SPEECH TO THE IR SOCIETY OF NSW ANNUAL CONFERENCE 2018
26 May 2018
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I acknowledge the traditional owners of the land on which we meet today and pay my respects to elders past and present.
Thank you to the NSW IR Society for hosting me at your annual Conference.
The theme of this conference is a good place to start – Is the system broken?
From the outset let me make it clear I don’t entirely agree with that proposition.
I do contend that there are parts of the system which are not working as they should, and structural issues in our labour market which we must address.
But we cannot say the entire system is broken.
As the ACTU Secretary, noted when speaking on ABC’s AM program on Wednesday, the Fair Work Act brought in positive changes to Australia’s IR laws, restoring rights that workers lost under the Liberal’s WorkChoices regime.
It is true that with the benefit of hindsight, we can now see that in 2008 the labour market was changing at a speed and in ways that meant that simply restoring fundamental rights to industrial relations laws would not be sufficient.
It was not possible to fully anticipate, only 10 years ago, the cumulative impact of:
· the extent and nature of structural changes to the labour market;
· the pace and impact of technological advances, such as automation and the gig economy;
· widespread corporate gaming of the system cheered on by a complicit government; and
· interpretation of sections of the Act by the Commission and the Courts in ways which were never intended.
So while the system is not broken, it is proper to ask whether, almost a decade after its introduction, there are aspects of the system which aren’t working as they should, or achieving the objects of the Fair Work Act.
We do need to ask whether the minimum safety net is providing “fair and relevant” wages and conditions, and whether enterprise level collective bargaining is “achieving productivity and fairness”.
And the answer has to be – in too many respects, they are not.
That is why, starting well before the last election, Labor has announced ma suite of reforms to the workplace relations system, including:
· introducing an objective definition of casual;
· tightening up the definition of sham independent contracting;
· since 2015, making submissions calling for a fair and reasonable increase to the minimum wage;
· restoring penalty rates and making sure that award variations never reduce take home pay;
· reversing the onus of proof and increasing penalties for franchisor liability for underpayment of wages;
· introducing a National Labour Hire Licensing Scheme;
· increasing penalties for employers and directors who deliberately avoid paying their employees’ entitlements;
· introducing a Modern Slavery Act; and
· adopting principles for the sharing economy, including that new services must support good wages and conditions, pay their fair share of tax, and provide fair access for people with disabilities.
We are also committed to breathing life back into collective bargaining.
If we are going to turn around the trend of declining numbers and coverage of enterprise agreements, a range of procedural and systemic reforms are required.
Labor has already made a number of significant commitments in this area.
First and foremost, a Labor government will abolish zombie WorkChoices agreements. They should have been done away with a long time ago.
We will also put a stop to employers using sham enterprise agreements to avoid real collective bargaining with their workforces. Namely using and apply that agreement to another workforce in another state.
And, as I announced at this very conference last year, we will change the test for the termination of enterprise agreements.
It has become too easy for employers to have enterprise agreements terminated against the wishes of their employees – where there is a threat of workers being thrown back onto award rates, losing hard fought pay and conditions.
This has a chilling effect on negotiation of wages and conditions and Labor will not let this imbalance in bargaining power continue.
I hear often from stakeholders about procedural barriers to bargaining, which we need to consider.
For example, employer groups have raised with me that some of their members are increasingly reluctant to negotiate enterprise agreements because of ambiguities in the way the Commission has interpreted and applied the better off overall test.
Additionally, employers and unions alike are concerned that the steps for completing an agreement are too prescriptive.
Like business and unions, Labor supports the amendments to the approval process which are in the Repeal of 4 Yearly Review Bill – but unfortunately the government has left this to stagnate in the parliament.
Just this week I publicly called on the government to bring this bill on for debate in the House of Representatives. Nothing happened. You have to ask yourself – just what is this government prioritising in the industrial relations field other than the obvious - demonising workers and unions? Very little.
I’m also concerned that evidence suggests that the good-faith bargaining provisions are not robust enough to bring bargaining to a conclusion.
While majority support determinations can be used to get employers who have never had an enterprise agreement before to the table, they provide no guarantee that once there, the employer will finalise an agreement.
In contrast, the bargaining regime in Canada currently includes arbitration in what they call ‘first contract’ situations where agreement is not reached. While the instances of arbitration are low, research has suggested that even the possibility of first contract arbitration has the desired ‘shadow effect’. That is, it encourages unions and employers to negotiate their own agreement without third party influence.
It’s not only the first enterprise agreement which is proving hard to make.
We are seeing more and more that re-negotiation of expired agreements, instead of taking months, is taking years.
