Lining up the Bills: Preparing for a Double Dissolution
WA: The Impact of Recent Changes in State Labour Laws
The title of this presentation is "WA---The Impact
of Recent Changes in State Labour Laws". I would argue
strongly that WA has gone from having the best industrial relations
system in Australia to having the worst. Rather than going forward
it is the clear view of employers in WA that the changes take
us backwards, perhaps to the late 70's or early 80's---back to
the old them and us, one size fits all system dominated by adversarial
relationships and with the involvement of third parties unconnected
to the workplace.
However, employers have no option but to operate within the
laws of the land and how they are responding I will look at in
detail later. At the same time we do not accept that the debate
over industrial relations reform is over. We will continue to
argue the case for genuine reform that puts the focus on cooperative
relationships at the workplace with the flexibility to respond
to the needs of individual businesses. The State's ability to
deliver higher living standards and lower unemployment in the
end depends on how productive we are and productivity improvement
will not come from a rigid, inflexible, adversarial industrial
relations system that is isolated from the workplace.
Western Australia provides an interesting case study in industrial
relations reform. WA experienced significant change at the end
of 1993 and it is instructive to look at the impact of those
reforms and the community attitude to those reforms. It is also
instructive to look at the reasons for the current reversal of
those reforms in order to assess both their likely impact and
the chances of them being effectively implemented. In the next
half hour I will look at these issues and then conclude by looking
at the implications of WA's experience for further reform as
well as make some brief comments on what those reforms could
Background to the Western
Australian Reforms of 1993
At the end of 1993, the so-called Kierath reforms were passed
by the Western Australian parliament. They provided for a dual
system---employers and employees could opt out of the existing
system and remove themselves from the influence of the Industrial
Relations Commission through the use of individual or collective
WA Workplace Agreements, which were underpinned not by an award
but by legislated minimums. This approach differed from the opt-in
approach by the Kennett Government in Victoria making it both
politically more saleable (no change unless you agreed) and also
more difficult to shift to the Federal system. Employers saw
WA Workplace Agreements as providing much greater flexibility
and certainty and therefore the opportunity to increase productivity
and to be more competitive.
Employers would argue that these changes produced considerable
benefits for Western Australia, and in the vast majority of cases
a win/win outcome for employees and employers. The economic benefits,
both in terms of productivity and competitiveness, but also in
terms of the State's reputation, were considerable. Industrial
relations as an issue disappeared---both in existing employer
discussions and as the first question asked by businesses considering
investing in the State. Although the overall level of workplace
agreements was relatively low (less than 10% but widely used
in some major WA industries, for example mining) the existence
of the alternative system also had a modifying effect on the
behaviour of both the unions and the Commission in the traditional
system---they were both conscious that employers and their employees
These views of employers would come as no surprise to this
audience, however what is interesting is the WA community's attitude
to these changes.
Community Attitudes to
Industrial Relations Reforms In Western Australia
In November 2000, the Chamber of Commerce and Industry in
WA (CCI) and the Chamber of Minerals and Energy, WA commissioned
Market Equity to undertake a community attitudes survey of industrial
relations in Western Australia. In January 2002, CCI again commissioned
Market Equity to repeat the survey. The methodology was unchanged.
Both surveys were random stratified telephone surveys of individuals
aged 18 and over who were permanent residents covering both metropolitan
and country WA---all major WA regions were included in the survey.
The results of the survey were then weighted to reflect the WA
population. The first survey consisted of 651 interviews and
the second, 408.
The purpose of the first survey was to establish the degree
of support for the then Opposition (Labor) party's proposals
to abolish workplace agreements. The survey was conducted in
November prior to the State election in February 2001. The second
survey was conducted to further test community attitudes just
prior to the new Government's legislation being introduced into
Parliament in February 2002.
The results were unexpected and yet the two surveys were consistent
with each other. They show a surprising degree of support for
the then legislation and certainly show there was no widespread
support for its repeal. The results are shown in the attachments---the
results are for the second survey but the results for Nov. 2000
are shown in bold.
