi-autonomous units of 99 employees, so that their entire workforce will be exempt from Unfair Dismissal protections.

But wait, there's more.

As I noted in my last diary, at present in Australia there is a complex map of state and federally-based `awards', ie conditions covering working arrangements. These are bound together in agreements that are either negotiated collectively through a union or similar, or in individual contracts. All are based on, and can't fall below, the series of minimum awards set by the Industrial Relations Commission that relate to standards for minimum hourly wage, leave, sick leave, redundancy, superannuation, maternity leave, penalty and overtime rates, and so on. At present, the majority of working agreements in Australia are still negotiated collectively.

The Howard government wants a single, federally run award system. Few disagree that the current system is messy and overly complex, and even the unions have indicated a willingness to consider a single Federal system - but as the leader of the Australian Council of Trade Unions succinctly put it "not this system". Howard's proposal reduces the minimum number of awards to just 5 -

 4 weeks annual leave (of which 2 can be optionally cashed in), minimum wage,

 hours of work (there were signs of raising this to 40 hours, but the immediate backlash was so great the Federal minister backed down to the current 38)

 minimum personal leave of 8 days (meaning sick leave & other - eg attendance of a family funeral); and

 unpaid parental leave - setting in place basic maternity and paternity leave requirements which fall far short of the OECD norms.

 A minimum wage of $12.75 an hour, to be then legislated and reviewed by the new Fair Pay Commission - and we all know from the American experience how much harder it is to get a legislated minimum wage to be increased.

Everything else would be up for negotiation, combined with a massive push by the government to force as many people as possible onto individual contracts, leaving the most vulnerable in our working society - notably women - in no position to negotiate. This would mean many workers having to cede such basic entitlements as penalty rates for working night shift - something that takes 10 years of your life, for working weekends, for overtime beyond the standard working week, and not even a guarantee of superannuation.

This from a government that talks long and hard about the coming burden of an ageing Australian population, yet it wants to abolish the right of all Australian workers to receive a minimum payment from their employer on top of their salary towards their retirement. Their short-term political commitment & long-term personal allegiances to corporate interests, versus the good of the country, could not be more clear.

Fundamentally, these changes allow employers to offer workers less than their award entitlements, less than their skill entitlements, and little or no protection from unfair dismissal. In also proposing to lengthen a new employee's probationary period in which they can be dismissed lawfully from 3 months to 6, Howard is offering major retailing chains and fast food outlets, as one example, the golden egg of a perpetual ability to hire and fire at will after 6 months, cashing in on the double whammy of government apprenticeship & "skill training" subsidies for young people, whom they can then dismiss without consequence after 6 months, and start again.

Finally, other proposed changes would greatly restrict the access and power of unions, impose draconian penalties for unlawful strikes, make it far harder to legally strike, impose secret ballots on all workplace decisions, and remove the obligation on any employer to respond to a collective bargaining negotiation - a fundamental human right that imposes justice in the workplace.

Why these changes now?

There are two sets of answers to this question; one involves the current political climate in Australia, the other the state of the economy. I will tackle the second first.

According to the Howard government, these changes are absolutely necessary to move Australia's economy forward. They argue that the Unfair Dismissal laws, for example, have been a major impediment to small business hiring more workers, that there is not enough flexibility in the workforce, and that Australia is not well placed to compete on the global market because of our industrial relations.

It would probably surprise Australians most to learn this, but according to international surveys, Australians are the hardest working people in the western world - even more so than Japan and the USA   - and this despite having 4 weeks annual leave, the entitlements listed above, and having the second largest number of part-time workers. We also have ¼ of our workforce casualised - see the last diary I did and the brilliant article by Elizabeth Wynhausen.

Our economy is booming, into its 14th straight year of growth, and profit margins have been high and increasing. Unemployment (although a topic I will come back to) is ostensibly at a 28 year low of just 5.2%. There have been records lows of industrial relations disputes.

