A Matter of Choice
Workplace Focus---Labour Relations: The Way Ahead
The Hon. Graham Kierath
First I would like to thank the H.R. Nicholls Society
for the invitation to address you today to discuss
what I consider to be the most significant changes
ever made in labour relations that have occurred in
The development of a competitive, labour relations
system holds the key to much of Western Australia's
future and certainly the nation's economic future.
It was some years ago that I followed with interest
the reaction of the, largely self-interested but vocal,
lobby to the views which your Society began expressing
in 1986. In particular I recall the self-righteous
criticism of your call for the deregulation of the
labour market. It was a bit like a shark in a feeding
frenzy, swift, brutal and vicious, no holds barred
and with a dose of hatred.
I have had exactly the same experience over the past
year, except that this time I found that I was on the
shark's menu. The extraordinary reaction we saw to
Robe River's decision at that time to take back control
of its operations from the unaccountable and unrepresentative
union delegates was simply amazing to behold. What
was seen then, as draconian and harsh actions by the
company, are now accepted as right, reasonable and
For all the odium which has been directed at your
Society, you can now reflect on the fact that you were
a significant factor in publicly challenging the conservatism
and comfort of a grossly outdated and inadequate industrial
relations system and in bringing to pass the reforms
which are now emerging. Our reforms are focused on
the workplace, which goes further than enterprise bargaining,
because it allows a number of workplaces within an
enterprise. The focus on the workplace for the new
stream, I believe, is in stark contrast to the "craft"
focus of our existing Industrial Relations system.
It is clearly evident that the "craft" focus is the
source of around half of our industrial disputes. With
a "Workplace Focus" we should at least be able to eliminate
this particular form of industrial cancer.
For its part, the Western Australian Government's
recent changes in the legislation reflect what we believe
will facilitate a more productive, flexible and efficient
labour relations system in which all parties will benefit.
Towards the end of last year, we enacted three bills,
the Workplace Agreements Act, the Minimum Conditions
of Employment Act, and the Industrial Relations Amendment
Now these Bills were not drawn up, as some people
said, just to demonstrate how a new coalition Government
could turn upside down the system which had been in
place for most of this century. My colleagues and I
began developing the policy for Workplace Agreements
three years ago. Our plan was not a one-year plan.
It was actually a ten-year plan. It started two years
before the last State election and with four year terms
this will take us to the period leading up to an election
and through two terms of government.
Workplace Agreements simply is the first step, stage
one, in our strategy. What we are trying to achieve
is real long term benefits for everyone who is concerned
in the industrial relations process. I suppose that
is one lesson we learnt from Gough Whitlam. He taught
us not to try to do too much too soon. It is intriguing,
this relationship with Gough Whitlam, because the sole
reason I am with the Liberal Party today is that Gough
was Prime Minister of this country for three years.
So you will see that our Workplace Agreements are moderate,
and yet they are extremely progressive. There is nothing
ridiculously radical about them but they have significant
benefits for the employees.
When developing our policy we bent over backwards
to ensure that the worker was protected. We are trying
to wean people off the system that they have become
addicted to and learn to stand on their own two feet,
so there are transitionary stages. I am also convinced
that the workforce acceptance of this, the first stage
of our reforms, is important to our overall strategy
and will make it much easier to go on from here to
introduce further reforms. In a few years time, we
will have something of value which will enable all
parties to prosper. Prosperity is the real ingredient
of lasting reform.
It has been only four months since our voluntary workplace
agreements came into effect, but a great deal has already
been accomplished. I want to give you an insight into
why it was necessary to introduce such change, and
what the effect has been on this State so far. The
existing system, that is to say the traditional system,
placed little importance on the individual and, in
some cases, nothing. It was largely prescriptive. It
was developed on the basis of conflict. Awards and
agreements were basically documents between employers
and trade unions. There was automatic third party intervention
and it was basically out of step with the needs of
Workplaces no doubt require flexibility. They should
be in control of their own labour relations. They need
to be more competitive, both nationally and internationally.
