Bills Digest No. 94  1999-2000 Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999


Numerical Index | Alphabetical Index

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History
Purpose
Background
Main Provisions/Further Reading
Concluding Comments
Endnotes
Contact Officer and Copyright Details

Passage History

Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999

Date Introduced: 30 June 1999

House: House of Representatives

Portfolio: Employment, Workplace Relations and Small Business

Commencement: The formal parts of the Bill commence on Royal Assent. Most operational provisions are to come into effect on a date fixed by proclamation but otherwise no later than 6 months after Assent.

Note: Prior to the completion of this Digest the Government indicated that it would not be proceeding with the Bill in the form introduced (and subsequently amended in the House of Representatives on 29 September 1999). The Digest reflects events up to and including 6 December 1999, making reference to the Senate Employment, Workplace Relations, Small Business and Education Legislation Committee's Report on the Bill. The Digest aims to assist readers in preparing for debate on the revised package of measures that is anticipated in the New Year.(1)

Purpose

The Bill amends the Workplace Relations Act 1996 (the Principal Act) and makes consequential changes to other Acts, the global changes include:

  • renaming and restructuring the Australian Industrial Relations Commission (variously 'AIRC' or 'the Commission')
  • streamlining processes for gaining access to Australian Workplace Agreements (AWAs)
  • restricting the scope of the AIRC's compulsory powers of conciliation to a narrower range of matters where arbitration is available
  • introducing a fee for service regime in cases where the parties to a dispute ask the Commission to use its conciliation powers (ie voluntary jurisdiction)
  • further limiting the scope of federal industrial awards, principally to providing a safety net for lower paid workers
  • accelerating the process of cancelling obsolete awards
  • further tightening access to unfair dismissal remedies
  • streamlining processes for making Certified Agreements (ie collective enterprise agreements), as well as providing that Certified Agreements may not contain provisions restricting use of AWAs
  • facilitating the spread of AWAs, allowing for the fast tracking of AWAs for employees on higher earnings
  • providing a legislative basis (presently there is no bar to the use of private mediation) for the voluntary use of alternative dispute settling procedures
  • clarifying and redefining the rights of the parties in relation to protected (lawful) and unprotected (unlawful) industrial action, including reinforcing the powers of the AIRC to prevent or stop industrial action
  • extending mandatory secret ballots of employees and employee organisations contemplating protected industrial action under the Principal Act
  • providing for 'cooling-off' periods during industrial disputes involving protected action
  • restricting union rights of entry to employer premises
  • extending the legislative prohibition on union preference and other union security devices, including 'de facto closed shops'
  • removing the Federal Court's power under the Principal Act (but not other Commonwealth laws, such as the Trade Practices Act 1974) to review harsh or unfair contracts entered into by persons with independent contractors.

Background

At the end of the Menzies era, the Commonwealth Conciliation and Arbitration Commission (the Arbitration Commission), though not without critics, was a widely respected institution close to the apex of Australian economic and political life. The Arbitration Commission's decisions in national wage cases were seen as having profound economic and social consequences for not only workers covered by federal industrial agreements and awards but for the workforce as a whole. The Commission's role, and the system of what is commonly called 'centralised wage fixing'(2) that it administered, was not subject to serious challenge from either side of politics. Commonwealth power over industrial relations relied almost exclusively on section 51(xxxv) of the Constitution, a provision frequently given a restricted ambit by the High Court.(3) State systems of industrial relations were strong and, for a variety of reasons, fiercely independent. The focus of industrial relations policy, however, was less on the nature of the processes of wage-fixing and dispute resolution than on what would now be termed 'outcomes', principally the link between wages and other macro-economic variables. Levels of industrial disputation and control of the union movement and the movement's links with the ALP were matters of great contention.

