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Right to strike should go

By Des Moore - posted Wednesday, 13 October 2004

During the election campaign Prime Minister Howard pledged to "push the boundaries out as far as possible on workplace relations reform" and slammed Labor's policy as being more likely than any other to "turn back the productivity clock in this country".

But with a Senate likely to pass major legislative changes from July next year, will the Prime Minister seize the day? Some see a major reform initiative as contrary to Howard's character and more the image of steady and reliable as he has successfully presented to the electorate. And the apparently limited industrial reforms specified in the Coalition's policy, given little campaign attention by Mr Howard, might be thought to constrain his mandate.

Any such perceptions, however, overlook the swag of reform bills rejected by the Senate. Last session they included the (many times rejected) exemption of small businesses from unfair dismissals; the establishment of a building and construction commission; and legislation effectively requiring the Australian Industrial Relations Commission (AIRC) to correct its astonishing decision that minimum wage decisions can ignore the effects on the unemployed.


Overall, since 1996 the Senate's rejections have been extensive and have included the 1998 Reith legislation to restrict the AIRC's powers. Accordingly, with its own mandates for major reform ignored by the Senate, the Government can now well and truly justify pushing the boundaries.

The need for fundamental reform is overwhelming. The rationale is in part to establish a family-friendly labour market - which should appeal to Family First - by offering a ladder of employment opportunity to the over 1 million jobless couples. Its basis can be found in three simple facts.

First, despite much improved rates of economic growth under the Coalition, and a major reduction in the official unemployment rate, participation rates have not increased since 1996. In short, the proportion of the population in the labour force has not grown as the economy has.

Second, many more people are seeking employment than the 550,000 officially unemployed. ABS data shows a labour under-utilisation rate of 12.5 per cent, indicating 1.2 million would like more work. Moreover, a further 700,000 say they would be available to start within four weeks if jobs became available. This means, as Professor John Freebairn has pointed out, "as many as 2 million, or 20 per cent of the numbers now employed, would like employment or an increase in hours of work".

Third, while the proportion of working age employed has increased, it continues significantly lower than in countries with economic, welfare and political systems broadly similar to Australia's. With a similar proportion employed as in the UK, for example, we would have another 400,000 in jobs. And with our higher literacy and numeracy rates, we should have higher, not lower, proportions employed.

These relatively low employment levels are not due simply to Australia's uniquely employment-depressive regulations. But a major part of the problem lies in those regulations and their interpretation by both the AIRC and the Federal Court. Their approach reflects outdated and erroneous beliefs, including that tribunals and courts have social policy responsibilities independently of Parliament, that an imbalance of bargaining power exists between employers and employees, and that courts have the capacity to make informed judgements about the workability of employment contracts. Far from being fair, their decisions produce outcomes that keep employment down, particularly for the less skilled.


Howard's big opportunity now is to use the enormous potential for increasing employment, and making the system fair for those now excluded, as a basis for implementing wide ranging legislative changes. The business community favours a national system to over-ride the increasingly regulatory State industrial systems run by union-influenced Labor governments. If (as promised) the Government investigates the duplicative federal and six state systems, it will find ample justification for over-riding legislation using the corporations power and consistent with Howard's thesis that the States are dragging the reform chain.

But a national system that largely replicated existing federal arrangements would be of no benefit. Two major changes are needed, one regulatory and one institutional.

First, legislation should ideally authorise employers and employees to negotiate their own terms of employment, except where illegal purposes are involved. As a second best, much greater priority should be given to Australian Workplace Agreements: Wage awards should exclude most of the absurd 20 allowable matters. Union privileges (such as entry rights, picketing and the right to inspect books) should be abolished, as should the unfair dismissals regime and the right to strike should be repealed.

Second, the AIRC should be converted into a mediatory body with no legal powers of arbitration or intervention. As a second best, the Coalition should extend its promise to establish for small businesses a mediation service to handle industrial disputes separately from the AIRC. All businesses should be included in the service and the AIRC's powers limited as in the previous paragraph.

The AIRC has been at the crease for 100 years. It is time for Howard, as captain, to call it to retirement in the pavilion.

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First published in the Australian Financial Review October 12, 2004.

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About the Author

Des Moore is Director, Institute for Private Enterprise and a former Deputy Secretary, Treasury. He authored Schooling Victorians, 1992, Institute of Public Affairs as part of the Project Victoria series which contributed to the educational and other reforms instituted by the Kennett Government. The views are his own.

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