Looking firstly at the political question---Support for
withdrawal of Workplace Agreements Legislation. (Image
1) 57 per cent did not support the withdrawal compared to
only 26 per cent who did. The change since 2000 was a decline
in support for withdrawal (down from 35 per cent), and an increase
in Don't know (up from 10 per cent). That the opposition to any
repeal could be twice the support for repeal in a climate where
the Kierath legislation was almost demonised (the then Secretary
of the TLC likened Kierath to Pol Pot and WA to the killing fields
of Cambodia), was surprising and suggested that the benefits
of reform were more widely understood and felt than was then
thought to be the case. This is confirmed in other responses.
Respondents were asked whether different arrangements give
workers the chance to earn more. The responses are shown in Image
2. The results speak for themselves. 50 per cent thought
an individual agreement provided them with an opportunity to
earn more compared with only 13 per cent who thought the award
Respondents were asked whether different arrangements give
workers greater flexibility in working life. (Image 3).
Again the results are positive for those who support reform.
52 per cent thought individual workplace agreements could give
you greater flexibility compared to only 13 percent who thought
that of awards and only 17 per cent who thought that of union
The results were more mixed when respondents were asked whether
different arrangements could be considered fair for all concerned.
(Image 4). What is interesting is that in all cases there
are a greater number who think the arrangement concerned is not
fair than it is fair. It seems all arrangements are viewed negatively.
However it has to be said that in this case awards are viewed
as fair by a greater percentage (33 per cent) than individual
workplace agreements (25 per cent). On reflection this is perhaps
not surprising. There has been a strong perception built up about
the fairness of awards and there were strong public cases being
argued about the unfairness of individual agreements. It is interesting
to compare this with the next set of responses.
Respondents were asked what type of arrangement they personally
would prefer to be on. (Image 5.) While there may be a
perception that individual agreements are unfair, they are overwhelmingly
the most preferred arrangement---50 percent favour an individual
agreement compared to only 14 per cent the award. It appears
that individuals favour an individual agreement for themselves
but, for whatever reason, fear that others may be exploited and
therefore individual agreements don't rate highly on the fair
scale. In particular, older people were concerned about young
people and yet young people were those strongly favouring individual
agreements. As an aside it appears that those most resistant
to change are males over 45---probably a significant majority
of this audience.
A positive view of choice is emphasised in responses to whether
or not there were any arrangements that should not be offered.
(Image 6.) A large majority (70 per cent) indicated that
all options should be available. No arrangement had more than
10 per cent of respondents saying it shouldn't be available.
It appears people like choice, and therefore are unlikely to
favour having that choice removed.
Finally, a more generic question was asked about people's
attitude to the regulation of pay and conditions. (Image 7.)
Advocates for further reform take heart. A large majority (75
per cent) said that arrangements should be less regulated---47
per cent who want details set at the workplace by employer/employees
and 28 per cent who want details set at the workplace by union/staff
groups. Only 21 per cent argue that pay and conditions should
be strongly regulated by industrial courts. It is interesting
to note in several of these responses the desire to avoid the
interference by third parties be they industrial commissioners
What these results suggest is that the community is not opposed
to change and welcomes choice. It is particularly interesting
to note that those who have experienced a more deregulated environment
are not keen to go back to the old highly regulated and centralised
system. There is fertile ground here for the reform minded as
well as lessons to be learnt by the union movement and perhaps
warnings (at least let's hope so) for industrial commissions.
There is one very clear message---there was no widespread community
support for the industrial relations law changes introduced by
the Gallop Government in Western Australia. That begs the question---why
is the Gallop Government so determined to turn back the clock?
While there was no widespread community demand for change
to WA's industrial laws, there was certainly a demand, loudly
expressed, by the trade union movement. While they couched their
arguments in terms of protection of their members, there is another
more obvious driver---declining union membership.
Image 8 shows union membership as a percentage of the
workforce for both Australia and Western Australia over the last
nine years. While union membership has declined significantly
for both Australia and Western Australia (from 39.6 per cent
to 24.5 per cent in Australia and from 37.0 per cent to 19.5
per cent in WA), it is interesting to note that the decline in
WA from Aug 1992 to Aug 1996 was much steeper in WA---a decline
of 33.4 per cent for WA compared to 21.5 per cent for Australia.