In the mid-1960s, emphasis was on collective not individual relations in the workplace, about 55% of employees were union members, and nearly 90% of workers were covered by federal or State industrial awards.(4) To critics of the way things were, this was a 'paternalistic system', dominated by 'uninvited third parties' and 'characterised by a one size fits all approach'. To borrow further an epithet, these were 'the bad old days, where decisions affecting ordinary Australian workers and employers were taken out of their hands and made in the closeted deal-making world of union officials, governments and industrial tribunals.'(5)

In the interests of neither being too reproving or dismissive of the past nor of those who governed through those times, it should be recalled that the mid to late 1960s were also an era of full employment, low inflation, strong terms of trade, high growth and rising living standards. Industrial disputation was characterised by moderate levels of industrial action and strikes, though relatively numerous, were for comparatively short periods. Productivity (both labour and multi-factor) growth in the middle to late 1960s was on average the same or higher than those in the late 1990s.(6) The State and federal systems, whilst independent, frequently acted with a degree of cohesion. Australian Conciliation and Arbitration Commission test cases were generally followed by State tribunals, and State developments were often mirrored in the federal system.

There have been many significant developments in Australia in the past three decades, for example a move to flexible exchange rates, declining Australian terms of trade, growth in new industries and technologies and the internationalisation of many sections of the economy.(7) Similarly, the industrial relations landscape has been re-fashioned.

Since the end of the Menzies era, the power and influence of the Commonwealth industrial tribunal has waned. Levels of industrial disputation rose from the late 1960s peaking in 1974-75 and 1981-82 but have subsequently declined. (The decline, starting from the time of the Hawke government, has been sustained under the Keating and Howard administrations.)(8) Likewise, unionisation rates have nearly halved and the demographics of the workforce in terms of age and gender have undergone marked changes. The Commonwealth now relies on a range of constitutional heads of power to support its workplace relations policies, one of the State industrial systems (Victoria) has for the present been largely collapsed into the federal arena. Inflation remains at or near historic lows of the 1960s but unemployment remains three times the rate experienced for most of that decade.

The focus of workplace and industrial relations has also shifted even though traditional concerns with the mechanics of the system still dominate both the parliamentary program and the statute books. It is at least arguable that there is a widening gap between such longstanding institutional concerns on the one hand, and the current expectations of employers, workers and the community on the other. Indeed a central theme for many critics of the present Bill is that - as the centre-piece of the Government's second term workplace relations legislative agenda - it reflects a policy mindset that is too 'pre-occupied with undermining the influence of awards and trade unions'. In a similar vein it is argued that the Bill '... fails to address the serious workplace and labour market problems Australia currently faces: job insecurity, excessive hours and growth of low-wage jobs.'(9)

The Bill seeks to build on the changes that were brought about principally by means of the Workplace Relations and Other Legislation Amendment Act 1996. Therefore, it is not surprising that supporters and critics of the Bill have drawn on the economic and social outcomes since the Act came into effect (in 1997) to support their views in relation to the present Bill. Indeed, the Terms of Reference for the Senate Inquiry into the 1999 Bill required the Senate Employment, Workplace Relations, Small Business and Education Legislation Committee to first examine outcomes under the 1996 Act before making an assessment of the Bill. (The majority of that Committee found that the Australian Economy had generally performed well over the past 30 months, with the majority members being impressed with increased levels of productivity and the decline in the level of industrial disputation. These improvements on comparative outcomes in the 1980s and early part of the 1990s were ascribed (in part) to the 1996 legislation.(10))

Senator Andrew Murray (Australian Democrats) in his dissenting report also accepts (at least for the sake of argument) the alleged link between changes to laws governing workplace and industrial relations and positive economic data for the past 18-24 months. To quote Senator Murray:

This Committee has been asked to look at the effectiveness of the 1996 reforms, and it is worth restating some of the evidence on the efficacy of the 1996 reforms. In doing so, it is instructive to use the five tests that Labor's shadow industrial relations spokesperson set down in Parliament in 1997:

Industrial disputation:

First, he asked, will there be fewer disputes than under the previous regime?

The answer is yes. The average number of days lost fell from 61.5 days per 1000 employees per month in Labor's last two years to 41.5 days per 1000 employees now.

Employment:

Two, will there be more jobs?

In the last eighteen months of the Labor government, 124,000 new jobs were created, of which 43,600, or 35%, were full time jobs. In the eighteen months of the Coalition Government following the 1996 Workplace Relations Act, 290,000 new jobs were created, of which 150,000 or 52%, were full time.

