No Ticket, No Start---No More!

The Evolution of the Opposition's IR Policy

Peter K Reith, MP

Thank you for the invitation to address this conference on the evolution of the opposition's industrial relations policy.

I am not the first member for Flinders to take an interest in industrial relations. One of my predecessors, S.M. Bruce, had a spectacular involvement in industrial relations and one of the myths about industrial relations in this country is that proposals for reform are inherently unpopular with the electorate. That is a very convenient argument for those who want to retain the status quo and is constantly used by politicians who propose constitutional change the substance of which is known to be electoral unpopular.

When I ran the 'no' case for the referendum last year for months and months the government said the people would vote for their proposals because they were sensible and when they were rejected in the most convincing defeat of any proposals in the history of the federation the government said, 'well people always vote no.' In fact, in Australia people do not always vote 'no' for constitutional change and in the history of referendums in Australia, if you include state sponsored referendums, it is clear that the electorate is a lot more capable of analysing proposals than some politicians would ever like to admit.

Stanley Melbourne Bruce did not lose office because of his proposal to abolish the Arbitration Commission.

It is not for me to give you my version of political history of the 1920s and 1930s but there is no doubt that Stanley Melbourne Bruce's Maritime Industries Bill of 1929 was not a decisive factor in the election which led to the establishment of the Scullin Ministry in October 1929. It is a myth to say that major reform of industrial relations is politically impossible.

The one thing that can be learnt from Stanley Melbourne Bruce is that industrial relations in this country was a mess even back as far as 1929. The other interest I share with Stanley Melbourne Bruce is that he and I have both had the distinction of losing the seat of Flinders and the great pleasure of winning it back again.

The topic for my remarks today may have suggested an opportunity to recount recent his tory. That would be a useful exercise but as an opposition politician looking to government I want to turn your minds to the evolution of our policy upon our attaining government.

In recent years the climate for change has itself changed, The H R Nlcholls Society has played an important role in that process, around Australia people are calling out for change. At Castlemaine in Victoria the employer and the 500 employees at a smallgoods factory called Castle Bacon sat down and entered into a voluntary agreement to improve the efficiency of that business. The union representative came up from Melbourne and said that you can't do deals without the union's endorsement and you can't do deals unless they are exactly the same as Don Smallgoods---another comparable producer. The 'them and us' attitude was alive and well but the difference in this case was that the 'them' was the union representative from Melbourne and the 'us' were the employers and the employees with a stake and a sense of commitment to the business in Castlemaine. They rejected the meat workers' view of industrial relations which declares the bankruptcy of employers as industrial success. These unions have done a lot, at a high price, to encourage the falling union membership in Australia, which is another factor encouraging change.

Our major banks have been experiencing some competition in their product market and they have also been buying banks overseas which has given them some wider perspectives about how to run better industrial relations. Changes in the product market are a near-certain prod for changes in the labour market.

Since the war the percentage of women in the workplace has grown considerably. Many of them want to work part-time, one reason they look for work is to try and offset the decline in living standards that has been a hallmark of this federal government. They're demanding a system where they can enter into arrangements with employers that suit them so that their children do not become latch-key children. There are other areas of change. Dyed in the wool trade unionists have been speaking out. Laurie Short says that secret ballots before strikes are a good idea, Charlie Fitzgibbon says that our policy of co-operation at the workplace is practical, and Joe Thompson says that we need more co-operation at work. Laurie Carmichael says that he has learnt from the experiences of 1981. The second tier agreements were reasonable first, although sometimes faltering, steps to encourage people to manage their own affairs without the meddling interference of third parties. The business community wants change and the OECD has been saying for years that it's about time that Australia faced up to the necessities of change in our labour market. Lastly the floating of the dollar by the federal Labor government has some inevitable consequences and reform in the labour market is clearly high on that list.

