The current IR environment

Prepared remarks - AMA Queensland Council of Doctors in Training

"The Liberal National government wanted to take away unfair dismissal rights. They wanted to take away dispute resolution rights.  They wanted to allow managers to interfere in clinical care.  They wanted to interfere with professional development leave. They wanted to interfere with rights of private practice.

And most of all the Liberal National government wanted to take away collective bargaining – because they know that that is where employed doctors’ power comes from. Just like all other employees, doctors have more power when their power is exercised collectively. The whole is more than the sum of its parts."

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Acknowledgement of Traditional Owners

Acknowledgement of the leadership of the AMAQ, President Dr Shaun Rudd and CEO Jane Schmitt.

 

Industrial relations is an inherently political field. Industrial and workplace relations describes the point at which labour and capital meet. At least superficially, their interests are not aligned. Capital has an interest in containing labour costs – not just remuneration but other costs like the cost of providing a safe workplace - to improve profits.

Of course these divergences in interest, considered more thoughtfully, are not as simple as they might seem. Economists and others say that extreme inequality puts a brake on economic growth. Governments have an interest in wages being at reasonable levels because wage levels affect revenue, both directly when taxes are based on income, and indirectly when taxes are based on consumption. Business has an interest in having its customers able to spend. Like everything of any importance in life, the interests of labour and the interests of capital ought not be oversimplified.

But having said that, the fact is that there is little more political than the way that power works when it comes to those who are employed and those who employ them.

I know that I am talking to a group of people who, after the events of the last summer, understand very well why industrial relations is political.

Let’s go back a little further.

The Queensland Liberal National Party government was elected in 2012. I didn’t pay too much attention at the time, having had a baby four days prior. But when I came back from parental leave in late 2012 it became very clear to me that this was a government unlike any previous government in the past two decades.

It was a government of great power. And it was a government prepared to exercise that power with little regard for process or consultation.

An early example was the directives and legislative change that unilaterally invalidated provisions of public sector enterprise agreements that gave people rights in relation to consultation, change and redundancy.

It was shocking to me that one party to a deal would be so dishonourable as to unilaterally change that deal, to the detriment of the other party.

Put more plainly, the State of Queensland had reached a deal with public servants. It reneged by changing the terms of the deal, without compensation, and without allowing those same public servants to renegotiate.

When public servants voted in favour of their enterprise agreements they did so taking the terms of the agreements as a whole. In other words, by striking out some of the terms, they were left with a different deal to the one for which they had voted. Who knows what the vote would have been had the agreement been proposed to them in its new, changed form.

So, as I say, this was shocking. It was dishonourable. It was shameful.

Sadly, it was not unlawful. The courts said so. State parliaments have very broad powers and one of them was to unilaterally change enterprise agreements by legislation.

So by the time that the state government got around to taking on salaried doctors, they were emboldened.

The government tabled the Industrial Relations (Fair Work Act Harmonisation No. 2) and Other Legislation Amendment Act 2013 on 17 October last year.

Submissions to the Committee Inquiry into the bill closed on 28 October 2013. There was a public hearing on 1 November 2013.

This was a very compressed timetable for such radical changes to the way that industrial relations worked for salaried medical officers.

The committee reported on 14 November 2013.  The government responded on 19 November. The bill passed shortly after and received royal assent on 27 November2013 – incidentally both the day before my birthday and the day on which, one year later, Brisbane was smashed by storms.

And from then the fight was on.

The Liberal National government wanted to take away unfair dismissal rights. They wanted to take away dispute resolution rights.  They wanted to allow managers to interfere in clinical care.  They wanted to interfere with professional development leave. They wanted to interfere with rights of private practice.

And most of all the Liberal National government wanted to take away collective bargaining – because they know that that is where employed doctors’ power comes from. Just like all other employees, doctors have more power when their power is exercised collectively. The whole is more than the sum of its parts.

I was preselected as the dispute was heating up. On 31 January, I wrote to the President of the Australian Salaried Medical Officers Federation, to express my support.  In that letter I wrote of my concerns about:

  • The Chief Executive’s ability to issue directives that could unilaterally change employment conditions;
  • The exclusion from collective bargaining;
  • Unfair dismissal;
  • Rights of private practice;
  • Dispute settlement;
  • Fair rostering;
  • Salary increases;
  • Salaries not applying across a classification (which would likely have gendered consequences);
  • The lack of a better off overall test.