Wage outcomes:

Three, will the distribution of wage outcomes and benefits be fairer after than before?

Answer, yes and no. In the last two years of Labor, real wages increased by 0.9% and 0.3% respectively, compared to increases of 4.2% and 2.5% respectively in the last two years.

National Wage Case Increases awarded by the AIRC under the new Act for the lowest paid over the last three years have totalled $36 a week, 50% more than the $24 a week awarded in the last three years of the Labor Government. Despite these real increases at the bottom end, the ABS reports that the distribution of income in Australia grows more unfair each year. This unacceptable trend remains unchanged from Labor's years.

Productivity:

Again, more good news. In the two years to June 1996, under the old Act, labour productivity rose by an average of 1.7% a year. In the last two years under the new Act, productivity has risen by 3.4% a year.

Outcomes:

Five, will the overall wage and salary outcomes be more consistent with a low inflation, low interest rate environment than the outcomes of the present system?

Answer, yes. It is well known that all of this - rising employment, rising real wages, rising productivity, has come in a period of low inflation and low interest rates. So, on the key economic criteria set by Labor for the 1996 law, it has been clearly a success in delivering better economic outcomes. That is evidenced by higher real wages, employment and productivity. (11)

In their dissenting report, the Labor Senators pointed to what they considered a range of negative outcomes since the 1996 Act came into effect, notably:

1.7 Detailed evidence was heard demonstrating that since the inception of the 1996 Act there has been a range of negative outcomes including:

  • the award simplification process which has resulted in the loss of entitlements;
  • growth in employment which has been slower than the preceding three years and is tempered by a growth in precarious employment - in particular full-time casual work and temporary employment;
  • a poor outcome in reducing the numbers of the very long term unemployed;
  • widespread fear of and growing job insecurity;
  • the increasing incidence of loss of employee entitlements due to insolvency; and
  • the continued increase in hours of work in turn impacting negatively on the balance between work and family life.

1.8 In addition there has been a widening of income inequality, in particular wages growth per hour being less for part-time and casual workers than full-time workers. Income inequality has also seen a widening gender gap in over award payments. In a range of industries many of Australia's most vulnerable workers - in the most precarious forms of employment and on the lowest wages - have experienced wage cuts, particularly through the loss of financial compensation for non-standard working hours.

1.9 The labour market and economic system in the period 1996 to 1999 has, when compared with the previous 3 years and with similar economic growth rates, failed to generate the same employment outcomes. Indeed, the average annual growth of employment in the period February 1993 to February 1996 was 3.1 per cent, while the average annual growth rate in employment in the period February 1996 to October 1999 has been just 1.76 per cent. As a result the average monthly employment generated in the period February 1993 to February 1996 was over 20,000 compared with an average of just over 12,000 jobs per month in the period February 1996 to October 1999. (12)

The Labor Senators also argued that a multiplicity of factors influence the operation of labour markets (ie, not just labour laws).(13) They suggest, that in crucial areas such as the measurement of living standards, there is simply not enough data to make a proper assessment of post 1996 trends.(14)

In the 1960s there was a lively debate as to whether industrial tribunals should act as economic legislatures charged with furthering good economic and social policy; or whether their prime concern should be the resolution of industrial disputes between the immediate parties to those disputes. On the latter view, macro economic policy and questions of social justice should ultimately be left to market forces and the other arms of government.

For much of the 1980s, principally through the mechanism of the Hawke Government's Prices and Incomes Accord with the ACTU, government appeared to favour the wider role for wages policy, principally as means of fighting inflation and lowering (real) unit labour costs to aid a return to full employment. However, this was a form of 'government managed' wages policy. The Commission's role as final arbiter remained but at times it was (perhaps unfairly) seen as merely facilitating Government /ACTU sponsored wages deals.