They need to adapt to changing social and economic
circumstances. They are subject to external market
forces and it is inevitable that the system should
become decentralised. The reforms themselves create
the opportunity for meaningful workplace reform. A
co-ordinated response to the needs of that workplace
and, most importantly from our point of view, a choice
between workplace agreements and awards, but a choice
that the people in the workplace make and not some
The Workplace Reform Legislation
The aim of our legislation was to do four things :
- to assist the workplace reform process that was already
underway in Australia but, in some cases, going along
at a painfully slow place;
- to allow direct negotiations between the primary
parties, that is the employer and employee; to allow
enterprise agreements under the existing system to
make the existing system more flexible; and
- to provide a "safety net" for all Western Australian
employees through the Minimum Conditions of Employment
The Workplace Agreements Act 1993 allows an
agreement to be negotiated between the employer and
the employee or a group of employees so that it covers
one, some or all of your employees. It promotes direct
negotiations between the parties. No third parties
are involved unless they are so invited by the primary
parties, and there is no power of veto for third parties.
No party can be coerced. Each party has the option
to appoint a bargaining agent of their choice. Bargaining
agents can be used by people who are unsure of their
ability to negotiate. There is no restriction on whom
they can choose and no compulsion on whom they can
use. Each party has to deal with the other person's
These agreements must also contain dispute settlement
procedures. They focus on internal dispute resolution.
External arbitration is available only as a last resort.
The parties appoint their own arbitrator but they cannot
be forced into arbitration by an external tribunal.
It is interesting when you look at some of the possibilities
with workplace agreements to notice the types of people
who have been chosen as arbitrators; they can range
from a chemist to a JP, a police sergeant to a Roman
Catholic priest, and a publican to a retired Industrial
These agreements prevent the flow on of conditions.
They preserve the workplace as a separate entity and
you are not forced to comply with conditions which
are determined somewhere else.
There is a different role for some of the tribunals.
First of all, one thing we have done is perhaps to
use the name "Commissioner" in the wrong context,
because a Commissioner for Workplace Agreements bears
very little resemblance to a Commissioner under the
Industrial Relations system. The Commissioner has to
ratify agreements and be satisfied that the parties
willingly entered the agreement, that they understand
it, and that they weren't threatened or coerced into
reaching that agreement. He does not get involved in
disputes and the agreements themselves, and he is outside
the jurisdiction of the Western Australian Industrial
The Minimum Conditions of Employment Act,
1993, established a minimum set of employment conditions
for all workers in the State of Western Australia.
It included 100,000 non-award employees who had had
few statutory minima prior to the passage of the Act.
It provides them with a minimum weekly rate of pay
of $275.50 and includes ten days' sick leave, four
weeks' annual leave, two days' bereavement leave, ten
standard Western Australian public holidays, parental/adoption
leave, a requirement that employers notify employees
of any changes in the workplace likely to have a significant
effect on the employment of the employees, and regulation
of junior wages. There is no restriction on employers
or employees reaching an agreement that improves, over
and above, those basic benefits. The first review of
the State minimum wage will be in May of this year.
The Industrial Relations Amendment Act 1993
has been amended to accommodate these changes and allow
this new alternative system to exist. It allows more
flexibility for dealing with unfair dismissals and
it also allows for enterprise agreements under our
existing Act. This is basic to allow single employer
industrial agreements which are not bound by wage fixing
principles and are not required to be consistent with
the State award. Industrial agreements will have a
lot more similarity to workplace agreements but they
will still allow and require automatic third party
The Freedom of Association Act (Part VIA) was
rewritten to try to ensure that discrimination on the
basis of membership or non-membership of a union was
outlawed and to ensure that such discrimination was
a punishable offence. You might have seen something
in the press recently where two companies and five
unions have been charged over these offences; and the
interesting thing is that they have not actually been
charged under the new changes but under the old Act,
and that is what the former government should have
In sum, the choices that are now available to people
in the workplace are these :
- a collective or individual workplace agreement;
- an industrial award;
- an industrial agreement of the type which I have
talked about; or
- the common law contract of employment.
Let us now have a look at the attitudes of some of
the people who have been involved. First the employers.
The scare campaign that was conducted left many employers
confused and there are many who want to embrace workplace
agreements but simply are not sure of their ground.
