Fair Work Australia: the powerful regulator

It’s a rare day when I agree with the Victorian branch secretary of the Electrical Trades Union Dean Mighell! Yet his recent call for his union to leave the Labor Party is one such occasion. This is not to say I agree with his reasons nor do I want to make a habit of tugging my forelock to industrial muscle - quite the opposite in fact. Labor needs to move beyond rent seekers, if it is to promote the national interest in industrial relations and industry policy.

Mighell argues that Fair Work should be the next contest for the ACTU in their bid to further re-regulate the labour market. His call to arms is for an expanded union movement based on the benefits of joining his brand of industrial muscle, should it be appealing, especially to workers in say restaurants! He says:

I well remember when John Howard ushered in the 1996 Workplace Relations Act. Peter Reith was industrial relations minister and the ACTU denounced the legislation as the ultimate, anti-worker evil. Union anger was at boiling point and Reith was demonised at every turn. Now there is a deafening silence from the ACTU as Labor governs and workers' rights and conditions are attacked.

This view is symptomatic of a wider longing among many unionists and Labor “true believers” for a return of the power that unions had in the 1970s. The kind of power that saw coal mining unions in Britain shorten the availability of electricity to factories to three days a week during the early 1970s strikes there; the kind of hard power that can only come through bitter strikes in key economic sectors.

Mighell adds:

The truth is that Howard's laws at the time, as bad as they were, gave workers and their unions a much better go than Rudd and Gillard's Fair Work Act. When Howard controlled the Senate, he then took it too far and paid the ultimate political price.

That former Prime Minister Howard overstepped the mark with WorkChoices is self evident from the 2007 election results and the general polling on industrial relations. Yet, Kevin Rudd’s Labor sought a carefully crafted middle ground in opposition and indeed the orchestration whereby union leaders like Mighell and Joe MacDonald were stripped of membership masked an overall unwillingness of Rudd Labor to take on the more extreme elements of the trade unions that have substantial power in the Labor Party.

Like many true believers, Mighell genuinely believes in the orthodoxy that a very powerful union movement has created a fairer Australia. His politics and his union are a mechanism to achieve wage rises for his workers, whether they are affordable to business or not, and he does not recognise his danger to wider society. He wants the insiders, his union, to be able to more actively set wages for his members, in spite of the “side effects” this might cause to outsiders like the unemployed and small business.

It is hard to imagine what Mighell wants when the Maritime Union of Australia achieved a $50,000 increase over three years for its members in ports serving the oil and gas industry in Western Australia without any obvious productivity trade-offs. This in spite of Fair Work being worse for workers than Howard’s 1996 laws!

More than 50 years ago “social market” inventor and former German Chancellor, Ludwig Erhard, saw rent seeking as the biggest threat to prosperity and a better distribution of wealth. For him, this was no simple workers versus profits divide, indeed he saw that markets would, over time, deliver the greatest wealth dividend and provide democratic underpinnings to the fragile post-war German society. He therefore saw reform of price controls on wages, rents, foodstuffs and materials as the removal of undemocratic institutions that also inhibited better functioning of the economy benefiting workers and business alike.

Erhard is reported to have said at the time: “I hope you don’t misunderstand me when I speak of a social market economy. I mean that the market as such is social not that it needs to be made social.”

And yet, 50 years on, Fair Work enshrines an outmoded view that markets inherently mean inequality and the best way of getting “balance” is by the powerful hand of regulation. Mighell sees balance as Labor caving into the demands of big business. Yet in the same breath, we see evidence such as the case of the school children who cannot work after school because the relevant award has a minimum three-hour shift.