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SPEECH BY THE MINISTER FOR INDUSTRIAL RELATIONS  SENATOR PETER COOK

INDUSTRIAL RELATIONS SOCIETY OF WESTERN AUSTRALIA  TWENTY FIRST ANNUAL CONVENTION

26 OCTOBER 1991

COMMONWEALTH

PARLIAMENTARY LIBRARY  MICAH

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Almost everyone agrees that there is a need for greater  decentralisation in the wages system.

But enterprise bargaining or company bargaining or workplace  bargaining mean very different things to different people.  It  is the cause of considerable confusion.

The system the Government has chosen to embrace it has dubbed  workplace bargaining.

Today I will detail what exactly we mean by the term workplace  bargaining, how it fits into the industrial relations  framework, and how markedly it differs from the model proposed  by the Opposition.

The Government is committed to accommodating workplace  negotiations, not for any ideological predilection, but  because it is essential for its microeconomic reform agenda.

It is very clear. If the benefits from award restructuring are  to be realised, the new classification structures and  flexibility and facilitative clauses in restructured awards  have to be applied with goodwill at the workplace level.

Workplace bargaining will also assist in accelerating change  in the workplace culture.

The fundamental tenet of the Government's industrial relations  reform strategy is the 'cultural revolution'  taking place at  the workplace - a revolution involving workers, unions and  management, working co-operatively for mutual benefit.

The Government has recently presented its views on the wages  system to the Australian Industrial Relation Commission's  Review. A decision from that Review is imminent.

The Government argued that workplace bargaining should occur  within broad guidelines set by the AIRC. Such guidelines  would assist in ensuring that real productivity gains are  forthcoming, and assist in preventing exploitation by any of

the parties.

I believe it would be useful at this juncture to outline  briefly the key features of the guidelines proposed by the  Government.  First, workplace wage increases must be linked to demonstrable  gains in productivity and flexibility. A broad view of what  constitutes productivity should be taken to ensure relevance

to all sectors.  For example, what constitutes productivity in  manufacturing is unlikely to be relevant to the services  sector.

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Second,  national award standards of employment must be the  minimum basis for workplace bargaining. These would include  such items as standard hours, redundancy provisions, and leave  provisions including annual leave, maternity and parental

leave.

Third, workplace agreements should be for a defined period of  time and include no extra claims commitments.

Fourth, all workers in a particular workplace should share  equitably in the benefits of the agreement. To this end, a  consultative process should be put in place to ensure all  workers are represented in the decision-making process. A

single bargaining unit would best facilitate effective  bargaining.

And, finally, negotiations must be workplace specific: they  must not be based simply on workplace arrangements reached  elsewhere.

It should be said, of course, that the Government supports  sectoral framework agreements such as that which has occurred  in metals.

The Government is confident that these guidelines provide an  equitable and effective framework for workplace bargaining.

At the same time they are sufficiently broad to cater for a  range of different approaches and outcomes.

A vital part of the workability of the system which must not  be overlooked, is the Government's Accord agreement with the  trade union movement.

We have agreed to work within an aggregate wage outcome of  about 5 per cent in 1991-92.

We have further agreed that future wage outcomes should be  consistent with keeping Australia's inflation at levels  comparable with those of our major trading partners.

In other words, the trade union movement has agreed to assist  in achieving responsible aggregate wage outcomes.

Such commitments,  and the framework proposed, remove much of  the risk associated with a move to more decentralised wage  negotiating arrangements - particularly the risk of a blowÂ­ out in labour costs as the economy recovers.

The priority in the period directly ahead is to provide  flexibility in the wages system to accommodate workplace  bargaining.

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However, the Government is also concerned to ensure that the  wages system provides for the maintenance of the living  standards of all workers.

The Government has proposed to the National Wage Bench that a  further review be held, later this financial year, to assess  progress in the new wages system - to review the quality of  workplace agreements and how widespread they have been.

It would also assess the implications for the agreed aggregate  wage target and for the Government's commitment to low  inflation.

Within this framework there should be scope for a generally  accessible wage increase that protects the living standards of  all workers.

What are the implications for the rest of the industrial  relations system as a result of this move to inject greater  flexibility into the system?

This was the subject of the Parliamentary Statement I  presented to the Senate on the 17th of October.

