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Gutless reform dash Liberal hopes

By Des Moore - posted Wednesday, 31 August 2005

The Government’s announced changes to workplace relations regulation have left many important details unclear. However, in a July 11 address, the Prime Minister said the proposals are “not radical” and that, after implementation, Australia’s labour market will still be more regulated than its British and New Zealand counterparts. This admission is a pretty damning indictment.

ACTU Secretary Greg Combet’s assertion that the Government has not put the economic case for the changes is not the complete ambit claim unions are wont to make.

Absent economics is unsurprising given the budget forecasts of a lower participation rate in 2005-06 and a slower employment increase over the next three years.


Moreover, despite the $3.6 billion expenditure on 16 Welfare-to-Work measures, over the next 3 years the budget provides for a 29 per cent increase in unemployment assistance and no reduction in social security spending from its already extraordinarily high proportion of GDP.

Continuing to determine the minimum wage on a similar basis is the worst feature of the proposal. The Government says the new commission will be guided by legislated parameters and will avoid existing adversarial processes, but controversy over the weight given to particular parameters will continue. And with that commission determining fair pay, the requirement that it balance fairness against employment and the suggestion it operate along the lines of Britain’s Low Pay Commission, Australia will maintain a minimum that is high (58 per cent) relative to the median.

That will limit the scope for employing almost 2 million Australians searching for work. As many of these are unskilled, their capacity to obtain jobs is importantly dependent on employers being legally able to offer a wage commensurate with their lower productivity. However, there is little prospect of employers being allowed to offer employment at a wage between the minimum of around $25,000 a year and the unemployment benefit of about $11,000.

Other social unfairness will include the provision of the minimum wage to more than half of low wage earners who live in households that benefit from high household incomes.

Above the minimum, an inquiry will examine the Australian Industrial Relations Commission’s absurd process of prescribing awards purporting to provide a safety net for about 1.5 million workers including, unbelievably, those earning over $1,000 per week.

But, while Minister Andrews hopes awards could be reduced to a few hundred, it is equally absurd to establish a new body to outguess the flows of demand and supply in a substantial part of the labour market.


Hopeful features of the promised new regime include the exemption of businesses with up to 100 employees from unfair dismissal claims and the subjecting of individual and collective agreements to only 4 legislated protected conditions, that is, 4 weeks annual leave, personal carers leave, parental leave, and a maximum number of 38 ordinary working hours per week.

But, given that 21 per cent of existing employees work for no paid leave and 4.5 million people work over 38 hours, will there be some provision for exemptions from these protected conditions? And what will be the role of the new dispute-settling AIRC and the Federal Court? These institutions will retain considerable scope to interpret disputes relating to relevant legislation and court decisions. For example, the foolishly maintained right to strike and trade union rights to enter business premises under states’ occupational health and safety legislation will be subject to disputes and legislative interpretation.

Similarly, to replace the unfair dismissals exemptions, these institutions could extend the application of unreasonable notice claims, the growing claims under the Trade Practices Act seeking to convert pre-contractual representations into promises that must be fulfilled and anti-discrimination claims.

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Article edited by Angela Sassone.
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First published in The Age on August 18, 2005.

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About the Author

Des Moore is Director, Institute for Private Enterprise and a former Deputy Secretary, Treasury. He authored Schooling Victorians, 1992, Institute of Public Affairs as part of the Project Victoria series which contributed to the educational and other reforms instituted by the Kennett Government. The views are his own.

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