Industrial relations laws have the power to determine whether this century will be one of prosperity or stagnation for Australia.
Yet despite bills to establish the Australian Building and Construction Commission and the Registered Organisations Commission serving as the official triggers for the early double dissolution election in 2016, not a whimper was heard about industrial relations during the election campaign. And since then, the government has done little more than tinker.
The re-established ABCC will enforce existing industrial relations law, but the CFMEU will retain its privileged place at the bargaining table of Australia’s construction industry. And although the supervision of union officials has shifted from an organisation stacked with Labor appointees (the Fair Work Commission) to an organisation stacked with Coalition appointees (the Registered Organisations Commission), there has been no reconsideration of why union officials should be supervised at all.
If legislation didn’t give unions special privileges, there would be no need for separate legislation to supervise unions.
Then there is legislation like the ‘Corrupting Benefits’ and the ‘Proper Use of Worker Benefits’ bills, which attack union officials who look after themselves rather than members. These may force some union officials to change their behaviour and slow the flow of funds to Labor and its mates, but any impact on the workplace will be marginal.
Government tinkering to industrial relations also includes, in the case of the Victorian Firefighters legislation, banning enterprise agreements that fail to promote respect for volunteers. This is not a record of visionary reform.
Visionary reform would remove unwarranted privileges for unions, remove unfair dismissal laws and, above all, reduce the regulation of wages.
Australian workplaces need wage deregulation to promote productivity and innovation and restore wages growth, in the face of challenges from automation and international competition.
Workplaces will never encourage individual workers to take on roles that make the best use of their skills and enthusiasm so long as they are paid at rates identical to other workers in the business, the industry or across the country. And yet the proportion of workers paid at a one‑size‑fits‑all regulated wage rates, otherwise known as awards, is on the rise.
From the time Keating first promoted enterprise bargaining as a better way for setting wages, through to the end of the Howard era, the share of workers on award wages fell. But from 2010 that share has risen and is now at levels not seen since the turn of the century.
What changed in 2010 was ‘modern’ awards. These involved replacing thousands of wage regulations with a little over a hundred regulations. The problem was, whenever multiple regulations were rolled into one, the highest wage rate from the original regulations applied. This removed the capacity to have diversity in wage rates for workers who make different contributions.
The change was implemented by Rudd and Gillard, and Labor now wants to continue it by banning the regulator from ever reducing an award wage or even a component of it, including Sunday penalty rates.
Paying workers the same higher rate has not helped wages growth. Following an initial bump with the introduction of modern awards, wages growth has been poor. Forcing employers to treat all workers the same is a recipe for apathetic workplaces and stagnant wages. A pay rise can be an incentive and a reward, but not if your employer also has to give it to your workplace’s resident slacker.
Thriving workplaces also need owners and managers who are willing to hire without being forced to pay new starters more than they are worth and fearing that, once hired, they can never be fired.
Official unemployment, a decade on since the Global Financial Crisis, remains at 5.4 per cent, well above the rate that prevailed when small businesses were exempt from unfair dismissal laws under Howard. More than 700,000 Australians are in unemployment queues while small‑business owners struggle to do everything themselves.
The Government says the current Senate wouldn’t support attempts to wind back unwarranted privileges for unions. It may say the same about attempts to abolish or reduce award wages, or to exempt small businesses from unfair dismissal laws.
But such reforms will only happen if the Coalition campaigns on them and Australians have a chance to vote for a Senate that will support them. Reforms like these are sorely needed.