A Matter of Choice
The Brereton Industrial Relations Act
The Printing and Allied Trades Employers' Federation
of Australia (PATEFA) represents the companies in the
Australian printing, packaging, paper and publishing
industry. These industries are arguably the only industries
to date to benefit from the Brereton Industrial Relations
How? The new legislation has almost doubled the size
of the existing Industrial Relations Act which must
be reprinted and published by someone, and that is
about as much benefit as we are likely to receive in
the near future.
Our industry, in terms of its contribution to the
economy as measured by the number of establishments,
employment, wages and salaries, turnover and gross
product, is the third largest of the twelve manufacturing
industry sectors and second largest in certain important
indices such as value adding.
It employs more than 110,000 people through more than
4,000 establishments with a combined annual turnover
of some $14 billion.
The industry produces a wide range of paper, packaging
and printed products and is an important consumer of
locally made and imported materials. It is at the forefront
of technological change in Australia and utilises the
most sophisticated equipment available here and overseas.
Like most industries, we have come through a period
of severe recession during which rationalisation and
downÄsizing was the order of the day.
Some 82 per cent of our industry comprises establishments
that employ under twenty people and only 4 per cent
employ 100 or more. We are in a true sense the embodiment
of small business in Australia.
Small business, as the economists, politicians and
others keep telling us, is the backbone for our nation's
If this is true why then is small business, the economic
battler, bearing the brunt of new industrial relations
legislation which is destined to put power into the
hands of a few by:
- tying-up business in unprecedented amounts of paperwork;
- taking away the employers' right to run a business
as they see fit;
- creating a climate of enterprise and conflict rather
- giving unions greater powers; and
- generally penalising the most crucial employment
sector of our economy for the sake of the inept, the
lazy, and the trade union movement.
While this is an over-simplification of the situation,
the answers are best found by looking back through
the confusion, instability and rhetoric that have dogged
Australia's industrial relations system in recent years.
The seeds for the Brereton bible on industrial relations
were firmly grounded in the fertile soil of rhetoric
that became known as the Australia Reconstructed Report
published following the ACTU/Trade Development Council
(TDC) mission to Europe in 1986.
The main recommendations of that Report focussed on:
- Macro economics policy
- wages, prices and incomes policy
- trade and industry policy
- labour market and training policy
- employee participation and industrial democracy
- union policies, structure, research and education
If you think that a number of the recommendations
have a familiar ring, you are right; they have emerged
as part of the new legislation.
While the Australia Reconstructed Report provided
the platform, the various Government/ACTU Wage Accord
Agreements were the pointers along the route to Brereton's
bible, the Industrial Relations Reform Act 1993.
There exists an enduring Union myth that all employers
are out to screw their employees. That myth, having
been transformed to doctrine, logically needed detailed
and prescriptive rules drawn up to protect employees
from the so called perfidious acts of the bosses.
So great has been this paranoia that for the first
time in the history of industrial relations in this
country a Federal Government, at the behest of the
Union movement, has seen fit to rely on the Corporations
and External Affairs powers as a constitutional base
to enlarge the reach of Federal industrial legislation.
Irrespective of Australia Reconstructed and the Wage
Accord Agreements, it is still pertinent to pose a
rhetorical question. How did this centralistic, complex
and in many ways stultifying piece of legislation get
up? We'll come back to that in a moment.
Australia and its place in the world have undergone
a significant change over the last decade or so. No
longer can we rely on our geography and great natural
resources to get by. We must compete with the global
economy to survive. Hence some important aspects of
our economy have had to change to meet this challenge.
During the middle to late 1980s, it became apparent
that the traditional centralised wage fixing system
was a severe impediment to achieving necessary workplace
reform. Mechanisms for the delivery of a more deregulated
wages system were needed.
With the election of a conservative government in
New South Wales, some workplace reforms were initiated,
although the traditional Award system was also retained.
The election of the Kennett Government Victoria saw
the first genuine attempts to deregulate the wage fixing
industry and bring about labour market reform. Not
surprisingly, the Union movement opposed these reforms,
orchestrating the movement of employees from the State
System into the Federal System.
While genuine reforms were being introduced in some
States, the ACTU and the Federal Government, at least
in principle, were advocating the benefits of workplace
reform and encouraging moves towards enterprise-based
As part of the rhetoric in a speech delivered in early
1993, Prime Minister Keating knowingly or unknowingly,
gave the impression that direct employer---employee
bargaining, particularly in the majority non-union
section of the workplace, was to be made available
through the Government's proposed industrial relations
Additionally, extensive consultation with employers
and unions on the content of the proposed legislation
was promised. It was foreshadowed that enterprise agreements
would govern day to day work arrangements and that,
over time, the Award based centralised system would
become less and less important.
At this point, it is appropriate to seek to answer
our previously posed rhetorical question: How did this
centralistic, complex and in many ways stultifying
piece of legislation get up? We answer with the further
question: Who Pays the Ferryman?, and we reply: 'The
Government.' The Industrial Relations Reform Act represents
the Union movement's reward for helping the Government
to win the unwinnable election.