To say, however, that we are on the right track in some areas can be misleading. In some areas we are not on the track at all and even if we were on the right track as Mark Twain once said, you can be on the right track but if you are lying down you'll still get run over by the next train. In Australia the next train is next month's balance of payments figures or the next set of rising inflation figures.

An example of getting off the track is the current award restructuring plan of the ACTU. It's Bill Kelty's plan that, according to newspaper reports, he has been planning since 1970.

The working out of this latest grand plan from Bill Kelty has been a classic case study in the workings of the Accord. The myth making machine has been on double and triple time as Mr Kelty has wound it faster and faster to meet the steadily deteriorating economic situation.

Let me start by saying that award restructuring is a first class idea and in fact it is our idea and has been coalition policy for some years. If it was done properly it could be a useful mechanism for reflecting some worthwhile changes. If done wrongly it will be a retrograde step. It is the Government's only policy for labour market reform and nobody in the labor movement has made any secret of the fact that it originated with the ACTU and has been accepted by the government, virtually without any questioning.

Even if award restructuring were properly undertaken, and there is no way known that it will be under this government, but assuming that it were properly undertaken, it is only one of a long list of areas that are calling out for some action. Any plan to address Australia's basic problems must include opening up areas such as coastal shipping and the waterfront to competitive pressures and the privatisation of government business enterprises. The government has never had the stomach to stand up and be counted on those issues and when they faced the consequences of their double-talk before Christmas in regard to OTC they sacked the long serving dedicated Mr George Maltby to try and disguise their manifest inadequacies.

To undertake award restructuring properly the first thing you should do is look at awards on the basis of the needs of individual enterprises. You would involve employees and employers at the workplace in the process so that the results were not only relevant but would give you the added bonus of attracting commitment to the process of change. The people who know what they are talking about because they run the business would then ask themselves the simple question---'when looking at the way in which we work in our business how can we change the way we work to make our business more efficient and more productive?' When you ask the right question it is a lot easier to get the right answer. In some companies the time that you start work, the time that you finish work, weekend work, shift work, the length of time of production shifts, penalty rate, public holidays and any other issue about working time arrangements will be an important matter for discussion. In some companies that might be the only area in which you can make the business more efficient. In other enterprises it might be that a change in staffing arrangements will make considerable differences. You might change the ratio of permanent employees to casual employees. On the waterfront the inability to have a casual component in the workforce is one of the worst restrictive work arrangements in the industry. You might hire more independent contractors. In other businesses it might be sensible to cut down the number of unions so that for the business there is only one union to represent the interests of employees instead of having a whole lot of unions. In other businesses the smart thing to do might be to introduce remuneration packages which give people the incentive that they don't have today. I am politician, my job is not to try to tell business how to run its business. My job is to try and change the system so that the people in business have the freedom to run their businesses much more profitably and much more productively than they have in the past.

Bill Kelty and the trade union movement have different views. In addition to wanting to put a tax on family homes, they also want to control the workplaces of every enterprise in the country. The fact is that the Kelty plan for award structuring is not about productivity at all. The last thing that people like Bill Kelty and Simon Crean want is a return to the second tier arrangement where people obtained increases as a result of agreeing to do things better. If they were fair dinkum then they would want to talk about working time arrangements and staffing arrangements and remuneration and award coverage as a means to find the dollars to sustain the massive wage increases that they want everybody to have. But unfortunately that is not their objective. Their objective and strategy is more subtle than that and is not to be underestimated.

For all the clever presentation of Mr Kelty and Mr Crean the fact is that their plan has a sting in the tail. It means more power for the ACTU.

In particular, the plan is premised on a highly centralised approach to wage fixing. On page four of the Kelty Plan Mr Kelty states:

    'the capacity to restructure all awards will depend on the capacity to develop an integrated structure amongst the key minimum rates awards.'

He accepts that the unions will need to endorse changed relativities, but, and this is the crux, he also says the union movement must adopt:

    'a comprehensive and integrated strategy involving the application of common principles...