Many reasons have been advanced for the decline in union membership
over time---changes in the composition of the workforce, increased
part time work, greater female participation, relevance of union
services and so on---however, these are unlikely to provide sufficient
explanation for such a significantly faster decline in W.A.
There were significant changes in the Kierath legislation
that could have contributed to this. Workplace agreements both
individual and collective themselves made union involvement less
relevant for many employees. For the first time non-union agreements
were allowed. (While it is true that the Federal system had EFA's
courtesy of Keating/Brereton reforms, the State collective and
individual agreements were regarded as administratively easier
and user-friendlier. The take-up of EFA's was very slow.) Both
individual and collective workplace agreements provided an opportunity
for employers and employees to enter into their own arrangements
without interference by third parties. Without a changed approach
by the union movement to better market their services this was
likely to lead to a loss of membership.
Strategically Unions also appear to have made the mistake
of shunning any members who signed Workplace Agreements effectively
rendering the value of their membership nil.
The total numbers of individual Workplace Agreements registered
reached well over 300,000 in Western Australia. Because of privacy
provisions measurement is imprecise but it is accepted that penetration
of these Agreements overall was to something like 10% of the
Western Australian workforce.
It is useful to recognise that in practice the target market
for Workplace Agreements were employees covered by Awards rather
than the workforce as a whole. This means the 10% figure significantly
underestimates the industrial impact and explains why the Union
reaction to these has been so fierce in opposition.
One of the big users of workplace agreements was the mining
industry, which in the early nineties was highly unionised. In
an environment where workplace agreements were likely to lead
to improved conditions for employees by direct negotiation with
their employer, many employees were likely to question the value
of their union membership. This appears to be what happened.
Membership in the mining industry fell rapidly in the one to
two years following the introduction of workplace agreements.
There is some evidence to suggest that membership may have recovered
somewhat but nowhere near their previous levels. Similar experience
occurred in other industries but mining was the most dramatic.
Union membership in the nine years to August 2001 in Western
Australia fell from 37 per cent of the workforce to 19.5 per
cent---a decline of 47.3%. Little wonder that what was happening
in W.A. caused concern not just to WA trade union leaders but
also nationally. No wonder there was so much pressure on the
Beazley Opposition prior to the last Federal election to rule
out individual agreements.
A loss of nearly half your members in nine years is a great
motivator to argue the case for turning back the clock. There
is no need to look further for what is behind the Gallop Government
proposals. This is legislation designed to put the unions back
on centre stage of the industrial relations arena. This is not
legislation by a Government that has the interests of the entire
community at heart. Even if the union did speak for all their
membership it would still only be for less than one in five employees.
What the earlier survey results suggest is that this is not legislation
that was wanted, nor will it be welcomed, by the broader community.
Unions and the Gallop Reforms
There is not time to look at all aspects of the new WA legislation.
However, there are some changes which confirm what this paper
argues is the real objective of the legislation---to facilitate
the union's role in industrial relations.
This is not to question the legitimate right of unions to
exist and look after their members' interests. Rather it is to
question the right of unions to have a privileged position within
the system that guarantees them a role rather than having to
earn that role. This is no mere academic interest. The incentive
to behave responsibly is likely to be related at least in part
to the penalty that attaches to irresponsible behaviour. If there
is no penalty, because a party has a legislated right or role,
then behaviour is likely to be more extreme and irresponsible.
One of the interesting results found in community research
over the last ten years is that the percentage of the population
that think unions have too much power has declined. One possible
explanation is that community support for unions has grown in
tandem with more responsible behaviour---working days lost due
to industrial disputes are at an all time low. This paper would
argue that the dual system that has operated in W.A. for the
last eight years has played a part in modifying the behaviour
of unions because there was an alternative for both employees
and employers that did not necessarily involve union representation.
Employers' concern about irresponsible behaviour by the union
movement started to arise soon after the election of the Gallop
Government early in 2001 and well before the new legislation
was introduced into parliament. Perhaps the first indication
was the government's response (at best ambiguous and inconsistent)
to the reappearance of "no ticket, no start" signs
on Perth building sites.
