19-October-2005
Speeches, Workplace Relations
Address by Andrew Robb AO MP to the Roberts Rofe & Associates Seminar
I greatly appreciate the invitation to address this conference.
The role all of you play is so important to Australia’s future that I was very keen for you to consider the opportunities presented by our proposed changes to the rules governing Australian workplaces.
Put in its most simple form, WorkChoices represents another significant step in the Howard Government’s commitment to providing choice.
In a policy sense, in a community sense, we see great power in choice. We have 20 million people in Australia. That means there are 20 million different perspectives, 20 million different sets of talents, 20 million unique personal circumstances, 20 million souls.
The more that we can give expression to these unique characters, the more people will be challenged and fulfilled, and the greater will be our sense of purpose and our happiness.
To this end, over the last decade, this Government has worked hard to provide Australians with genuine choice across many areas of Australian life, particularly health, education, aged care, superannuation and the skills of our young. These reforms have provided more genuine choices for everyone.
At the last election campaign, the Prime Minister made it clear that “(t)he Coalition has an unconditional commitment to parental choice in education”, and we continue to seek to deliver on this commitment.
As a result of the Government’s commitments, the number of children attending independent schools has steadily increased since 1996, to now represent around one third of the total school population, and increasing. Importantly, this growth has taken place overwhelmingly in low cost schools.
This means that now more than ever, there is genuine choice in education for parents.
The contribution that a strong independent school sector makes cannot be underestimated. Genuine choice among schools increases the quality of education, and increases the prospect of each student giving greater expression to their unique set of talents, and, in turn, being more fulfilled as a person.
In the same vein, WorkChoices seeks to provide all employees and employers - including independent schools covered by the new legislation - more choice about working arrangements that suit their individual needs.
Before I talk in more detail about some of the changes which will impact on independent schools, I want to put the evolution of WorkChoices into some context.
The evolution of IR reform
The real pressures for today’s workplace reforms had their genesis in the dramatic economic upheaval during the 1970s and early ‘80s. The post-war rigid, highly regulated post-war economy couldn’t cope with the impact of globalisation.
It was quickly recognised that sustaining a growing economy in a globalised world required the encouragement of competition, the limiting of government interference and the elimination of monopolies.
Critical to achieving these goals was the deregulation of markets.
And so, in a bipartisan way during the 1980s, substantial tracts of our economy were deregulated — the financial sector, the Australian dollar, tariffs and subsidies, government assets and restrictions on foreign investment.
However, the one major area that continued with choking regulation was the labour market.
Despite flexibility being critical to meeting the challenges globalisation posed – to change, to adjust, to adapt –inflexible work practices remained solidly entrenched in the award system, making it extremely difficult, unless you went outside the system or could afford multi million dollar legal challenges, to choose work practices which suited the needs of individual businesses.
As the Australian economy moved into the debilitating recession of 1990, our rigid, centralised labour markets contributed to nearly a million people out of work, and employees and employers started forcing the issue, openly challenging the system.
Eventually there was recognition that the straitjacket of labour regulation was hurting the very people that these regulations were there to protect.
The penny dropped.
On 21 April 1993, Paul Keating addressed the Institute of Company Directors and outlined his vision for the new Australian labour market:
“let me describe the model of industrial relations we are working towards. It is a model which places primary emphasis on bargaining at the workplace level within a framework of minimum standards …Over time the safety net would inevitably become simpler. We would have fewer awards, with fewer clauses…We need to find a way of extending the coverage of agreements from being add-ons to awards … to being full substitutes for awards.”
While history shows us that the ACTU significantly nobbled the subsequent reforms, nevertheless, the break with the centralised system had begun.
When elected in 1996, the Coalition Government moved to give full effect to Mr Keating’s model of workplace bargaining – to make agreement making more attractive and to clarify that primary responsibility for agreement making lay with employees and employers.
This progressive introduction of flexibility and choice into individual workplaces has been one critical factor underpinning the resilience and growth of the Australian economy over the last decade – the extraordinary job growth, the halving of unemployment, the 14.9% increase in take-home pay and the low interest rates.