I have held extensive consultations with leading employer  bodies and the union movement on the matter.

Essentially, there is broad agreement that there is a place  for bargaining beyond the existing conciliation and  arbitration framework, for those who are able to do so  responsibly.

Experience with section 115 certified agreements under the  Industrial Relations Act demonstrates how effective and  constructive such agreements can be.

Examples include sites such as ICI Botany, and at Southern  Aluminium in Tasmania. Similar agreements are operating at  the Daimaru Department store in Melbourne and are likely at  the new Toyota greenfield site at Altona.

However, I believe that more could and should be done to  encourage such an approach to the joint determination of  employment conditions and work relationships.

The Government proposes, therefore, to reform the present  legislative arrangement in relation to Section 115 agreements.

The changes are aimed at more clearly defining and separating  certified agreements from the mainstream conciliation and  arbitration system, and at facilitating increased use of such  agreements.

The AIRC will have an appropriate role at the entry point of  the process.

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The Commission will have to be satisfied that the decision by  the parties to regulate their relationship by such agreements  has been reached fairly and with a full understanding of its  implications.

I disagree strongly with the proposition advocated by the  Opposition that tribunals and unions should have no part in  reaching and finalising workplace agreements.

It has been correctly observed that the typical relationship  between an employer and an individual employee is one between  a person with power and a person without power.  Labour law  operates in civilised societies to prevent this natural

inequality from being abused.

Under the Government's proposal,  bargaining beyond the  arbitral framework will not occur in an 'anything goes' way.  Such bargaining carries with it both rights and  responsibilities. The obvious flexibility which such an  agreement implies should be tempered by recognition of the  need for bargains, once struck, to be observed. Clearly

specified consultative and grievance procedures must be  followed.

Having opted for such an industrial relationship, a party  would not be able to abandon it unilaterally during the term  of an agreement; the consent of the other party must be  present.

There would, nonetheless, be a place for the AIRC to review  the continuation of the agreement if it appeared to be  operating in a manner contrary to the public interest.

No industrial action would be allowed during the course of the  agreement over matters which are the subject of the agreement.

Equally, the parties would, subject to reasonable conditions,  be able to undertake certain forms of industrial action in the  period of negotiating new workplace agreements.

This raises a very important point. When governments, or  anybody else, entertain options for remodelling the industrial  relations system, they cannot avoid addressing the question of  the legal framework - including rights and penalties - that  will underpin the integrity of the remodelled system.

There has been much debate of late about the finding by a key  United Nations body - the International Labour Organisation -  that our present legal framework appears to contradict our  commitments to freedom of association, which we assumed when  Australia ratified ILO Convention 87.

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This finding by the ILO Committee of Experts on the  Application of Conventions and Recommendations - an  independent body of eminent jurists - has already underlined  the need to revise the existing machinery for securing

compliance under the present system.

Opening the system to more direct bargaining, as the  Government proposes to do, makes the question raised by the  ILO even more pressing.

The question is not just about legal sanctions or the right to  strike, to which most of the current debate is confined.

With a decentralised system we need to be sure that the  existing legislative framework can guarantee its integrity.

And the fact is, workplace bargaining cannot be genuine  without the right by both parties to engage in certain forms  of industrial action under prescribed conditions.

There is a danger in dwelling too long on this issue because  it can deflect attention from the main game: which is to  develop a co-operative culture in the workplace.

It genuinely surprises me that so much attention is still  focused on the role of unions and industrial action when the  period of the Accord has seen, firstly, an unprecedented  reduction in industrial disputes and, secondly, the rise of a

responsible trade union movement which has been a major player  in the reform of the labour market.

The focus on conflict by some participants in the industrial  relations debate is doubly surprising when the fact is  appreciated that time lost through strikes is only a very  small fraction of total working time lost.

Work-related injury and illness and avoidable absences should  be of far greater concern. They are symptoms of problems which  are at the very centre of the reform issue. A change in  workplace culture is the only effective way to address these  problems.

It is interesting to note how the other IR participants have  reacted to the Government's policy pronouncements.

Significant common ground between the Government,  employer  groups and the ACTU was evident in the hearings before the IRC  in the National Wage Review - although some important  differences were still apparent.

Certainly, the response to my Parliamentary Statement has in  general been cautiously supportive from employer groups and  the ACTU.