Another early warning was also
related to the building industry. One of the first actions taken
by the Government early last year was to disband the Building
Industry Taskforce that was established in 1993 by Minister Kierath.
The taskforce was viewed as having had a constraining effect
on extreme behaviour in the industry. This was endorsed by the
Conclusions of the Cole Royal Commission which said : "The
WA BITF demonstrated a determination to effect change to an industrial
culture that had developed in Western Australia and to enforce
the rule of law".
The new Minister Mr Kobelke replaced the Taskforce with the
Building Industry and Special Projects Inspectorate which amongst
other changes would no longer be able to prosecute criminal matters.
The Royal Commission concluded
that: "There can also be no doubt that the perception
in the industry is that without the power to investigate and
prosecute matters, such as criminal trespass, extortion and demanding
benefit by menace, BISPI is seen as being unable to deliver.
In this environment, it is to be expected that contractors, subcontractors
and employers will not expose their commercial enterprises to
the risk of ongoing industrial action and intimidation which
may follow as a means of retribution for making a complaint to
an organisation such as BISPI, where their perception is that
BISPI will not be able to make good the complaint and prosecute
In short, a working enforcement body was deliberately replaced
with one that was ineffective.
Given that start it was no surprise that the W.A. legislation
goes much further than is necessary to protect any workers likely
to be suffering exploitation under Workplace Agreements---while
CCI in Western Australia would have opposed it, a no disadvantage
test similar to the Federal system, applied to the previous legislation
would have satisfied that perceived need.
The current Gallop legislation seeks to enhance the union
role to a very considerable extent and beyond what would provide
the union movement the fair opportunity to market itself to its
members and prospective members. For example:
- Right of Entry. There is for practical purposes
unlimited right of entry at any time and to discuss any matter
including the right to look at non-member records. (All that
is necessary is that the workplace has a member or potential
member.) There are already examples of these new right of entry
laws being abused. In one instance 23 representatives of the
Miscellaneous Workers Union simultaneously sought entry at one
workplace---both their sheer numbers and their behaviour demonstrated
their action was not about any genuine issue but rather an attempt
to intimidate and disrupt the business.
- Expanding the role of the Industrial Commission. The
Commission now has the power to issue interim awards with the
onus of proof now on employers to show cause as to why the award
shouldn't issue. This will make it easier for union applications
to bring award free occupations into the award system and under
the influence of the Commission and unions.
- Unfair Dismissals. Interim reinstatement before the
case was heard was proposed originally (assumption---the employer
must be guilty). Fortunately this was removed. Unless you have
your case handled by the Union---in which case interim reinstatement
is still available, there is a 28-day time limit for lodging
unfair dismissal proceedings (can be extended in exceptional
circumstances) unless the union is handling it for you in which
case there is no time limit.
- Safety. Safety is now included in the definition of
an industrial matter. The Commission now has jurisdiction even
though safety is dealt with in separate legislation and by an
independent safety magistrate. This creates double jeopardy for
employers and an increased likelihood of safety being used for
industrial relations purposes.
- Good Faith Bargaining. The legislation allows the
same claims to be made against multiple employers, that is, it
encourages pattern bargaining. Further it obliges employers to
negotiate as a collective unless an individual employer is granted
the right to negotiate alone by the Commission. What does this
say about flexibility, certainty and the ability to respond in
a way which suits the particular needs of the organization?
- No practical individual Agreements. The unions argued
hard for no individual agreements. The Gallop Government is making
much of the fact that it has provided a form of statutory individual
Agreement, an Employer/Employee Agreement or "EEA".
The reality is the Unions have achieved what they wanted because
EEAs are not practical and are unlikely to be used. Industry
is already voting with its feet. Figures released by the Office
of Employment Advocate show that the rate of registrations of
Australian Workplace Agreements sought by WA employers and employees
has skyrocketed. Problems with EEAs include that they are tied
to the award reducing flexibility and certainty, a new employee
must be given the choice of the award or the EEA even though
the EEA has satisfied the award no disadvantage test and even
though the business' operations may be structured around the
EEA, and finally, where there is a collective (union) agreement
there can be no EEA.