And I wrote:

“Under WorkChoices, the Howard government used individual contracts to divide and conquer workers. That led to the stripping away of conditions like penalty rates and leave loading. Salaried doctors are right to be concerned that the individual contracts that the Newman government is introducing will have the same effect today.”

“In other words, salaried doctors are entitled to be legitimately worried that the government will use individual contracts to weaken their negotiating power and erode their pay and conditions through a divide and conquer approach.”

You all know the outcome of that dispute. You know that doctors had wins when it came to collective bargaining, dispute settlement, dismissal, clinical care, and professional development leave.

And you know why doctors won – because they worked collectively, amongst the profession and amongst the community. It was a powerful campaign.

The reason I’m talking about this dispute is because it is so consistent with what’s going on in the current IR environment more broadly. And that, in turn, is consistent with the Liberals’ approach to industrial relations since John Howard was elected in the mid 1990s.

In September 2013 – just before the bill to change Queensland’s IR laws in relation to doctors was introduced – there was a federal election. A new Liberal National government was elected. Tony Abbott – a long term ideologue when it comes to industrial relations – became the Prime Minister.

I want to talk to you about his government’s approach to IR. But before I do, I want to give you the economic context.

As Bill Shorten said in his Budget Reply speech this year:

“Australia is fundamentally strong, and so is the legacy Labor left behind. Low inflation. Low interest rates. Net debt peaking at just one seventh of the level of the major advanced economies. A triple-A credit rating with a stable outlook from all three international ratings agencies – one of only eight countries in the world [to have that]. Superannuation savings larger than the size of our whole economy. And around a million new jobs created.”

Bill talked about our legacy. We were one of the only developed countries in the world to have avoided recession during the Global Financial Crisis. That’s something that all Labor people regard proudly.

Importantly, when we left government, unemployment was low - when Tony Abbott got elected it was 5.7 per cent. Today’s figures show national unemployment at 6.3%. In Queensland unemployment hit 7% in October. The IR system is not to blame for unemployment: it’s the deterioration in the economy, because of issues including the remarkable hit to consumer and business confidence since this government’s first budget, among other reasons.

Similarly, the IR system is not a cause of slow productivity growth. In fact, labour productivity has been growing faster under the Fair Work regime than it did under Work Choices. And the RBA Governor has spoken recently of the pleasing increase in the rate of growth of labour productivity – now growing at around 2% per annum.

So it is in this context that the Liberals’ approach to industrial relations should be considered.

Labour market reform was John Howard’s cherished goal. He was not able to persuade the Democrats in the Senate to support some of the more radical aspects of his desired labour market reform upon his election. But about a decade later, the Liberals and Nationals gained control of the Senate, and things changed.

Work Choices was everything John Howard wanted for this nation when it came to industrial relations.

Of course, Work Choices took aim at unfair dismissal, restricted dispute resolution rights, and reduced the power of the industrial relations commission. All of those things will sound very familiar to anyone who understands the doctors’ dispute of 2013-14.

But at its heart Work Choices was about taking away collective power. It did so by making it harder for unions to organise, limiting rights to bargain collectively, limiting the types of bargains that could be struck, limiting the circumstances in which collective bargains could be struck, and limiting the content for which parties could bargain. And, flouting international law, it gave primacy to statutory individual contracts that not just undermined but excluded collective bargaining.

The natural consequence was individual contracts in which the employee bargaining party had less power and therefore had to accept a substandard deal.

Take just one example: penalty rates. 63% of Work Choices individual contracts took away penalty rates. That was part of the point. Present day federal Liberals like my parliamentary colleague Dan Tehan MP are still taking aim at penalty rates, and it seems that the government, as I’ll tell you, will ask the Productivity Commission to look at penalty rates.

One of the reasons for these changes was to put downward pressure on wages with a view to improving profits. The idea being that if corporate Australia is better off, then so is everyone.  Of course, being a Labor representative, you would expect me to be deeply sceptical of trickle down economics. You would also expect me to want inclusive growth, not growth that disproportionately favours those who are more well off compared with those on low incomes or with low wealth. As I said, present thinking is that inclusivity is important not just because it is fair but because it is necessary to drive growth.

Another reason was to break the power of unions because unions support Labor.  It’s all well and good to come after your political opponents. But the fact is that as unions’ coverage and power decreases, so does the ability of working people to bargain collectively, and so, ultimately, does fairness.

Ultimately Work Choices was John Howard’s undoing. It cost the Liberals electoral support not just in the Kevin07 election, but in 2010 as well.