With inflation currently at low levels and union membership in severe decline, policy now favours a lesser role for the AIRC and it would appear less important as a bulwark against wages break-outs and industrial disputation. Greater efficiency and productivity gains are to be pursued through a less centralised system of bargaining with an emphasis on individual contracting and a further shift away from collectivism. The AIRC, far from being seen as an economic legislature, has a considerably reduced role in even its primary area of responsibility, ie dispute resolution.

It is this context that the principal focus of the present Bill remains on the processes that govern bargaining arrangements in the workplace. It provides for:

  • a more confined and 'contested' role for the AIRC (eg expanding the role of the Employment Advocate and providing for other officially recognised forms of alternative dispute settlement, ie mediation)
  • a more closely regulated role for trade unions, further cutting down the degree to which the industrial relations system is predicated on their continued influence (eg removal of incentives such as preference clauses for unions to become registered bodies and limiting unions' quasi-regulatory role under the Act by limiting their capacity to detect award breaches), and
  • more conditions currently enshrined in awards to be contestable, ie the subject matter of possible trade-offs or re-negotiation as part of enterprise bargaining.

The Government's broad position

The Government's rationale for the Bill is concisely summarised in Minister Peter Reith's Second Reading Speech. There he notes that:

This next phase of workplace relations reforms build on the objects of the 1996 system that we now know has worked well. They propose important amendments that are necessary in light of experience to improve the operation of the system, entrench its gains and extend its benefits more widely throughout the work force.

  • They will continue to give workers and employers at their workplace more choice and more opportunities to manage their relationships without forced interference from unwanted parties.
  • They will continue to end the paternalism of the old system which told workers, their workmates and their employer what was good for them, without any regard to their own circumstances.
  • They will make intervention by third parties in decisions made by workers or their employers more democratic and more relevant, removing similar centralisation and control eliminated by governments in comparable economies, including measures taken in the United Kingdom in the mid-1980s and not since overturned by the Blair Labour government.
  • They will continue to devolve powers to the workplace where workers rights to make agreements individually or as a group, to withdraw their labour or not, to join or not join unions and to decide just how they want their industrial disputes resolved should be recognised and respected.
  • They will continue to remove unnecessary complexity from the system so that workers and employers get a real say, not just lawyers, management consultants and union officials.
  • They will continue to maintain a safety net of minimum wages and conditions to protect the low paid and disadvantaged in the work force.
  • They will continue to remove red tape and unjustified cost, especially from small and medium sized businesses, including in the area of unfair dismissals.(15)

Labor's Position

The Opposition's position is broadly reflected in the amendments to the Bill moved by the Hon Arch Bevis, the Labor spokesperson on Workplace Relations:

That all words after "That" be omitted with a view to substituting the following words:

(1) he House condemns the Government for introducing a bill which:

(a) further entrenches unfairness and bias in the existing industrial relations system;

(b) ensures that the role of the Australian Industrial Relations Commission is further restricted and the independence of the Commission is compromised;

(c) reduces the minimum conditions available to all Australian workers by further undermining the award system as the dynamic framework for the protection and advancement of wages and conditions, through further award stripping;

(d) denies Australia's lowest paid workers any further wage increase unless their award is stripped of basic entitlements such as long service leave, superannuation and paid jury service leave;

(e) further removes workplace and enterprise bargaining from the protection of the Australian Industrial Relations Commission, placing it solely in the hands of the Office of the Employment Advocate, which is run by one the Minsters former senior personal political staffers;

(f) further weakens opportunities for employees to organise and bargain collectively;

(g) aggravates problems of inequality for women and the most vulnerable in the labour market;

(h) further restricts workers who are denied proper industrial protection in their state from accessing federal protection;

(i) prevents the Australian Industrial Relations Commission from conducting much of its traditional conciliation role;

(j) further dismantles the framework for the prevention and settlement of industrial disputes;

(k) amends the termination of employment provisions to limit an employee's right to pursue an application and extends the cost provisions;

(l) emphasises the punishment and prevention of industrial action rather than its resolution;

(m) unduly hinders the entry and inspection of premises by relevant organisations;

(n) demonstrates a lack of balance in freedom of association provisions;

(o) fails to ensure that Australia's labour standards meet our international obligations; and