Overall the new Act is unbalanced. It entrenches union
power at a time when record numbers of Australian workers
are opting out of unions. It changes the law to the
detriment of employers through imposition of de
facto unionism by allowing unions the right to
inspect non-union agreements and, if they wish, oppose
them in the IRC regardless of what the majority of
employees in a workplace may want.
It retains the centralised award system as the floor
and then attempts to build on this through an enterprise
bargaining system which includes a legal right to strike
while supposedly bargaining in good faith!
Brereton's bible fails to encourage the enterprise
forums needed to stimulate co-operative employee relations
which can create more productive workplaces, increased
competition and innovation which are necessary ingredients
to encourage business confidence and expansion through
As an amalgam of the old and new testaments, it retains
the worst features of both, with little of the benefits.
Consequently labour relations, one of the remaining
major areas of the Australian economy in need of reform,
basically remains unchanged by the new legislation.
This view is supported by the OECD which only a week
before said there was a need for more labour market
reform in Australia.
The OECD warned that if costs, in terms of workplace
inflexibility, poor productivity and higher structural
unemployment were to be avoided "bargaining structures
and the role of the award system will need to evolve
in such a way as to facilitate the spread of enterprise
Is such evolution possible? Not if union comments
are to be taken as gospel. John Sutton, National Secretary
of the Construction, Forestry, Mining and Energy Union,
is reported as saying in the Union's recent journal
that the Union had achieved 280 enterprise agreements
in eighteen months. He said they had achieved "high
wages and conditions standards . . . with a minimum
of flexibilities or concessions to employers."
Iain Ross, who, as Assistant Secretary of the ACTU,
helped design the new system and, prior to his appointment
as an IRC Vice President, said, in an unpublished but
on-the-record interview with The Australian
newspaper in November last year, that he saw little
incentive for non-unionised employers to use the new
system. "We (the unions) don't expect it to be used
(much) not because it is difficult but because of the
award underpinning it," he said.
He said the IRC would be more vigorous and have a
"broader role" in testing a non-union Enterprise Flexibility
Agreement than a deal involving a union, because of
the lack of a union as a party to protect the interests
How did we let ourselves get into this situation?
There are several answers. It is fair to say that despite
assurances to the contrary virtually no real consultation
between the Government and employers took place. Employers
were presented with a fait accompli, the majority
of concerns being later dismissed as scare mongering
or met by the rejoinder that after all "we won the
Ultimately and unfortunately, business groups did
not present a sufficiently unified opposition to the
legislation and allowed the Government off the hook.
Opposition politicians also lost their way through
a preoccupation with internal and related issues that
time and time again have been used by the government
to its advantage. Shadow Minister for Industrial Relations,
John Howard, said on 29 March that "the task of genuine
industrial relations reform belongs to the next coalition
government." For companies trying to decide what to
do next and for those of the 10.5 per cent unemployed
looking for work, this Lazarus style prediction will
be far, far too late.
Does Brereton's bible of industrial relations light
the way for all of us to follow? Not quite, unless
you are of a particular trade union creed. Let's briefly
look at some of the provisions:
The Awards---status quo of comprehensive,
highly presumptive awards is locked in. The "no disadvantage
test" is an impediment to more flexible working arrangements.
There is a real possibility of award rates of pay increasing
with movements in over award payments.
Family Responsibilities---A social minefield.
There is an obligation on the Commission to take account
of these matters. This has already caused problems
after the IRC gave a group of nurses at a Canberra
hospital the right to reject a change of shift if it
interfered with their child care arrangements.
Termination---Many more burdens are placed
on employers. There is a de facto onus of proof
on employers to provide a valid reason, instead of
on employees, to prove harshness. Small business in
particular will be hit hard by the need to ensure all
aspects of their employees' work is fully documented
to ensure compliance.
The unfair dismissal procedures are also extended
to managerial positions. There are no caps on amounts
of compensation that may be awarded. Already claims
have been lodged, one of the first by a Melbourne manager
seeking $798,882 compensation from his former laundry
service employer. In its first day of sitting, the
Industrial Relations Court heard seventeen cases.
Equal Pay---There is a possibility of a revival
of the discredited, comparable worth approach. If so,
extreme costs and disruption to industrial relations.
Certified Agreements---About ten new tests
for certification of agreements are added, to a total
of about eighteen. The link with awards is strengthened.
Provisions are unreadably complex. Union involvement
Right to Strike---Unions have a right to strike
in support of a claim for a certified agreement. Employers
have no remedy but lock out. The ordinary contract
of employment management rights to dismiss or stand
aside for industrial action is removed.
Bargaining in Good Faith---Employers may be
forced to disclose information. No one knows what this
means. The United States experience is that it is a
Secondary Boycotts---The former statutory prohibition
on secondary boycotts (Sections 45 D&E of the Trade
Practices Act) has been repealed and new, much more
elastic, constraints were inserted into the Industrial
Relations Act. "Industrial" boycotts are now legal.