Tony Abbott learnt from this. That’s clear. But the question is: what lesson did he learn? Did he learn to be a centrist when it comes to IR? Or did he learn that the Liberals needed to be better at disguising their ideology?

The Liberals went to the election with the following policy:

2. WE WILL ENSURE THE LAWS WORK FOR EVERYONE

A Coalition Government will initiate a genuine and independent review of the Fair Work laws to ensure Australians have the benefit of an objective, comprehensive and factual assessment of their operation and impact. This will be conducted by the Productivity Commission which will also be asked to consider how the laws can be improved.

More than a year later, we are still awaiting that review. But because of leaks to Fairfax earlier this year we know that the terms of reference, as drafted, contemplate the Productivity Commission looking at penalty rates, pay and conditions, “union militancy” and “flexibility”.

Notice the focus on penalty rates and other remuneration – implying that remuneration is too high in Australia.  Yet where is the evidence for that?

The Wage Price Index has been kept since the late 1990s. Wages growth is at its slowest for the entire time that index has been kept. Other economic indicia support the proposition that wages growth is very sluggish. And the labour share of national income has been falling for many years (with a corresponding increase in the profit share of national income).

Note also the reference to union militancy. Again, attacking unions, for the two reasons I’ve mentioned, is the Liberals’ modus operandi. Another example is the Royal Commission presently on foot – a commission that has been extended for a year though the Commissioner did not ask for that to occur.

And finally, note the reference to ‘flexibility’. That’s code. They don’t mean flexibility to make it easier for you to manage your care and other domestic obligations. They are talking about flexibility for employers – the sort of “flexibility” that the Newman government wanted in relation to private practice rights, and managerial entitlements.

As I say, we’re still awaiting that review. Some organisations are becoming impatient. The Australian Human Resources Institute, for example, has called for a significant overhaul of IR laws, and has called for a reintroduction of individual statutory agreements, a reduction in power for the Fair Work Commission, and other measures aimed at reducing union power.

This review, when it happens, will be crucial in shaping the IR environment. This review will likely be the key driver of the IR environment and I suspect the states are likely to follow suit if the federal Government changes IR laws in the wake of the review.

As to the current IR environment, from a federal perspective, I also want to mention three pieces of legislation that the government has introduced, but not passed, since being elected. Each will also contribute to shaping the IR environment.

They are the Comcare legislation, the Fair Work Amendment (Bargaining Processes) Bill 2014, and the Fair Work Amendment Bill 2014. I spoke in the debate for each of those three pieces of legislation. Each is still before the Parliament.

The Comcare bill seeks to bring more employers into the Commonwealth workers’ compensation and safety systems. For reasons I’ve spoken about, I consider those systems substandard compared with the Queensland systems. It’s also worth noting that under Work Choices, employers that joined Comcare also found that unions’ rights of entry were affected. 

The Fair Work Amendment (Bargaining Processes) Bill 2014 seeks to add an additional requirement for an agreement to be approved by the Commission, to add further information to the definition of “genuinely tried” to reach agreement, and to provide additional grounds to refuse a protected action ballot – in relation to ambit claims, and claims that would be adverse to the firm’s productivity.

The Fair Work Amendment Bill 2014 contains six major proposals affecting union right of entry, Greenfield agreements, the timing for industrial action, which relates to whether industrial action can be taken if the employer has refused to bargain first, changes to Individual Flexibility Arrangements that would make them more akin to AWAs than they are at present, and changes in relation to interest on money held for underpaid workers, and some other recommendations.

I also want to mention superannuation.

There have been superannuation changes this year, with a slowing of the rate at which the superannuation guarantee will increase. That has been done so that the changes will now occur later than people anticipated when they voted in September. For those who’ve made binding agreements, it means they won’t be getting the superannuation they expected, but also won’t be able to renegotiate for additional pay to compensate them for that loss.

Finally, I wanted to mention cost of living.

The budget hits cost of living in so many ways. Health out of pockets will go up – not just for GP visits, pathology and imaging, but also for pharmaceuticals. Petrol is going up. Pension indexation is changing. Repayments on higher education loans are expected to take longer as fees increase substantially, if the higher education changes pass. And, on the income side of managing cost of living, cuts to family tax benefits will leave families up to $6000 a year worse off. All of these cost-of-living issues, like the broader economic issues, shape the IR environment. Because as it becomes harder for employees to bear their cost of living, the fairness of our IR system, and workers’ ability to organise and bargain collectively, becomes ever more important.

Ends

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