I’m also getting complaints about the process even within the Commission in relation to agreements that have already been agreed to from employers and unions but have not been approved. Some Agreements have been held up in the Commission for up to 6 months.
It may be time for the umpire to be given a stronger whistle. An arbitral power for the Commission could be used primarily as leverage to bring parties to negotiation, and to bring seemingly intractable disputes to resolution.
Too often, when the big corporations - the economic decision makers - source their work force through sub-contracting and labour hire, not only are the workers left without a seat at the bargaining table - there isn’t even a table to sit at.
And with union density at 15 per cent of the workforce, too few workers have an advocate in the workplace to represent their best interests.
The Fair Work Act has not adequately facilitated multi-employer collective bargaining. While this is an economy wide failing, it has particularly negative consequences in those industries where employees are low paid and where they lack industrial power.
We will consider how far we go regarding vulnerable workers and if employers and unions are interested in this direction.
It is widely accepted – here and around the world - that low union density and falling levels of collective bargaining contribute to stagnant wages.
It is therefore important that policy makers ask why is it that the low paid bargaining stream, which permits multi-employer bargaining, has comprehensively failed to deliver.
Is it just a problem with the drafting of the provisions in the Act, or is there a greater systemic issue which must be addressed?
And it’s not just the low-paid bargaining stream.
The system is also not delivering for women.
Women are more likely to be employed in low paid industries and jobs, and are more likely than their male counterparts to be award reliant.
They are also overrepresented in industries where workers have little industrial power.
To date, there has only been one successful case using the equal remuneration provisions of the Act.
And, the Commission has been unable to effectively address the gendered undervaluation of work and the gender pay gap through annual wage reviews.
As it currently stands, our industrial relations system does not seem to be able to effectively deliver for low paid women – and this needs to change.
If we can’t do it now, after 26 years of uninterrupted economic growth, then when can we?
THE FAIR WORK COMMISSION
An evaluation of how well the system is working must involve a measured look at the composition and power of the Fair Work Commission.
This week there has been a debate around the composition of the Fair Work Commission.
The politicisation of regulators by the current Federal Government is astonishing, but sadly true to form.
Between them, Ministers Cash and Abetz have appointed 14 commissioners, none of whom came from the workers side of the bargaining table.
That’s not a reflection on any of those 14 appointees, but it’s not acceptable.
This is shameless stacking of an institution which should be fair and free from bias.
Right through from Menzies, Fraser, Hawke, Keating, up until Howard, there was a convention that government’s appointed experienced representatives from both sides of the bargaining table.
It was Howard who distorted it enormously when he had Peter Reith and Tony Abbott as his Ministers, when they appointed 18 out of 20 appointments coming from the employer side. Abbott and Turnbull have followed in Howard’s footsteps.
A Labor government would seek to redress the imbalance caused by the Abbott and Turnbull governments and ensure that representatives with a worker background remain squarely in the mix at the Fair Work Commission.
Previously in this speech I mentioned that Australia has experienced 26 years of uninterrupted economic growth.
This is an important point.
There is no denying that the nature of work is becoming increasingly precarious.
We are dealing with disruption from offshoring and automation, and the dividends of profit and security are not being distributed fairly.
But I do not suggest that somehow things have gone completely awry.
I don’t accept the view that whilst we’ve got some very significant challenges and we can see challenges ahead in terms of the changing nature of the labour market, that somehow the Australian story is not a good one in the main, economically.
It is ridiculous to argue that it’s all apparently been undone.
When you’ve had, as a sovereign nation, the longest economic growth compared to any developed nation. When you’ve had wages grow in all of that time, except under this current government. For all of that time wages grew. It’s just that wages at the high end grew faster than wages at the bottom end.
What I and Labor does acknowledge and accept is that the labour market is changing and we need to have laws in place that respond to that.
That’s not about writing laws for the 1970s, the labour market of today doesn’t resemble anything like the labour market of the 70s, 80s, or 90s. But we do need to work out how to deal with the challenges that exist now and are only going to become more complicated and challenging in the future.
So when asked the question is the system broken? I say, it’s got some very significant challenges and it’s got some deficiencies – collective bargaining is falling in real terms, reliance on awards is growing, there are too many wages to get around your obligations, there is a great capacity to game the system.
Our announcements are looking to do that and we’ve got more to say. We’re not going into the election without a mandate.
We are putting our views forward, whether it’s in tax reform or industrial relation reform so the people of Australia can make a decision.
That means we will be subject to attack and scare campaigns by the current government, but we will have an agenda if elected and we will have a mandate for that agenda.
We want to bring about change for the better. Making sure our economy grows, making sure people share in the dividend of that growth.
Thanks very much.