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Below is my letter published in today’s AFR on the announcement by FWA of an “overhaul” of the so-called modern awards proscribed about 2 years ago. For this purpose the FWA has established a number of panels of its members to review the large number of awards that exist.

But the question is whether the FWA, or for that matter any similar body, should be setting wages and other conditions to be observed by employers in various industries in a modern economy. One would have thought that the Middle Ages are over.

If the government believes that its economic policies are not capable of exercising sufficient control, one or more of its ministers, advised by economic departments, should take responsibility for what is the most important cost employers have to meet. It is absurd to have the FWA (a body with large numbers of ex-unionists and little understanding of the range of economic conditions across industries) determine wages and conditions for the farcical “industries” it has created.

In this regard, the government’s attempt to portray the FWA as an independent body is just nonsense: it created the body and, as shown by Minister Shorten’s intervention in the health union shemozzle, has the capacity to intervene or if necessary to legislate. However, as indicated by last night’s 7.30 report interview with health unionist official Kathy Jackson (extract below), Shorten seems mainly to be using his position to play union politics.

Des Moore

Intervention needed in FWA awards
letter published in The Australian Financial Review, 3 May 2012

Fair Work Australia’s announced “overhaul” of modern awards has elicited widespread concern about penalty rates (“Food sector baulks at penalty rates”, May 2). But serious concern also exists about the FWA’s setting of wages and conditions more generally.

Their overall level is essentially determined by budgetary and monetary policies and the government has already set an overall average wage increase of 3.75 per cent as consistent next year with returning to trend growth and acceptable inflation. Any significant upwards diversion from this would require restrictive policy changes adding to unemployment.

But how can FWA make the various awards allowing for this and with the widely different circumstances applying to industries?

Clearly, it must avoid any “splitting the difference” approach between the views of employer associations and unions and any cave-in to aggressive unions. Awards must also be conditional on implementation of accompanying improvements in productivity. As employers compete, they should be recognised as best placed to identify awards that avoid dismissals of workers.

Yet the FWA lists for overhaul more than 300 modern awards seemingly applying to “industries” within industries, such as fitness (4), hair and beauty (3), plumbing and sprinklers (5) and so on. Is it realistic to set awards that allow for competitive differences as well as macro-policies?

The FWA is described as an independent body but it’s a government creation and a minister has recently intervened to correct its mishandling of union misbehaviour. There is a strong case for intervention that provides directions to ensure FWA awards are consistent with macro-policies and recognise the different positions applying to various industries.

Des Moore
Institute for Private Enterprise, South Yarra Vic

HSU plot thickens after police raid
Extract from 7.30 Report Interview with Kathy Jackson

CHRIS UHLMANN: So will you support then the Government's move to have the HSU East branch put into administration?

KATHY JACKSON: No, I will not support that move. I won't support that move because it's not being done in good faith, and more importantly, all it's about is Bill Shorten propping up his numbers in Victoria, the factional numbers, and what Bill Shorten is doing quite evidently and clearly is that he's putting forward the Michael Williamson agenda, the Chris Brown agenda and the Shorten agenda, which is to split the branches. The problem is not that we amalgamated. The problem is once we amalgamated we saw the corruption and what we don't want to see is the breakup of the union into separate entities.

: Well, the other six branches of the union think that this is a good idea and they will be supporting the Government tomorrow.

KATHY JACKSON: Well those six branches have their own problems to worry about, and more importantly, when I asked for these branches to support me in my action, they weren't forthcoming. Once again, Chris Brown is publicly saying this is a factional fight. This is not a factional fight; this is about rooting out corruption from the HSU East branch.

Do you think that the people of Australia should believe that there is no other union in Australia that might have similar problems?

KATHY JACKSON: Well I have no evidence of that, but what I do say quite clearly and loudly is that we need to have legislative reform about looking at how elections are run in unions, a cap on electoral funding, democratisation of unions, and if Mr Shorten, the minister, was serious about this stuff, he'd be putting up a reform agenda like that.

CHRIS UHLMANN: Finally though, what about the oversight of unions? Shouldn't they be run more like companies? There would be no question that criminal actions had taken place if these were companies and not under the Registered Associations Act under Fair Work Australia?

KATHY JACKSON: Oh, I totally agree with you. I think we need to have a different regulatory body that's not part of Fair Work Australia. This stand-alone - maybe the ASIC model. But that's not a matter for me. But my personal view is that how it's currently regulated isn't enough and we do need to go to a model more like the ASIC model.

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