(p) has a short title which is deliberately misleading and fails to represent the actual intention and impact of the bill; and

(2) the House also condemns the Government for its eagerness in tabling a bill that will specifically strip workers of their basic rights while failing to protect workers' legally accrued entitlements in cases of corporate insolvency; and

(3) recommends that a new bill be introduced which:

(a) delivers fair and equitable outcomes for Australian workers;

(b) preserves basic conditions for all Australian workers;

(c) provides for an independent commission with the appropriate power to conciliate fairly and settle disputes; and

(d) provides jobs and income security.(16)

Other Parliamentary Perspectives

In criticising the Bill, the Member for Calare, Mr Peter Andren (Independent), recalled that he had supported the Government's earlier legislation, including the small business exemption from unfair dismissal laws. He nonetheless rejected the Bill. In doing so he further observed:

The member for Mitchell should not crow about his government's ability to represent the battlers. The battlers know they are not feeling warm and comfortable, despite the alleged benefits of micro-economic reform: a big surplus, low inflation, low interest rates and good GDP. Why isn't everyone happy? Apart from the insecurity caused by economic rationalist policies of downsizing, competition policy, privatisation and competitive tendering, the rampant insecurity that exists out there, particularly in the regional work force, I would suggest it is because the great growth in employment opportunities is occurring in the casual employment market only, where women especially have no will nor skill to negotiate. This is where the level playing field is tilted uphill for the employee, and this bill tilts it ever so much further away from the worker and away from the award system. This is more about employees being units of cost rather than partners in the productive process.(17)

The position of the Australia Democrats seemed to progressively harden against most major features of the Bill.(18) In the wake of the 400 page Senate Committee Report on the Bill presented on Monday 29 November 1999, the Democrat Spokesperson on Industrial Relations, Senator Andrew Murray, outlined the Democrats' approach to the Bill and their reasons for opposing most of its key provisions. Speaking on the tabling of the Senate Committee Report, he stated:

My problem with much of this bill is that it is too early, too much, too soon. It is unnecessary and it does not address the fundamental problems, which are social and not economic. Furthermore, it includes the usual healthy dose of union bashing which I think is unhelpful in moving us on to a better way, a less adversarial way, of dealing with industrial relations in the future. Lastly, I note in the submission from the Victorian government that they support a unitary industrial relations system and so do I.(19)

Dealing with the Democrats' likely approach to the schedules 18 schedules which make up the bulk of the Bill he indicated that:

The Democrats took the view that this bill, overall, should be split into three. I will read from my report which explains exactly what I mean. I said:

The inquiry has convinced me that a number of schedules have very little merit overall and should be rejected outright.

I rejected eight schedules in my recommendations. Those eight include schedule 1, objects; schedule 4, conciliation; schedule 5, mediation; schedule 6, awards; schedule 8, certified agreements; schedule 9, Australian Workplace Agreements; schedule 12, secret ballots; and schedule 16, independent contractors. Later on in the report I detail my findings.

I then went on and said that there was a second set which should be considered. To quote from my report:

There are five schedules of relatively low importance (except No 15) which are worthy of due consideration. In its submission, the ACTU, despite its `just say no' campaign, did not even comment on these five schedules. I can only conclude that this is because these schedules either contain good legislation for employees, (Schedule 15 contains clauses which materially and beneficially assist Victorian employees), or are quite modest in effect.

The five schedules are schedule 3, Employment Advocate; schedule 10, relevant and designated awards; schedule 15, Victoria; schedule 17, miscellaneous amendments; and schedule 18, amendments of other acts. I remind all those people who in all honesty and commitment write or ring or email my office, without ever having turned a page of the legislation, that the ACTU did not have a single thing to say about five of those schedules. So the `just say no' campaign, on those grounds alone, becomes exposed.

I then picked up the third category. I wrote: The remaining schedules have major provisions that should be rejected and other clauses which need amendment. These schedules nevertheless retain substance worth considering further.