At the same time, despite the record period of growth that Howard likes to boast about, his government has opposed every single claim for a rise in the minimum wage that has been brought before the Industrial Relations Commission. In a testament to the independence of the Commission, it has rejected the government's demand that wages not rise, and has rewarded Australian workers for the booming economy they have played no small part in building.  Yet if Howard had had his way, those on minimum wages would be over $2000 a year poorer right now. Juxtaposed against this is an unprecedented housing boom in Australia, partly fuelled by the government's tax breaks for investment owners, which has seen first home buying climb beyond the reach of more Australians than ever before, has pushed families to the knife edge with massive mortgages, and seen many barely able to make rent as investors use the housing squeeze to raise rents to pay their investment mortgages.

All the economic indicators, both from the economy at large, and in terms of the productivity of the workforce and the individual debt burden on Australians at present - now at record highs - suggest the need to maintain job security, not lessen this. And certainly the article I posted last diary highlighted some of the real issues in the Australian workforce - a massive number of minimum wage, underemployed, casualised, low-skill, insecure positions, largely filled by women, who can barely keep above the poverty line, and frequently rely on government hand-outs to do so; and who struggle as it is to get fair working conditions.

Yet the proposed IR changes will do nothing more than this, according to 17 academic experts in IR, who delivered a damning report card on the Howard government's proposed changes.

So why now? The real reason is that this is an article of faith for Howard, and the Australian Chamber of Commerce and Industry , a right-wing business lobby group has demanded these changes from the conservatives they bankroll for years - indeed, it is common scuttlebutt that they quite literally wrote these current changes.

And now, the final barrier has been removed. At the last Federal Australian election in October  2004, the conservative Howard government coalition of Liberal and National parties won a majority in both the House of Representatives and the Senate. The Opposition parties have since Howard was elected in 1996, been combining their numbers to defeat earlier attempts to water down the Industrial Relations system and worker protections.  

Let's be clear on one thing. These changes were never publicly released as policy for consideration as part of the election campaign. Howard has no popular mandate whatsoever for these changes.

Yet the new Senate majority seems to have delivered him carte blanche. But not quite. His Senate majority is just one, and the minor conservative party of the current coalition, the Nationals, effectively now hold the balance of power. Already, National Party Senators coming into the new Senate have been flexing their muscle, and their vote is not a foregone conclusion.

The battle to win the hearts and minds of those Senators has just begun. The Unions kicked it off with a week of action last week, culminating in hundreds of thousands of Australians taking to the streets in all capital cities - over 100,000 in Sydney and Melbourne, 50,000 in Brisbane, 20-30,000 in Perth, and a few thousand in the remainder. The Unions have also spent $8 million on a television advertising campaign, and the combined actions have had an effect. Latest polls show the Coalition support & Howard's personal approval ratings plunging.

All this before the final legislation has been drawn up, and the new Senate begins sitting on 1 August. Yet the battle is only beginning. Howard has vowed he will convince the people - and he has the many millions of dollars that the government can spend on `public information' to do it with. Scuttlebutt is predicting that the government media campaign will be launched earlier now to counter the Union ads, and will total somewhere around $20 million of taxpayers money. Oh, you didn't know? There is no law or independent oversight in Australia preventing the government at either state or federal level from using taxpayer's money to spruik it's own propaganda.

Welcome to Australia, where there's a fair go for all - unless Howard gets his way.

We had this sort of industrial relations reform in New Zealand 15 years ago (though we didn't go nearly so far as to remove unfair dismissal claims).  The net result was greater casualisation, a dramatic drop in union membership (which flowed on to poorer working conditions in general), a massive loss of overtime and penal rates, and pay cuts of up to 25%.  Management salaries continued to rise, of course.  It also led to a decline in productivity, as employers found it easier to invest in more cheap proles than in training or upgrading their plant.

No Right Turn - New Zealand's liberal blog

by IdiotSavant on Thu Jul 7th, 2005 at 08:06:26 AM EST
Hey, nice to see a Kiwi here! :-) I'll check out your blog when I get a chance.