Importantly, the co-operative nature of workplaces stemming from employee/employer agreements has fostered the lowest level of industrial disputation in Australia’s history.
Yet, the full expression of these 1996 reforms was limited because of obstruction in the Senate. In particular, it has been difficult for small and medium size employers, who employ over half the workforce, to take advantage of the choices and flexibility in the workplace that has contributed so much to the success of big business over the last 10 to 12 years.
So the government has on the table a further round of measures, much of it directed at small and medium size businesses. These measures are designed to complete the model articulated and begun by Paul Keating twelve years ago.
This is not a revolution, as some would have you believe, it is evolution. It is the third stage of a 12 year evolution away from a highly regulated, centralised system to a system centred on agreements, and designed to capture what works best in each workplace.
In our view, if we don’t continue this evolution, as a country we will slip behind, our quality of life will be threatened. We can’t stand still.
The Reforms
When these reforms come into effect, the day to day operations of your school are not going to change overnight.
Other than some union preference clauses, which will go, the basic proposition is that no matter whether your staff are employed under an award, a collective agreement or an individual agreement, what they’ve got they keep.
So all award conditions, State and Federal, are preserved for both current and new staff entering award based workplaces in the future. Similarly current agreements continue through to their expiry date.
Award conditions are protected, and minimum wages will increase following determinations of the new Fair Pay Commission, but if a school and its staff want to achieve new terms and conditions, then this will need to be done by making an agreement. But teachers cannot be forced into making an agreement. Coercion will continue to be unlawful.
Agreement making:
However, the focus is on encouraging far more choices in each workplace by making agreements simple to negotiate, simpler to understand and easy to lodge without unwanted third party interference.
Over the last 12 years, agreement that provide terms and conditions that best suit individual workplaces have led to an undeniable increase in productivity and harmony at the workplace.
There are many success stories from those who have embraced agreement making – whether collective or individual agreements – but Rio Tinto’s Iron Ore operation provides a wonderful example.
Before embracing agreement making in the mid 90’s, Rio Tinto’s Iron Ore Operations were plagued by decades of industrial strife, low productivity, poor workplace morale and a horrendous safety record.
Agreement making has led to a four fold increase in productivity, a five fold increase in safety, extraordinary flexibility in their work practices from mine to mine, no days lost to disputation since 1995 and, importantly, a well rewarded workforce.
In a globalised economy, collaborative workplaces provide better outcomes for the participants than the “them and us” workplaces of old.
Yet while important productivity improvements have occurred in some larger workplaces, the full benefit of agreement making has been limited and frustrated by the “no disadvantage test” which requires agreements to be compared to all of the terms of an award.
It is an expensive, uncertain and highly subjective exercise comparing a 300 or so page award with a 10 page agreement, and this has enabled significant third party interference, delays, serious amendments to agreements where they have become not much more than awards with add-ons, all of which has added further to the costs and discouraged businesses, especially small and medium sized businesses, from looking at agreement making.
To enjoy the full benefit of agreement making under the existing system requires significant resources, resources which schools and other non-profit organisations have better uses for.
The existing system effectively deprives schools of important opportunities to make more collaborative and successful workplaces.
The nub of WorkChoices is to make it easier for the small or medium sized businesses to make agreements with their employees that are relevant to their business, that provide opportunities for employees and in turn make for more fulfilling, more collaborative, more productive workplaces.
This reform is no revolution or the product of blind ideologues. It is simply an attempt to complete the industrial relations model outlined by Paul Keating in 1993 - “to find a way of extending the coverage of agreements from being add-ons to awards … to being full substitutes for awards”.
To achieve this, the no disadvantage test will be replaced with a safety net of five key terms and conditions, protected by law, with which all agreements, collective or otherwise, must comply. The five conditions include the minimum wage; a 38 ordinary hour week, averaged over a year; four weeks’ annual leave; a minimum personal leave entitlement of ten days sick/carer’s leave, with a further two days unpaid carer’s leave where the leave is expired, 2 days compassionate leave to visit a dying relative or to attend a funeral; and 52 weeks of parental leave.