They are schedule 2, the Industrial Relations Commission; schedule 7, termination of employment; schedule 11, industrial action; schedule 13, right of entry; and schedule 14, freedom of association. However, before the proponents of the bill get too excited, in every single one of those schedules I have rejected the government's major propositions.(20)

On 30 November 1999, Senator Meg Lees (Leader, Australian Democrats) announced that the Democrats had formally broadened their opposition to the Bill. Senator Lees said:

... the Democrat Party Room had decided this morning that [a further five] schedules would require such heavy amendment to make them fair that it was not worth the effort to salvage them, particularly given the tight timetable of this session.

Even sensible propositions like improving the effectiveness of unfair dismissal processes have been twisted in Peter Reith's bill to restrict access to arbitration of claims. It is very difficult to unscramble the omelette to make this bill fair and balanced ...

The Democrats were prepared to support five technical schedules of the bill with a few minor amendments.(21)

Constitutional Context

Australian industrial law is notoriously complex and technical and has been regarded as such for some time.

In part this complexity arises from attempts by the Commonwealth to push to the limit the restricted powers given to it by the framers and (ultimately) the Australian people.(22)

Attempts to gain additional powers for the Commonwealth by way of constitutional amendment have failed. The last such failure being the Prices and Incomes proposals put to the people by the Whitlam Government in December 1973.

Apart from its powers in respect of its own public servants and persons employed in the Territories, the Commonwealth has only a limited enumerated power in respect of industrial relations. The relevant provision of the Australian Constitution, section 51 (xxxv), provides that the Commonwealth may make laws with respect to 'conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State'. Although the power is 'filled out' by the incidental powers, it is nonetheless quite narrow in scope. It does not allow the Commonwealth power to set private sector wages, it requires the existence of a genuine inter-state dispute and that dispute must involve an element of collective, not merely individual, relations between employers and employees. What section 51(xxxv) also requires is that apart from common law contracts of employment, whose ambit may be cut back by the operation of industrial awards and agreements, all bargains between employers and employees and their representatives are subject to independent vetting by a statutory tribunal.

The unique status of section 51(xxxv) of the Australian Constitution has been remarked on by leading industrial lawyer, Professor Ron McCallum. In his submission to the recently completed Senate Inquiry, Professor McCallum noted that the provision is important because it 'enshrined in our polity the view that Australian citizens had the right to have the terms and conditions of their work as employees determined by an independent body which is neither beholden to capital, to trade unions or to the State ... While the role of our federal and State tribunals have altered over the century, independence and fairness has been their hallmark'.(23)

The practical scope of Commonwealth power has expanded over the past century by two principal means. First, a more generous interpretation of section 51(xxxv) by the High Court and a greater willingness of Commonwealth governments to test the limits of the High Court's liberality of approach. Secondly, the use by the Commonwealth of a range of other constitutional powers, those which on a plain reading do not relate to industrial or workplace relations.

These later statutory initiatives are not quite of the same character as more long-standing uses of other heads of power such as the trade and commerce power and the public service power. Earlier use of the non industrial powers (in the industrial arena) had been to expand the Commission's jurisdiction in areas seen as national industries such as maritime and stevedoring, airlines and Commonwealth public sector employment. More recent initiatives have either by-passed the Commission or offered it a less critical role.

The three volume Report of the Committee of Review into Australian Industrial Relations Law and Systems,(24) a tri-parite inquiry headed by leading economist Professor Keith Hancock,(25) recommended against the use of what the Committee called 'the exotic powers' of the Constitution to further widen the scope of Commonwealth's power over labour relations. The Hancock Committee noted that:

The use of 'exotic' powers carries a serious risk of antagonising the States and significant sections of the industrial relations community and might be counter-productive. Some 'artificial' limitations on the federal tribunal's powers can be released by co-operative actions of the Commonwealth and the States.(26)

In the period surrounding the completion of the Hancock Inquiry we have in fact seen all three courses canvassed by the Committee. Hence, there is now greater co-operation between federal and State industrial tribunals. One State,(27) Victoria, has partly referred its industrial powers to the Commonwealth. Perhaps more problematically, greater use has been made by the Commonwealth of what the Hancock Committee called the 'exotic powers'. Thus, for example:

  • Divisions 2, 3 and 5 of Part VIA of the Workplace Relations Act dealing with matters as diverse equal pay, termination of employment and parental leave, all rely to varying degrees on the Commonwealth's external affairs power [section 51(xxix)]
  • certified agreements and AWAs, the so-called secondary boycott laws (now largely dealt with under the Trade Practices Act) all rely on the corporations power (section 51[xx]) as do aspects of the 'freedom of association' provisions of the Workplace Relations Act
  • part reliance is placed on the trade and commerce power [section 51(ii)] to support a number of provisions of the Workplace Relations Act, eg the unfair contracts sections and provisions dealing with the formation of AWAs.

The use of powers other than the industrial relations power to give effect to Commonwealth labour relations policies was confirmed by the High Court in Victoria v Commonwealth (1996) 187 CLR 416. The Court, however, did strike down some provisions of the then Industrial Relations Act 1988 which underpinned aspects of the Keating Government's unfair dismissal regime.

Whilst the Court has clearly said that the corporations power can be used in the industrial relations field, it should not be thought that the scope for using powers such as the corporations power is either open-ended or, for that matter, clearly defined. In Re Dingjan; ex parte Wagner (1995) 183 CLR 323, for example, members of the Court made it plain that laws relying on the corporations power must have some particular connection with the types corporation ('trading', 'financial' or 'foreign') referred to in section 51(xx) of the Constitution.

Recent comments by the Minister for Workplace Relations, Mr Reith, indicate that the Government is contemplating a move to a more unified system of industrial and workplace laws reliant in large part on the corporations power.(28) These comments were restated on 30 November 1999 when the Minister announced that a taskforce had been formed within his Department to assist the Government with its thinking on such a proposal.(29)

Legislative Context

The principal Commonwealth statute dealing with workplace and industrial relations, formerly the Conciliation and Arbitration Act 1904 and the Industrial Relations Act 1988, was re-styled the Workplace Relations Act in 1996.

Together with its predecessors, that legislation has been subject to over 90 amending bills since 1956. The pace of legislative change has quickened and deepened in recent times with five bills since 1987(30) proposing major and global changes to the legislation whilst reflecting a disparate and at times conflicting array of philosophical approaches to labour relations. With the exception of the 1987 Bills, all five of these measures were examined extensively by Parliament and/or parliamentary committees, processes that absorbed considerable amounts of parliamentary time and energy. Amongst these major packages, Governments have introduced a plethora of legislative measures designed to promote better labour market outcomes or more efficacious industrial relations. In 1999 alone, apart from a package of three Bills with significant implications for Commonwealth public sector employment relations, there have also been stand-alone bills dealing with stevedoring and the waterfront, youth wages, unfair dismissal, employee superannuation, defence force leave, employment arrangements in the Australian Federal Police, tradesmen's (sic) rights regulation and equal opportunity for women in the workplace.

A short chronology

Whatever else may be said, critics of the Bill had little basis for arguing that they had been taken unawares by the content of the proposed legislation.

Significant features of the Bill were outlined in the Coalition's workplace relations 1998 Election manifesto More Jobs, Better Pay released in September 1998 towards the end of the campaign.(31)

The election commitment drew on already published material such as the August 1988 Ministerial Discussion Paper, 'Approaches to dispute resolution: a role for mediation?'(32) and foreshadowed further changes in areas such as youth wages and unfair dismissal. These were picked up in separate pieces of legislation introduced in 1999.

In November 1998, Minister Reith released an information paper prepared for the Australian Labour Minister's Council by Mr Des Moore, Director of the Institute of Private Enterprise, investigating the benefits of further labour market de-regulation. Reports released by the OECD and the Productivity Commission also made a contribution to policy formation at this time.(33)

On 3 December 1998, the Minister for Workplace Relations wrote to the Prime Minister further outlining his plans for revamping labour relations, including greater use of the corporations power in industrial relations and further entrenching what he described as the gains from the passage of the 1996 Act. As already noted, the letter and the Prime Minister's response of 7 February 1999, were released by Mr Reith on 17 February 1999.