By tightening the relativities between key minimum rate awards the ACTU plan would actually make certain that Australia was locked into a vicious cycle of extremely centralised wage fixing followed by wage blow-outs.

The Kelty plan for award restructuring therefore not only provides the prospect of becoming the vehicle for substantial wage rises in 1989-90---it could also provide the basis for future wage break-outs.

What we need to do is jettison the concept that all remuneration can be efficiently set by a central body. Australia cannot afford a system where, if employee 'A' receives an extra $10 per week because he is a good worker then every other similar employee must also receive $10 whatever the economic circumstances facing the firm that he or she works for.

The Kelty plan involves widespread use of supplementary payments. This payment system overrides the operation of the market and introduces even greater rigidities.

Instead of tightening our system, instead of making it more rigid and even more centralised we must develop a greater flexibility. We must work to produce a framework for evolutionary change which will promote productivity throughout our economy.

Mr Chairman, I highlight my concerns about award restructuring just to dispel any sense of inevitability or complacency about change. Yes, there are changes, but there is no guarantee that this country will make the best of its opportunities. We must intensify our efforts and we must not let up on our criticisms of the Accord. It deserves to be discredited. It is about time that Australians realised that we have as high a level of disputation now as when Malcolm Fraser left office and at times under Hawke it has been worse than Fraser. Our industrial disputation record is considerably worse than our international competitors. Margaret Thatcher's United Kingdom has a record two and a half times better than ours. I think we also ought to continue to remind Australian workers that Labor deliberately runs a low wage policy. This government congratulates itself on keeping people's wages down. It's a policy that really will end up with people living in grass huts as was effectively suggested by Paul Keating when the recent CPI figures, and in particular the housing component, didn't fit in with his idea of what they should be. The Accord has been a spectacular flop and we must make sure that people understand what a cruel hoax it has been.

In the five months that I have had the job of Shadow Minister for Industrial Relations I have come to the conclusion that there is a lot of common ground about the need for change and of course the coalition parties and John Howard in particular, have played a leading role in preparing the way. I think it is one thing to know what to do and to have the right vision of a better industrial relations system 5 years or 10 years down the track but it is another issue to effectively implement that policy.

So our policy has passed the first test---it's now accepted as a comprehensive document which contains practical and comprehensive reform. The job now is one of implementation. One approach could be to liken an implementation strategy to the entry and exit of tankers into the safe harbour of Western Port Bay in my electorate. With a full cargo they start slowing down many kilometres out and it takes them a long distance to finally come to a full stop. It doesn't take long to unload and reload the cargo but, after some assistance with the tugs and a push in the right direction, it takes a similar distance before the tankers get up a full head of steam to head off in the right direction. The critical factor is momentum.

I was recently speaking to a prominent British banker who took the view that industrial relations changes in the UK have taken a long time to filter through to the shop floor. It takes a long time to build up that entrepreneurial spirit and that sense of co-operation and enthusiasm for the future of an enterprise. It seems to me that we need to get off to a strong start but at the same time realise that we need to build a momentum for change. We're in this for the long haul. Some of the attitudes that must change are deeply entrenched.

We will stick by all our policy commitments including our commitment to consult with interested parties throughout the process. At the same time we will have a mandate for change and we want to make solid progress.

Our implementation strategy will have a number of components; including legislation, administration, business and employee activities. Involvement in reform must be widespread.

High on our list of legislative priorities must be to address the inequalities of the bargaining position between employers and trade unions. For years Australia has had a system where employers are required to comply with decisions of this Industrial Relations Commission but trade unions could 'go into the field' to win better deals. No conservative government has yet comprehensively tackled the institutional and legal framework which bolsters union power, we will do so. In particular, return to work orders which are frequently ignored by unions under current arrangements will be enforceable in the ordinary courts of law. This reform has been essential for 20 years this coming May, 1989, which will be the anniversary of Clarrie O'Shea's release.