Above and beyond this parties will be able to agree on terms and conditions which are relevant to their particular circumstances, however, there are seven matters which will be as contained in the relevant award unless they are specifically referred to in an agreement – these are public holidays, rest breaks, incentive based payments/bonuses, annual leave loading, allowances, penalty rates and shift & overtime loadings.
The possibilities for creative agreement making in schools are almost endless, but a few examples are multi-skilling or multi-tasking teachers in smaller schools or offering a broader range of less popular subjects; providing more flexible part-time arrangements for parents returning from parental leave – which is particularly relevant in an industry where more than 65% of teachers are female; and modifying the school day or the school term to suit student, parent or teacher requirements.
It will also be possible to have collective agreements covering more than one school, even if they are different employers, however, it will not be possible to take protected action which is “pattern bargaining”.
The key to making these provisions work is reaching agreement with staff.
In addition to the replacement of the no-disadvantage test with a safety net protected by law, the approval process is also being significantly streamlined to make agreement making more attractive. Agreements will operate from lodgement and may last for up to five years.
In recent weeks, we have heard a lot of scaremongering about the impact of the reforms to the no-disadvantage test.
This includes comments about the ability to average ordinary hours over a 38-hour period. In fact, averaging occurs in many, many union negotiated agreements and is something that schools should be fairly comfortable with given that teachers’ pay is averaged over the year.
There has been fear-mongering about trading public holidays. In regards to public holidays nothing will change compared to existing provisions in awards and agreements.
We have heard that there won’t be an opportunity to bargain collectively.
This is nonsense. The right to bargain collectively is guaranteed by law. The right to seek to have a collective agreement is guaranteed by law. During negotiations, employees can be represented by a union or a bargaining agent, and if they wish to bargain collectively, then they may do so. Likewise, an employer can engage the services of a bargaining agent and equally has the right to have a say in whatever form of agreement will suit both parties.
As is the case now, when it comes to agreements, it takes two to tango. So neither the employer or existing employees will be able to impose a form of agreement on the other. Both will need to agree on both the type of regulation – award, collective agreement or individual agreement – and the choices within an agreement.
Another instance of scaremongering peddled by opponents to reform is the fear that individual agreements will be used to undermine the conditions which have been earned under collective bargaining, be it through awards or agreements.
What this fails to recognise is that the track record of Australian Workplace Agreements (AWAs) is clear about “undercutting” – across the 750,000 individual agreements already struck, employees on AWAs earn on average 100% more than employees on awards and 13% more than employees on collective agreements. It suggests individual employees have got, and have exercised, bargaining power.
The reality is that, while it will be possible for an employer to offer an individual agreement to an employee, the notion that principals will automatically offer inferior agreements to new teachers fails to recognise the effect that this would have on morale in the school community, let alone the school’s ability to attract and retain high calibre staff.
Schools cannot afford unsettled relationships with their teachers. They cannot afford discontent or disruption to their operation, and it is a terrible and ill-informed slur to suggest that a Principal would act otherwise. In any event, collective agreements are likely to be the most common form of agreement in schools.
In practice, schools will work out what choices are in their best interests, through discussions, negotiations and common sense.
This is a win-win situation for the school and teachers – but the biggest winners of collaborative agreement making in schools will be the students.
Unfair Dismissal reform
Another aspect of WorkChoices where considerable scaremongering is taking place is the government’s proposals to exempt businesses with up to 100 employees from unfair dismissal laws.
There is a substantial body of evidence suggesting that unfair dismissal laws have acted to slow the entrepreneurial pulse of our economy, to make our firms less competitive and to impede job creation. Some employees, with the urging of “no win, no pay” law firms, have used these laws in a vexatious and opportunistic way to, in effect, blackmail employers, who cannot afford costly legal action into paying “go away money”.
There is evidence from around the world that if you make it too difficult to remove an underperforming or disruptive employee, then employers will be less likely to take on the risk of a new employee in the first place.
As a consequence of these failed unfair dismissal laws there are tens of thousands of people sitting at home in Australia without a job because many small businesses have become “gun shy” about employing new staff.