An employer hit by a secondary boycott or other tortious
acts cannot seek redress until 72 hours have expired
Ä unless the boycott causes "substantial injustice".
Common Law---Common Law remedies cannot be
sought until 72 hours have expired, unless substantial
injustice can be proved.
Industrial Relations Court---A specialist court
has been set up, for no convincing reason which has
emerged. There is a possibility of a lessening of the
discipline of the general law.
Having got this far without being struck down by a
Keatingism as my reward for Brereton bible bashing,
it is only fair to look at some areas of possible benefit
Enterprise Flexibility Agreements---These are
of some benefit to industry, offering a right to bargain
which previously did not exist. Tests for approval
are far too complex and the right of trade unions to
be involved (at the request of a union member at the
particular enterprise) are of real concern.
Doubt exists as to whether employers of non-union
or substantially non-union workers will be prepared
to risk the attention of trade unions by seeking Commission
approval for Enterprise Flexibility Agreements.
Limitation on Arbitration---This is of some
benefit, but compulsory arbitration remains available
when under the Award stream. Arbitrated safety net
increases across the economy are still available and
almost certainly will be sought by the ACTU.
These are the new costs of employing.
How will all of this impact on employment prospects?
Regrettably I fear there will be a devastating impact,
whether it be through actual circumstances or the confusion
and lack of adequate explanation and education that
is the hallmark of Brereton's bible.
Companies are more likely to put up with non-performing
employees for fear of being involved in lengthy and
costly action before the IRC.
This will cause a decline in the companies' productivity
and morale and eventually lead to lower profits and
reduced job opportunities.
Those companies that cannot bear the cost of poor
performance by some employees and elect to dismiss
them may face enormous payouts, particularly at management
level, to avoid being dragged through lengthy and costly
proceedings. Eventually this too will affect employment.
Perhaps the most serious consequence is that companies
will be reluctant to employ additional staff for fear
of the consequences if things don't work out satisfactorily.
This will work against the long term unemployed even
if accompanied by various subsidies and grants that
the government may offer. It is also likely to encourage
business to invest its increasing profits in capital
rather than employee resources. The tragedy is that
all the recovery indicators are flashing green and
we should be entering a period of growth and expansion
with a very positive and continuing effect on unemployment.
Next week the PATEFA quarterly survey will be released,
and it is expected to show a continuing increase in
actual employment growth as well as in projected increases.
During the December 1993 quarter, 21.1 per cent of
those businesses surveyed reported an employment increase
compared to a decline of employment of 4.7 per cent
for the December 1992 quarter. Employment in the March
quarter is expected to continue this trend, with the
level of employment exceeding projections. How the
Industrial Relations changes impact on this trend is
still to be seen.
It is well worth noting that the United Kingdom, which
has had lower unemployment than Australia for the past
three years, has gone the opposite way to Australia
by deregulation and removal of bureaucratic obstacles
to starting new businesses and managing existing companies.
The result has been almost unprecedented employment
growth, with economists forecasting that unemployment
could fall to 3 or 4 per cent by the turn of the century,
a prospect that could not be seen as remotely possible
Of course there is a price for this and it is mirrored
in the quality of jobs and the lower wages paid. How
can such a thing be possible in the home of the trade
union movement, the very model used for Australia's
Britain's Tory government restricted employer's rights
to protection against unfair dismissal and payments
for people laid off until they had been on the job
for two years. Wage fixing mechanisms which set minimum
wages were abolished and unemployment and related benefits
were cut to make the dole less attractive. Job hunting
requirements for the unemployed were increased.
Britain in now the envy of Europe and is attracting
considerable business investment which in turn is creating
new jobs. The change has not been painless but it has
been in synchronous with the economic climate. The
Australian solution to creating new jobs appears to
be to attack the problem by further penalising, through
innovative taxation, those who should be encouraged
and assisted to develop business.
Perhaps one of the best summaries of our predicament
with the IR Act comes from an editorial in the 28 March
issue of the Sydney Daily Mirror Telegraph,
which prides itself on being the newspaper of the workers
and has a high circulation in the densely populated
and industrially developed areas of Sydney. The editorial
- From Wednesday, industry and the Australian workforce
will be stricken by new rigidities in their capacity
to adapt boldly to the economic demands of the world.
- Employees and employers will be locked into a system
in which trade unions dominate, in which minimum standards
are imposed and in which jobs are discouraged.
- . . .These impositions amount to yet another penalty
on employment in the area of business where hundreds
of thousands of jobs could be created.
- . . .The Government should not be allowed to believe
the industrial relations reform task has come to a
happy conclusion, and now it can rest.
- The job has not been half done, and worse, it has
been botched in a manner which will be a blight on
business and employment for years to come.
Perhaps the most appropriate closing comment is the
words of wisdom from Henry Ford II, who in 1952 said:
"You cannot do today's job with yesterday's methods
and be in business tomorrow."