But despite that there has been significant interest
shown by many organisations in workplace agreements.
Many progressive employers have been keen to embrace
the opportunities. They were well prepared and as soon
as the new legislation was brought in, they were away.
The employers most likely to succeed are those who
seek to improve consultation and employee involvement
rather than cost cutting. With proper consultation
and negotiation with their employees, the successful
companies will more than adequately replace the unions,
which, by their own admission, have not serviced their
members satisfactorily in recent years. This only has
to be evidenced by the declining union membership when
people are actually given a choice.
Let's turn then to the attitude of the unions themselves.
Before the last election the unions as well as the
Opposition simply attacked our plans every step of
the way. They vigorously opposed the provision allowing
employers and employees to negotiate directly, which
they believed would weaken the unions' vice-like grip
previously held on these negotiations.
Our aim, despite some people claiming to the contrary,
is not to attack the unions but to provide freedom
of choice which, in turn, will lead to greater efficiencies
and productivity. And out of that emerged the scare
campaign to try to convince the workforce to stay with
the union. The same scare tactics were used before
the election, during the election, after the election,
and they were again used last week. They try to find
examples of someone being exploited or threatened and
try to exaggerate it out of all proportion.
The Trades & Labor Council executives last week
claimed that they had found cases of exploitation and
diminishing conditions but yet they did not produce
the evidence. They have used the hackneyed slogan "sign
or resign" to condemn these agreements. Last week
I challenged them to produce the information to show
me the people who have been victimised. They say they
have got them but they are not prepared to put the
information forward. When we do get the information,
we often find it has been totally misrepresented. Yet
if the unions were progressive, if they were forward
thinking, they would have seen that there was a niche
in this new system of workplace agreements to act on
behalf of the workplace as bargaining agents. They
would be turning their attention to playing a positive
role instead of the negative destroying role which
they are playing at the moment. The unions that provide
real service to their members will do well. Unions
that rely on closed shops will need to re-examine their
methods of operation.
The unions' claim of exploitation, we believe, has
basically been proven unfounded. We have had one successful
prosecution of an employer who sacked someone for refusing
to sign a workplace agreement. We have said that we
are prepared to ensure an even bargaining table and
we are determined to stand by that claim.
To give you some idea of how successful this has been
in the short space of time: as of 31 March 1994, some
four months since the legislation was introduced, there
have been 2,136 workplace agreements lodged, which
cover fifty five different industries and about 3,000
employees. Of those, there have been thirty collective
agreements, involving about 630 employees and about
1,900 individual agreements, comprising thirty three
employers. This is interesting because we saw a large
rush of individuals, and now collective agreements
are starting to take priority, also we are getting
more and more of them coming through the system.
There are some very good examples, such as those affecting
Hamersley Iron and Gull Petroleum. Hamersley Iron wanted
to eliminate the costly strikes and industrial disputation
that they have had in their operations over a number
of years. They saw the workplace agreements as a solution
and embraced them wholeheartedly. I know from my discussions
with them that they would have considered it a success
if they could have had 50% of their workforce on workplace
agreements. They ended up with 92% of their workforce.
The features of their agreement are the transfer from
thirty eight back to forty hours per week as a base
week; the elimination of penalty rates, overtime and
other penalties by incorporating an annual salary package
which also included an increase in superannuation and,
I think, a pay increase of around 10%.
From a staff point of view, they now have a much more
stable and consistent income that is actually higher
than they would have got under an award. In return,
the company hopes to eliminate a long-standing
adversarial attitude towards employee relations and
to promote a team approach.
Gull Petroleum won praise for their co-operative approach,
which involved five tanker drivers in the very militant
and highly award structured area of fuel transport.
They had a change in the refinery from where they got
their fuel and they needed a new basis, so they chose
workplace agreements. Negotiations took place over
five months and the agreement now enables the company
to budget and actively monitor the wages component
of its delivery costs. Again, as I understand it, it
took an annualised salary approach.
We often hear people criticise the public sector.
In eighteen months with enterprise bargaining principles
within the system we have had one public sector agreement
get up. In less than four months, we have had two public
sector agreements get up and two more get under way.