Not only has unfair dismissal hindered the growth of jobs but evidence is starting to emerge that small businesses are selecting candidates for employment from a risk management perspective. This means that the more vulnerable groups in the community are being increasingly overlooked by employers in making their decisions to hire — the young, the long-term unemployed, the disabled, those from less advantaged suburbs, others who may have been out of the workforce for long periods, especially women, and people from different ethnic groups.
The failure of unfair dismissal laws is becoming a social justice issue.
Again, there has been a lot of scaremongering about the removal of unfair dismissal rights at schools. The school community is tight-knit, and a Principal who exercised these rights arbitrarily will cause disharmony in the workplace. Such arbitrary action will unsettle relationships, and cause discontent and disruption.
No prudent employer will terminate an employee without proper cause, and it is one of the terrible slurs levelled against employers in recent times to suggest otherwise.
In practice, what these reforms mean is that a Principal will be able to remove employees who are themselves causing discontent by not carrying their weight or are involved in disruptive actions in the workforce without fearing a costly and disruptive “unfair” unfair dismissal claim – claims which divert valuable resources from teaching.
There will always be bad apples, and so protection against unlawful dismissals will continue to apply, irrespective of the size of the business. Unlawful dismissals include being dismissed for discriminatory reasons (subject to the existing exemptions for some religious education institutions), temporary absence due to illness, injury or for caring for a sick child or for trade union membership.
Where an employee alleges unlawful termination, the onus of proof will be on the employer to prove that the termination was not for the prohibited reason.
The Office of Workplace Services is being significantly beefed-up to provide a “one stop shop” for advice and protection to employees, with a more than doubling of the inspectorate to 200.
One National System
The third significant area of reform is to create one national system of industrial relations.
When the constitution of Australia was framed in the nineteenth century, there was no way that its framers could have conceived the technological change which took place in the 20th century, particularly in respect of transport and communication.
What were once separate, isolated colonies are now room-mates in the global village.
Yet our workplace relations system continues to force organisations to comply with an unacceptable level of red-tape and regulation which adds to the burden of running a business, and hinders productivity. Small businesses are required to comply with thousands of pages of choking regulation.
To remove unnecessary duplication and complexity, and many of the 4,000 awards and 130 relevant State and Federal legislation, the Government is going to rely on the corporations’ power in the Constitution to take the first steps towards a single national system of workplace relations.
Since the government is relying on the corporations’ power, there will be a number of schools that are not covered by WorkChoices.
For schools that are not constitutional corporations, it will be business as usual unless or until the New South Wales Government decides to cede its industrial relations powers to the Commonwealth.
Transitional Arrangements
Most teachers in New South Wales are currently employed under a State award. When WorkChoices comes into effect, it will be business as usual. State awards, and for that matter, any agreement under the State system, will be deemed to be federal transitional agreements, and they will continue to apply for a period of three years.
At the end of the three year period, if agreement has not been reached, then the employees will be moved to the appropriate federal award, as recommended by the Award Review Taskforce, except that they will keep any superior conditions (such as the more generous sick leave provisions in most State awards).
Dispute Resolution
In keeping with the Government’s commitment to choice, and consistent with the Government’s view that the parties in a dispute are in the best position to decide on the optimum way of resolving the dispute, dispute resolution will be modified to require the parties to choose the dispute resolution process which works best for them.
As a result, the Australian Industrial Relations Commission will not have arbitration powers unless the parties specifically agree to permit it. Awards will be modified immediately to amend dispute resolution clauses to give effect to this.
Each agreement must have a dispute resolution procedure included in it, but the parties to an agreement are free to agree on a dispute resolution service that suits their needs. This could be the AIRC, or it could be some other service provider, such as an accredited mediator or, in the case of a school, a school council.
Conclusion
WorkChoices represents a significant shift in the industrial relations culture of Australia.
There is the possibility for substantial benefits for schools, teachers, students and the community as a whole if the school sector embraces the freedom which workplace bargaining can provide.
Crucial to successful workplace bargaining, particularly in an industry where centralised wage setting has been long-standing, is to ensure that you take your staff with you and avoid the inevitable scaremongering that will come from the gatekeepers of the IR club – if you do, then you will be in a strong position to develop arrangements which benefit everyone.