Finally EEAs are registered by the Industrial Commission---a
body that has rarely demonstrated an understanding of the need
for flexibility in workplaces. The Commission has issued guidelines
explaining how the EEA Award No Disadvantage Test will be judged.
Among other provisions the guidelines say the EEA shall not derogate
from the rights of "third parties"---that is, unions---something
that is a totally inappropriate consideration especially when
less than 15 per cent of private sector employees are union members.
In addition when considering award benefits that have been offset
by some other improved benefit the consideration will include
not just the relative benefit to the employee but also the "costs
of those benefits, entitlements and protections to the employer"---(
my underlining ) again an irrelevant consideration. These problems
are not theoretical---in the first six months we understand around
300 EEAs have been filed but no more than 12 have been registered.
What little demand there is for EEA's has been frustrated by
the unsympathetic culture of the tribunal.
Whilst EEAs are failing in practice the fact that the principle
of a statutory individual Agreement has been accepted by a Labor
Government is a potentially significant beachhead for future
- No Non-Union Collective Agreement. Even Laurie Brereton
thought this was a bit hard to justify. The Minister's explanation
for not allowing non union collective agreements is that he is
not opposed in principle but there wasn't time to include it
! This legislation was in preparation for 12 months. Perhaps
more relevant are the earlier comments about the impact on union
membership. For small, unincorporated businesses this means no
choice---they cannot go to the Federal system and use AWA's ,
EEAs don't work---so they either have a union collective agreement
or the award.
So it can be seen that the WA Government's Labour Relations
Reform Act 2002 represents a cumulative package of measures
that goes well beyond the election commitments of the then State
Opposition and does everything it can to ensure that workplace
relations in Western Australia return to the centralised, bureaucratic,
once size fits all system which employers hoped we had seen the
last of---but not just employers according to the community research.
What is surprising is the extent to which attitudes have changed
in Western Australia.
The response to the Labour Relations Reform Act has
predictably been a rapid shift by employers to Australian Workplace
Agreements. Image 9 demonstrates how rapid this increase
has been. It is worth pointing out notable dates on this timeline.
Februaury 2001 was the date when the ALP came into Government
in Western Australia then a year later, February 2002, when the
Government's Labour Relations Reform Bill was tabled in
Parliament and the public debate began.
The figures speak for themselves. Shortly after the Government
came to power there was a doubling then a tripling of the proportion
of AWAs attributable to Western Australian employers. In the
first three months of this year, the figures per month are running
at between 4,000 & 5,000 per month; ten times pre Labor Government
This demonstrates a very strong commitment by Western Australian
employers to a regime of individual Agreements, even when the
benefits of AWAs are less than the original option of Western
Australian Workplace Agreements.
WA Managers will not be denied the flexibility and benefits
they have previously experienced even when considerable effort
is required of them to again secure these under a different legislative
These figures confirm in practice the findings of the earlier
research that the community and employees accept individual Agreements.
One case study of how well entrenched and widely supported
individual Agreements are in Western Australia is the example
of Rio Tinto. Rio Tinto and its predecessor, Hamersley Iron,
were of course at the forefront of introducing all staff work
arrangements, ultimately enshrining these with individual Workplace
Agreements in 1994. In the lead up to the Gallop Government's
legislation to abolish Workplace Agreements becoming law, Rio,
in Western Australian offered a s.170LK Non Union Certified Agreement
and put this to a ballot of its workforce. The employees however
voted this down in all but one of its sites to the cheering of
Unions throughout WA who had campaigned against accepting the
Company's preferred non Union Collective Agreement.
In the wake of this rejection of the Company's approach, Rio
considered its options and some time later rolled out an offer
of individual Australian Workplace Agreements.
As Chris Renwick from Hamersley
Iron explained at a recent address, now more than 90% of Hamersley
Iron employees having signed on to these Australian Workplace
Clearly Union claims the initial rejection was a boost for
unionised collective bargaining and a vote of confidence in the
Gallop governments Reform Bill where wrong.
The Tribunal Re-asserts
At the same time that we have the legislative rollback by
the State Government the W.A. Industrial Relations Commission
has sought to re-assert its influence by undermining employers
who have sought to use Workplace Agreements, both State and Federal.