One of them came from the Department of Conservation
and Land Management and involved people whom we call
Dieback interpreters; they plan and plot the expansion
of Dieback in our Jarrah forests. They came up with
a most unusual agreement, one called annualised hours.
It is basically a bank account, if you like, of nearly
1,900 hours a year, but they can work through peak
periods and drag it out through thin periods. They
can work up to twelve hours a day six days a week to
get their average of only 37½ hours per week. What
that means is that effectively they can work long hours
during their peak season and in their off season they
can virtually have up to three months off and get twenty
six equal instalments of salary. It is interesting
that this came from the public sector. The other interesting
aspect of it was that it was not driven by management,
it was actually driven from the employees. What they
found was that they could lift their productivity by
33% and, in return, they asked for a 13% pay increase.
Yet there were people in the bureaucracy who tried
to prevent that happening. This is an outstanding
example of what can be achieved when you unleash the
thinking power of several ways of doing things.
At Murdoch University, there is a small Animal Resources
Centre which has finalised a collective agreement because
there is no union involvement on site, and their productivity
gains relate to a 5% pay increase within the coming
Let's look at the impact of this legislation. It promotes
a workplace culture which is based on trust. Initially
this is foreign to many employers and many employees
but it is worth pursuing. A sense of teamwork is absolutely
paramount. The old resolution procedures that relied
on outside intervention will not work in the current
workplace agreement environment; conflicts need to
be resolved from within.
There is a new role for responsible unionism, in some
cases, certainly to make them more accountable for
their actions, and induce them to reassess the services
Let us compare Western Australia to the other States.
New South Wales allows direct negotiation between an
employer and a union or an employer and 65% of his
employees. There is basically no individual negotiations
and, some of the procedures have made it too much of
a public interest type of test. There is too much exposure,
too much of a high profile of the people involved.
In Victoria, all employees were removed from the award
system. In other words, it was cancelled. They were
forced to change whether they wanted to or not, and
they could only return to the award system with mutual
agreement between the employer and the employees. The
result: a major move to Federal awards. My comment
on that is : there is not much point in being King
if you are king of nothing.
Under the Federal system, Section 134 of the Industrial
Relations Act 1988 allows enterprise agreements but
the union must be a party to an agreement and the Act
precludes involvement of non-unionised workers. In
Western Australia we have less than 30% of our private
sector workforce involved with unions, so we say that
the vast majority of our workforce is non-unionised.
Under Division 3, Part 6B, the Federal system allows
enterprise agreements and allows for non-unionised
employee negotiations but maintains the right of comment
by appropriate trade unions, which is something we
don't think appropriate.
We believe our reforms in Western Australia are the
most efficient in Australia and will stand the test
of time. It is a view which has been supported by
the Business Council of Australia and, in fact, if
you look at the Council's ideal approach, you will
see that it very closely mirrors the Western Australian
system, but we would like to claim that we had it first.
What other reforms have we made on a State level?
We have tackled the building industry with a code
of practice to try to clean up the rorts and rip-offs
that have been occurring. We are introducing legislative
reviews. I will very shortly be announcing a major
review of the Industrial Relations Act, and we are
looking at all the various other Acts associated with
it to see if we can either eliminate them or rationalise
them, namely the Factories and Shops Act, the Truck
Act, the Trade Unions Act, the Master and Servants
Act and the Public and Bank Holidays Act. What we are
trying to do is to give more streamlining and less
regulation in the area of labour relations. We have
also had reviews on what we will do following on from
the Coles-Myer decision, and we are also looking at
the Industrial Magistrates Regulations.
I want to assure you that we are pretty pleased with
our first twelve months in office, but our reform agenda
has not stopped. We will continue to reform the labour
market of Western Australia. This year we are able
to begin our second wave of industrial relations reforms.
Our strategy was to try to get the workplace agreements
up and running now, so that people could be involved
with them while we tried to change the existing system
So, in conclusion, I would say to you that 1993 was
a watershed year for labour relations in Western Australia.
It was the year in which the most significant reforms
in almost a century were introduced. These changes
will, no doubt, provide us with long lasting benefits.
