Labor's Deceptive Industrial Relations Policy

Canberra Times, 23rd September 2004

Opposition Leader Mark Latham claims the central focus of his industrial relations policy would remain the negotiation of agreements at the enterprise level, with no return to "heavy-handed re-regulation". But, like many of Latham's other policy claims, this explanation is highly deceptive argues Des Moore

The practical effect of Labor's proposals would be to undermine enterprise bargaining by increasing union and arbitral power.

Having already blocked employment-stimulating reforms in the Senate - such as exemption from (alleged) unfair dismissals for small businesses - Labor would thus further deter employers from taking up potentially available employment. Many more than the official unemployed of 580,000 are available: ABS data show about 2 million want more employment than obtainable even under existing highly regulated arrangements.

But, contrary to Latham's signature tune, under Labor Australians would slide further down the ladder of opportunity. With a smaller proportion already employed than in countries like the USA, UK and New Zealand, our employment gap would widen. Unlike Labour governments in the latter two countries, the Australian version enhances the role of powerful unions and arbitral institutions.

Consider some of the problems with a Latham-implemented policy.

First, while enterprise bargaining would remain notionally available, the Australian Industrial Relations Commission would be more amenable to industrial action to secure union objectives on an industry wide basis. Such pattern bargaining - the antithesis of enterprise bargaining - would inhibit employment and productivity growth.

Ominously, as well as prescribing good faith bargaining, Labor proposes to increase the powers of the Australian Industrial Relations Commission to "restore the right of all working Australians to bargain collectively".

This is blatant nonsense: employees already have the full right to bargain collectively. But allowing good faith bargaining would, with the willing help of the AIRC, give unions greatly increased opportunities to intervene in enterprise bargaining even where no union members are involved. Good faith bargaining sounds fine and dandy but it really compels employers to bargain with unions.

Latham has brushed aside concerns about increasing the AIRC role. But his claim that it would simply be performing its historical function as an impartial umpire has produced hollow laughter still echoing around the continent.

In reality, the AIRC has long favoured unions because, like Labor, it accepts the fallacious notion that an imbalance of bargaining power exists between employers and employees needing correction via its intervention. But in our modern economy, with1.1 million businesses actively competing for the services of around 10 million workers, employers have no monopoly allowing conditions to be imposed on employees.

[AIRC favouritism is exemplified in the difficulties it imposes on employers seeking non-union agreements while readily consenting to agreements with unions. In recent years the AIRC has spread its union-favouring role by, for example, extending union rights of entry and widening its arbitral function in industrial disputes. When arbitrating a refusal to grant overtime, the AIRC even decreed the poor employer took "industrial action"! ]

Second, what about Latham's policy of "re-empowering" (sic) the AIRC to "settle long-running, intractable disputes"? Does anyone seriously believe Shadow Minister Emerson's claim that this power would only be used as a last resort? The AIRC and the Federal Court are past masters at dodging around legislative constraints, even direct prohibitions. Under Labor their preparedness to intervene in disputes would encourage union industrial action.

Third, the absence of justification for abolishing employees' right to enter individual agreements further signals Labor's obeisance to a union movement representing only 17 percent of private sector employees. Individual agreements only cover about 250,000 employees; but their flexibility and hence higher productivity (supposedly sought by Latham) allows employers to provide better employment conditions than under union agreements. No wonder unions hate individual agreements: they do them out of a job!

Fourth, Labor will give AIRC powers to prescribe more than the twenty employment conditions now allowed in safety net awards. Of course, the AIRC has already extended its role well beyond any realistic safety net (in the 2004 redundancy case, for example). But increased AIRC legislative power over awards would open the potential for inflationary additions to costs.

Finally, Latham has emphasised the need for fairness in industrial relations. But Labor refused to pass legislation requiring the AIRC to change its extraordinary decision not to assess the effect on the unemployed of its determination of the minimum wage. How can Labor support an institution that displays such unfairness - Australia's absurdly high relative minimum wage obviously keeps some unemployed out of employment?

[Tragically, the Coalition is not addressing probably the most important reform issue Australia faces. Almost as worrying, it allows Labor to escape exposure of the serious damage from increased union and arbitral power under its policy.]