There is already widespread support for effective and binding compliance measures. Once those measures are in place you will see many more employers looking to take up the opportunities provided by other parts of our policy.

Also high on the agenda for implementation should be policies to promote a greater sense of commitment and participation at work. It is fundamental to our policy to encourage a common purpose and mutual interest between employee and employer. The evidence is clear that enterprises which foster good relations with their employees consistently perform better than enterprises with a poor industrial relations record.

More and more Australian businesses are realising that their workforces are potentially their greatest asset to the benefit of the enterprise and employees alike.

We must encourage all forms of employee participation---ranging from employee consultation through to financial incentives, profit-sharing and employee share ownership.

As increased competitive pressures compel employers to look for new ways to increase productivity, employee participation and incentive schemes will flourish.

The task of the next Liberal and National party government will be to ensure that their introduction is facilitated, our policy to return responsibility for industrial relations to the workplace will provide a framework conducive to all forms of employee participation while more specific initiatives may be required to encourage particular schemes. This process of change will take time so the sooner we start the better.

Another area which could be dealt with early in our first term would be changes in the legislation affecting the Industrial Relations Commission to require a greater focus on individual enterprises. We want the resources and experience of the commission to be harnessed to develop a more flexible approach. We want it to be responsive to individual enterprises whilst at the same time taking into account the impact of its decisions on the national economy. In other words we want the commission to reflect economic realities at the national, industry and enterprise levels. We will put our submissions in the most forceful and persuasive way and we look to the commission for development of some of the better decisions it has made in recent years. That is not to say that reform is possible from totally within the system but rather so great is the need for reform that every instrument must play a role---including the commission.

Of course, implementation is not just a matter of legislative action in Canberra. There are a range of administrative options which will be available to the new government. In the building industry I think we need to develop an implementation policy which includes a code of conduct for government contracts for Commonwealth building projects. Under Labor the Commonwealth has set precedents of the worst possible kind which have been allowed to flow throughout the building industry. We ought to have building contracts setting the pace for good industrial relations not the worst.

The business community will have a key role the implementation of our policy. Some employers are already making changes or have made changes which will prepare them well to compete effectively and productively in the labour market in the new environment which will develop after we are elected. They must be encouraged to continue their plans and the thousands of other business enterprises around the country must start to gear up for that change, again in this area there are changes under way. I understand the BCA Industrial Relations survey is stimulating a lot of practical re-examination of industrial relations practices. But more must be done.

Lastly in our implementation strategy there is similarly a critical role for employees, whether unionised or not, to take the opportunities provided by our policy and make the most of them to do something practical to sustain a real improvement in their living standards. We can do a lot to encourage them. I'm not in favour of phoney bills of rights that take power from elected parliaments and purport to give people rights they already have. But I am in favour of restoring rights. A charter of workers' rights would be both politically popular as well as long overdue. We need to be setting standards and such a charter could lead the way. Existing industrial laws are designed to give rights to unions whereas we want to give employees more freedom. Under Labor the privileges are for unions at the expense of union members.

Mr Chairman, the H R Nicholls Society has done a lot to promote understanding of the need for change. Whilst that work must continue my submission to you is that an even greater challenge is to effectively implement these proposals.

In my view there is enough common ground on the necessary reforms to say that it's time to turn our attention to implementation. I want to see in the months ahead the emergence of common ground on implementation both as to strategy and timing.

Labor's epitaph will be 'they never tackled the labour market'. There is a groundswell of opinion that our reform policies must be adopted and then implemented. We now need to build support for an implementation strategy. We will build this support by inviting debate on implementation and in that way encouraging a commitment to it. For that reason the propositions I have raised today are neither fixed nor exclusive. They are intended to promote discussion. I invite you to continue your vital contribution to the debate and I look forward to hearing the views of your members.

Why HR Nicholls?

More...