I heard that a group of people had spoken to one of
the existing Industrial Relations Commissioners who
said that these reforms were the biggest since about
1860. We have only been playing since 1902.
I believe that the reforms of Western Australia are
better than those of the other states. A number of
notable commentators have supported our changes. One
even suggested that, if the Federal Government were
serious about reform, it would have adopted our legislation.
Of course, the qualifier was that it be serious about
reform, which we know it is not, and that is why it
would not adopt our legislation.
We believe that our voluntary workplace agreements
are far-sighted. We believe they will actually produce
better long term results, and that is what we are looking
for in the long haul. Our direct negotiations between
the only two parties who matter ¾ the employee and
the employer ¾ eliminate the subsequent 'flow ons'
which are inevitably rammed through the award system.
In this way, everyone knows exactly where they stand.
We believe that freeing up the workplace is the essential
ingredient to make this State and the nation really
In one form or another workplace reform and bargaining
is under way right across Australia, and I think the
unions need to realise, particularly in this State,
that they passed the point of no return. The workplace
agreements have broken out on such a wide front across
so many different industries that no-one will be able
to turn the clock back. At best or worst, depending
on the point of view, if there were a change of government,
the very best the Labor movement could hope for would
be to try to quarantine the workplace agreements.
The pace of change however, would be slower if employers
were to cave in to union demands. We have given employers
the tools with which to manage the workplace industrial
relations but if they still cave in to the old threats
and intimidation, it will make the process of change
I believe this is the best chance in our history to
give the economy a massive push forward, with the employees
receiving conditions better than they could get with
the unions under the award system.
We now have the potential to attain a new degree of
positive, co-operative and productive workplace relations.
This is, of course, largely in accord with what your
organisation was espousing, and was being vilified
for, just seven years ago.
I can identify with what your Society has been through.
I can understand it. I think, like most of you here,
we reacted the same way. The bigger the threat the
more determined we are in our resolve to achieve reform.
Because in our view the bigger the threats, the greater
the need and desire to change and reform the system.
In fact if we didn't get many threats, perhaps we might
even go soft on it. So some of the threats have been
counter productive; they have actually stirred the
Government great resolve our Government to great resolve.
As I have said, in the last twelve months I have identified
with what you have been through. I have been through
a whole series of death threats, not only against myself
but on my family. I have been vilified as a person.
I have suffered the most vicious name-calling the State
parliament can ever remember. I have been responsible
for more Labor members being thrown out of the parliament
than anyone else can remember. I have even been blamed
for the use of the guillotine which eliminates repetitive
Unfortunately the Federal Government is simply not
only content to ignore the desperate need for change,
it is actually working in the opposite direction by
introducing legislation to try to prevent that change,
trying to prevent the States from exercising their
constitutional rights over industrial relations in
the State arena. We, as a State, will join with the
other States in challenging the Federal legislation,
which is more noteworthy for its obscene misnomer,
the Federal Industrial Relations Reform Act, than for
any genuine advancement.
I have tried this afternoon to clarify our objectives
in introducing changes to the Western Australian labour
relations system. We believe that both employers and
employees now have a number of choices available to
them and those who are willing to enter into a workplace
agreement will have the chance of gaining a number
of advantages. Most importantly for the employer would
be a competitive edge over his or her competitors.
That in itself will force other companies to change.
Competitive edge will drive the other companies to
The number of agreements made so far simply serves
to validate my belief that it is the best system available
anywhere in Australia, and we believe that both parties,
employers and employees, are willing to embrace this
As maturity is often required to opt out of the existing
system and into workplace agreements, we have allowed
our agreements to go further than those in some of
the other States. Employers and employees in Western
Australia now have an avenue through which to escape
a system that stultifies and constrains them, that
makes them captive to unelected and often unqualified
"intruders", and that has denied them the ability
to take the steps necessary to protect their jobs and
their businesses. If our legislation enabled one business
and its associated jobs to survive which otherwise
would have been lost, then to all involved it will
clearly have been a success. Indications so far are
that there will be many such successes. This surely
is the way ahead.