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Beazley’s plan to abolish AWAs makes sense

By Krystian Seibert - posted Tuesday, 18 July 2006

Kim Beazley has had a difficult time trying to sell his plan to abolish AWAs to business groups. In late June, he was in Melbourne to address the National Small Business Summit, a conference organised by the Council of Small Business Organisations of Australia.

In his address, the Opposition Leader repeated his pledge to abolish AWAs, which was met with a predictable response from the council. Trying to attack the Labor Opposition where it’s most vulnerable, other business groups, such as the Business Council of Australia and the Australian Industry Group, have been particularly hostile in their response to the plan, implying that any moves to abolish AWAs would affect Labor’s credibility as an economic manager. However, when you look beyond all the rhetoric flowing from both sides of this debate, you see that Kim Beazley’s stance makes sense.

First, it makes sense because AWAs simply have little or no impact on productivity. You don’t need facts and figures about productivity to back this up; you just need facts and figures about AWAs themselves. What you need to ask is: if AWAs are such an effective way to improve productivity, then why are so few Australian workers employed under them?


According to David Peetz, a professor of industrial relations at Griffith University, only 4 per cent of Australian workers are employed under an AWA. Given that business groups have been talking up the remarkable ability of AWAs to deliver productivity improvements, why are businesses so hesitant to use them?

There can only be two reasons for this: either that businesses are not interested in improving the productivity of their workers; or that AWAs simply don’t deliver such productivity improvements. Now, it’s obvious that businesses are interested in improving the productivity of their workers because in a competitive economy you need to increase productivity in order remain competitive, so it’s probably the case that AWAs simply don’t deliver the productivity that businesses are after.

Second, it makes sense because it fits in with the Labor’s perspective on workplace relations. Labor believes that ultimately, the interests of workers, of business and the entire economy are most effectively served through an emphasis on collective bargaining at a workplace level, a process designed to overcome the inherent power imbalances that exist between employers and employees.

As long as Labor holds this belief, it simply can’t support the existence of AWAs. That’s because, despite all the spin from the federal government, which says that AWAs are all about flexibility and letting employers and employees work out the terms of employment between themselves without third party involvement, the fundamental purpose of AWAs is to undermine collective bargaining at the workplace level.

This is evident in the fact that AWAs override not only awards but also collective agreements. They do this because a provision of the WorkChoices amendments basically states that while employees and unions are strictly bound by the terms of a collective agreement with an employer, the employer can continue to offer AWAs to employees during the life of that agreement. The purpose of this provision is to let employers chip away at the collective strength of employees during the life of a collective agreement, so that when that agreement expires, the ability of employees to collectively re-negotiate a new agreement with their employer is significantly reduced or even non-existent.

So given the inherent clash between AWAs and collective bargaining, it makes no sense for Labor to support their continued existence and business groups in particular shouldn’t expect Labor to do so.


This doesn’t mean that they, and everybody else, shouldn’t expect Labor to put forward a decent workplace relations policy in the lead up to the next federal election. Given that workplace relations is likely to be a major issue at that election, Labor will need to provide a decent alternative to the federal government's reforms, an alternative which delivers both productivity and which fits in with Labor’s perspective on workplace relations.

Assuming that Labor provides this alternative, the ultimate decision about the fate of AWAs and WorkChoices won’t be made by the John Howard, or Kim Beazley, but by the Australian voters.

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About the Author

Krystian Seibert is a public policy professional based in Melbourne. He has worked as a policy adviser to two Australian Ministers and studied regulatory policy at the London School of Economics.

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