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The position adopted by the Federal Opposition has been  consistently one of total rejection.

It no doubt feels clearly obliged to adopt a contrary  attitude.

Nevertheless,  there is little doubt the Opposition is  operating in a time-warp.

Its policy position has been formulated without a practical  knowledge of how our industrial relations system actually  works - both in a formal and informal sense.

It also fails to appreciate the changes that have occurred in  the attitudes of the parties and the institutions in the past  eight years.

A brief examination of the Opposition's recent policy  pronouncements demonstrates the point.

Mr Howard claims that, under a Liberal/National Coalition,  employees and employers would be free to choose to stay either  in the award stream or opt out of it altogether.

If they opted out, they would enter into a private contract  either individually or as a group of employees.

But what would happen if an employee wanted to stay in the  award wage system and the employer wanted to ditch it for a  private contract?

Mr Howard has no answer.

There is no mechanism in the Opposition's policy to prevent an  unscrupulous employer foisting such a shift onto his or her  workers under threat that jobs could go if they demurred.

There is nothing to stop an employer recruiting staff  conditional upon applicants accepting a less remunerative  private contract.

On the other side of the coin there is nothing to stop a  strong union forcing an employer outside the arbitral system  and securing large increases in wages.

Mr Howard claims that the Opposition would set a minimum wage  rate (expressed at an hourly rate) and minimum safety  standards to prevent exploitation.

In a recent interview with David 0'Reilly in the Bulletin (1  October 1991) Mr Howard claims that the minimum wage would be  "within bull's roar of the mean average wage that is paid at  present".

There are some interesting questions which arise from this  simple statement.

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For example, current average weekly earnings are around $480  per week. The lowest award rates of pay are around $300 per  week.

Does Mr Howard's proposal mean that low paid workers will  receive a substantial pay rise to bring them up to his minimum  wage? If so, he will no doubt win widespread support from  these workers and the ACTU!

Of course, what is more likely is that Mr Howard's bull's roar  statement is an exaggeration.  The minimum wage would be set  at a much lower rate, below the lowest award rate of pay ie.  below $300. This would mean a very weak level of protection

for the majority of workers.

The unreality of the Opposition's industrial relations  policies is best demonstrated, however, by Mr Howard's  proposal to deregister unions if they take industrial action  to flow on one workplace agreement to another workplace.

Such an idea is naive and absolutely unworkable. Talk about  using an atom bomb to kill a fly!

Some of the practical difficulties aside, there is no way that  deregistering unions would effectively prevent union pressure  to flow on wage increases.

Simply deregistering a union does not necessarily take away  its bargaining strength. In fact, once free of the  constraints, balances and checks which exist within the  system, a deregistered union could well become more difficult

to deal with.

Take a look at Britain where no formal registration processes  for unions exist.

Mr Howard's proposal to deregister unions has the potential to  legitimise industrial bastardry without any mechanism for the  public interest to intervene.

Most unions are separately registered in State jurisdictions  and could therefore continue to operate unless State  Governments took complementary action.

Ian Viner in 1981/82 tried to get reciprocal trade union  deregistration legislation with the States. He didn't even get  to first base.

Under the current Industrial Relations Act the union movement  would, in all likelihood, be able to raise a successful appeal  against deregistration. Section 294 of the Act says that the  Federal Court must be satisfied that the trade union's

behaviour is sufficiently grave to warrant such action.

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Most cases would not be clear cut. For example, how will the  Opposition or the Federal Court determine in practice whether  a claim is based on flow on from another agreement? What  position would the Opposition or the Court take if it were  only some part of a union (say some workplace delegates in a

particular company ) which was pushing to flow on wage  increases? Would they deregister the whole union?

Such questions graphically expose the unworkable nature of the  Opposition's industrial relations policies. These glaring  defects should be considered very, very carefully by all of  the industrial parties.

To conclude,  I believe that the Government's policies offer an  equitable and workable way to manage the move to greater  decentralisation in the wages system. In contrast the  Opposition's policies are ideologically driven, are  essentially unworkable and a recipe for conflict and inequity.

Moves to greater decentralisation raise broader questions for  the legal framework of the industrial relations system as a  whole.

Such questions must be fairly and honestly addressed in the  context of our pluralistic and democratic society.

I thank you for your time today.

