Inquiry into the Workplace Relations Framework actu submission to the Productivity Commission

First Principles: The Purpose of Industrial Relations Regulation

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First Principles: The Purpose of Industrial Relations Regulation.

Some central elements of the first federal industrial relations system had become inevitable in the constitutional debate that carried the motion (albeit by a majority of only 3 votes1) that the Commonwealth Parliament shall have the power to make laws with respect to conciliation and arbitration of industrial disputes extending beyond the limits of one State. The fact that at least two of the States (NSW and South Australia) had already established their own industrial arbitration mechanisms in advance of the Commonwealth legislation was also undoubtedly an influence. These developments occurred against the backdrop of a decade characterised by substantial social divisions, economic depression, lockouts and strikes2. It was a period where “freedom of contract” had been fighting collective representation, and winning. The decision taken in the constitutional debates marked a turning point.

When Australia’s first federal industrial relations laws were introduced, they were the product of a compromise that reflected a broad social consensus. The laws were devised by a minority Protectionist Party government held in power with the support of the Australian Labor Party and were implemented by a Protectionist-Free Trade alliance. Some matters of detail (such as union preference and the coverage of the state public services, foreigners engaged in coastal shipping and rail workers) were hotly contested, but the essential architecture of the system was not.

Whilst a Labor-Liberal coalition government might today seem a heretical proposition to both partisan political actors and the community at large, this important footnote in history serves to demonstrate that at its most fundamental level, the basic objectives of industrial regulation were settled well before the ink had dried on the C&A Act. Our proposition in this introductory chapter is that notwithstanding recent cracks (which the instigators of present inquiry are intent upon agitating), this broad consensus is intact and must remain so.

The “political football” contest concerning industrial relations has seen various losses and gains to labour and capital over its 110 year season. Most of the colour and movement however can be attributed to two key periods (which had significant variations within them).The first period covers the ALP-ACTU Wages and Incomes Accord while the second period covers the period of enterprise bargaining, supplemented by the award system. Moves towards the modernisation of Australian workplaces which were already under way in this first period—exemplified by award restructuring and productivity bargaining—were overtaken by the political momentum of a shift to enterprise bargaining3. This second period represented a move towards decentralised wage setting. It was inaugurated in the early 1990s when the Keating government formalised enterprise bargaining and was expanded further by the Howard government in 1996 when individual agreements were formalised. More dramatic changes took place 2005 under WorkChoices, when the ‘no-disadvantage test’ was removed from individual bargaining. Finally, under the Rudd-Gillard governments, the FW Act largely dismantled WorkChoices and inaugurated an agenda of award modernisation. As Borland notes, with regard to the changes during the 2000s:‘ [they were] primarily oriented to changing the relative bargaining power of employers and employees, rather than to enhancing overall economic performance’.4 Today, the residue of all these changes is still evident: enterprise bargaining is entrenched, but with an important role still filled by the award system. Managerial prerogative is in the ascendant, but organised labour continues to show resilience—notably during the fight against Work Choices5—and remains fundamental to both enterprise bargaining, the evolution of the award system, and the maintenance of the minimum wage. In the day-to-day relations on the shop floor, unions also remain significant, despite lower levels of union density in some sectors.

Whilst the labour movement has seen in aggregate more losses than gains over both periods, those losses have not been as a result of a re-think of the central pillars on which the system has been built. Rather, numerous commenters have aptly described industrial relations policy reform as a pendulum – apt because a pendulum can only swing within pre-defined limits. On the only occasion in recent history where the pendulum was transformed to a wrecking ball swung toward those central pillars, the result was significant public opposition, concerted activism from diverse wings of civil society and a change of government that unseated a Prime Minister.

Ascertaining the central objects of industrial relations laws involves a great deal more than resort to the relevant sections of an item of legislation that purport to state what those objects are. The drafting of such sections has gradually transformed from a mechanical summary of the basic architecture or institutional features of legislation (as was the case with the C&A Act) to broader policy statements that are somewhat obscured by ambiguous political catchphrases designed to ensure each of the loudest lobbyists can be persuaded they have been serviced by the Government of the day6. A much surer guide to the objects of legislation is to look at what it actually does, with the generally safe assumption that what it does do is done intentionally.

The brief account in Table 1 of what Conciliation and Arbitration system did and what the Fair Work system does is sufficient to demonstrate the historical consistency between the then and now. A more fulsome exposition of the major evolving features of modern industrial relations laws is enclosed in Appendix 1.

Table 1: Features of the Conciliation & Arbitration and Fair Work Systems

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