Yeah, the NZ experiment with this kind of "reform" has been weighing on my mind- I found this good article in the UK Guardian. Excerpt:

"In fact, on the question of productivity, one of the papers shows that, after the introduction in New Zealand of the Employment Contracts Act, 1991 (which similarly enforced individual contracts) the NZ economy began to lag behind Australia in productivity growth. For the 14 years prior to the legislative changes, NZ had kept pace with Australia in rates of growth."


"In NZ, the full-time participation rate in employment fell by 11 per cent and workers lost long-held entitlements such as overtime and penalty rates. Individual contracts often contained straight out pay cuts. The number of families with no adult in work increased dramatically and income inequality widened. Kiwi workers are still reeling from these changes."

Typical of the times here, btw, that I have to turn to non-Australian newspapers to get some kind of comparative analysis.

About every month I get depressed and think of moving to NZ. Being gay and all certainly adds to the pull, that and as NZ is a small , sane country not interested in an over-inflated ego or being 'noticed' by the rest of the world.

Getting lots of expat Aussies at the moment?

"This can't possibly get more disturbing!" - Willow

by myriad (imogenk at wildmail dot com) on Thu Jul 7th, 2005 at 09:02:06 PM EST
[ Parent ]
Well, we were also in the middle of a major economic crisis which had seen unemployment spike to 11.1%; many simply dropped out of the labour force rather than keep playing the game.

Howard's gall astounds me.  Even at the height of the free market reform push, our neo-liberal government didn't dare introduce a contract-based regime which was so blatantly one-sided.  The "trial period" means contracts will effectively be binding on workers, but not employers. Why bother calling them "contracts" at all, then?

As for moving to NZ, you might want to see how our election goes first - if National wins, it'll be the same sort of employment regime over here, and they're fairly keen on cuddling up to Bush in the forlorn hope of a free-trade deal (yeah, one like Australia's, which excludes agriculture...)

No Right Turn - New Zealand's liberal blog

by IdiotSavant on Fri Jul 8th, 2005 at 08:59:58 AM EST
[ Parent ]
This is off-topic and nothing to do with the subject of your diary (which is good to see on a site like this) but, as another Australian, I wonder if you can point me to any decent Australian political discussion sites on the net. The ones I've found so far are either deserted or extensions of sites with a different focus (e.g. tech sites) and so populated by people who think they know all but really don't. Thanks.
by Raddark on Sat Jul 9th, 2005 at 02:25:55 AM EST
Ah, another lost soul.

I know of a few good standard blogs (road to surfdom, john quiggin) but none with interactive user face similar to scoop.

I have been involved in 'your democracy' - an offshoot of Margot Kingston of the SMH's webdiary - www.yourdemocracy.net.au

I started blogging there (I'm Myriad Mint), but I feel the site has been increasingly taken over by the lunatic fringe and am pretty unhappy with the layout and feel of the site in general. However it is participatory.

All in all, I share the same frustration as you, hence being here & at booman.

The other thing I find is that the few I've found that do have discussions are pretty much dominated by left vs right debates, which go on endlessly, never resolve anything, and stop any major issues being looked at in depth, or any serious planning by progressive happen. I'm afraid as a result I didn't bookmark any.

Sorry to be of little help (it feels) - I just don't think Australians have embraced the interactive and  participatory potential of the internet for political discussion and capacity building etc.

"This can't possibly get more disturbing!" - Willow

by myriad (imogenk at wildmail dot com) on Sun Jul 10th, 2005 at 12:45:04 AM EST
[ Parent ]
Like myriad, I fear that there is not much worthwhile material in Australian blogdom.  Certainly nothing as interactive as this site.

My favourite is John Quiggin, who incidentally has a blogroll of Australian political blogs on his front page.

by canberra boy (canberraboy1 at gmail dot com) on Sun Jul 10th, 2005 at 11:54:35 PM EST
[ Parent ]
Some good news. The Sydney Morning Herald reported that Howard's popularity has dropped 10% in its most recent poll. The family first party senator said that secure jobs make for a strong family so that vote can not be taken for granted.
by core halo on Mon Jul 11th, 2005 at 02:59:40 AM EST

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