Sidelined for nine years by the most significant development
in W.A.'s IR history, the rise of Workplace Agreements, the W.A.
Commission is finding new ways to interfere.
The approach adopted by the W.A. Commission is to support
Union claims to flow on the wage increases and benefits enjoyed
by employees who have accepted individual agreements to employees
who have opted to remain on an Award or Union Agreement.
first instance of this involved BHP Iron Ore
and this approach was later repeated by the Commission in the
Burswood Resort Casino case. In
both cases the Commission agreed to make a new Award with wage
increases aligned with the Workplace Agreements and then in the
Burswood case to add insult to injury ordered four months retrospectivity.
Implications for Industrial
Relations Reform in Australia
There will always be opposition to change. However, those
who believe that further reform of industrial relations legislation
is needed in order to ensure a prosperous future for all Australians
need to continue to make the case as objectively and as openly
as we can. The Western Australian experience since 1993 suggests
that employers and employees are mature enough to accept responsibility
for their own affairs and not rely on the intervention of third
parties. Reform advocates should be encouraged by this experience.
There is also a warning both for unions and for Governments
(like the W.A. Government) who want to try and wind back the
clock. My view is that there is the potential for a backlash
from the community to the current W.A. proposals given the community's
experience with greater choice and increased flexibility. The
backlash will be even greater if there is a diminution of job
opportunities and/or a return to the bad old days of the late
70's and early 80's when strikes were common and the State's
reputation as a reliable supplier was questioned. Clearly the
W.A Government hopes the negatives of their policies will be
masked by positive economic growth---time will tell.
There should also be encouragement for the current Federal
Government in the Western Australian experience. Reform is about
forcing employers to accept responsibility for their own industrial
relations and not regard it as something that is for the various
industrial commissions to resolve, as has too often been the
case in the past. Given the right tools, and a competitive product
market, employers in W.A. in many cases have shown that they
are up to the challenge and can deliver win/win outcomes. The
'right tools' does mean further legislative change and if the
case is articulated vigorously and clearly then a constituency
for change can be built despite the Senate. After all it would
be a pity, at least from the perspective of the proponents of
reform, if in 2004, after three terms of a government with a
stated commitment to industrial relations reform, all we were
left with was the compromised, but useful, reforms of 1996.
What might those further fundamental reforms be? That is a
topic for a much longer paper but perhaps two thought starters.
The Western Australian experience is instructive and appeared
to be growing in acceptance by the community. A dual, opt-out
system where the alternative was not based on awards would be
a significant reform for Australia.
Alternatively, or even at the same time, steps could be taken
to separate the adjustment of the 'safety net' from adversarial
industrial relations, recognizing that the tribunals traditionally
have had a dual role of setting minimums and resolving actual
Splitting these roles could allow the establishment of a separate
administrative body with the limited role of setting true universal
minimum conditions, without the capacity to make general wage
increases and without a court room environment thus avoiding
the cycle and theatre of grandstanding claims, whilst retaining
the Australian Industrial Relations Commission to provide voluntary
arbitration for those parties who because of a lack of maturity,
or other more justifiable reasons, need third party intervention.
That there is a need for further reform to ensure that industrial
relations is dealt with at the workplace where the needs of the
business (shareholders and employees) can be dealt with in a
way that suits the needs of the particular enterprise is a view
strongly held by CCI. This means more fundamental change that
reduces the role played by third parties and takes away constraints
on the ability of enterprises to respond quickly to ever changing
circumstances. CCI will continue to argue the case for change
in the interests of all Australia.
Final Report of the Royal Commission into the Building and
Construction Idustry, Volume 21 Page 136 Paragraph 79.
Final Report of the Royal Commission into the Building and
Construction Industry, Volume 21 Page 137.
Chamber of Commerce & Industry address by Chris Rnewick
2 April 2003 "Seizing Opportunities---Growth for Western
Western Australian Industrial Relations Commission AFMEPKIU
& Ors v. BHP Iron Ore Limited 2001 WAIRC 02082 @ Volume
82 WAIG Page 2033
ALHMWU (WA Branch) v. Burswood Resort (Management) Ltd---Commission-in-Court
Session 2001, WAIRC 07077