On 4 February 1999, Minister Reith indicated that the Government would be proceeding to implement legislation based on its 1998 election statement, More Pay, Better Jobs, noting that in his view it had 'a clear mandate to implement these reforms.'(34) On 24 March 1999, the Minister gave a further major address, this time to the National Press Club outlining more far reaching (and arguably less evolutionary) changes to the industrial relations system, principally in proposing a move to a more unified system of regulation of workplace relations.(35)

In May 1999, a major Departmental implementation/discussion paper on changes to the Workplace Relations Act was released building on the commitments and policies outlined in the 1998 election statement, More Pay, Better Jobs. Apart from measures to be included in the present Bill, the implementation paper also foreshadowed as yet to be introduced legislation dealing broadly with registered organisations, specifically in relation to union rules, finances and reporting requirements.(36)

On 10 June 1999, the Office of the Employment Advocate released the report by the Wallis Consulting group on de facto compulsory unionism.(37)

The present Bill was introduced on 30 June 1999. On 11 August 1999, prior to passage in the House of Representatives, the substance of the Bill was referred to the Senate Employment, Workplace Relations, Small Business and Education Legislation Committee.

Fifty-two Government sponsored amendments to the Bill were carried prior to the passage of the proposed legislation through the lower House on 29 September 1999.(38)

On 24 October 1999, Minister Reith appeared on the Sunday Program, and indicated that he was still interested in pursuing the goal of a unified system of workplace relations:

REPORTER:
Does this, then, increase your interest in the idea of a new industrial relations system nationally, based on the federal government's corporations power in the Constitution?

REITH:
Oh, it certainly does. And there was a very interesting speech by Andrew Murray last week, on behalf of the Democrats which, well, it didn't demand that we move to a national system based on the corporations power, but it certainly set out the case for that move.

I've been pushing at it and I have announced this weekend that we will be establishing a taskforce within my department, to prepare discussion papers, to look at this issue in finer detail. So, there's no doubt that the Bracks election, plus the Democrats, sort of, holding out the prospect of supporting such a move, has given the whole thing a big kick along.

REPORTER:
Now, if the states fought you on this, could you beat them? Could you override them?

REITH:
We certainly have the constitutional power to establish a national system based on the corporations power. As to how you deal with the states, that would be, you know, that's, sort of, one of the options, one of the issues to be looked at. You could have the system as we've got it today, Laurie, based on the corporations power.

In that sense there could be, you know, little change to the state's systems, but I do think we've got to be reducing red tape, particularly for small business. And this is a direction in which we ought to be looking very closely.(39)

On 29 November 1999, the Senate Employment, Workplace Relations, Small Business and Education Legislation Committee tabled its report. The Committee split along party lines with the Australian Democrat, Senator Andrew Murray, as discussed above, coming down against major elements of the Bill.

The Bill was briefly debated in the Senate later that evening and survived an attempt to defeat it on the Second Reading.(40)

By Wednesday 1 December, the Bill was widely regarded as being 'in tatters'(41) and it was reported that it had been 'pulled' from the Senate Program for 1999.(42)

On 3 December 1999, Senator Lyn Allison (Australian Democrats) issued a media release indicating that they were prepared to negotiate with the Government on its proposed legislation to extend award protection to approximately 600 000 award-free workers in Victoria.(43)

There were suggestions that talks between the Australian Democrats and the Government would take place in the week beginning 5 December1999.

Main Provisions/Further Reading

There is no shortage of commentary on the Bill and further detailed comment can be kept until the legislation is revived or reintroduced in amended form in 2000.

Apart from the 208 page Explanatory Memorandum, there is also the 400 page Senate Committee Report referred to throughout this Digest. Many of the 500 submissions, including those from all the major interest groups, received by the Senate Committee also provide a useful contribution to understanding the Bill.

In addition readers might refer to the following:

  • Discussion Papers issued by the Department of Employment, Workplace Relations and Small Business. Of particular interest is a recent paper dealing with the Government's foreshadowed legislation on registered organisations, 'Accountability, Democratic Control of Registered Industrial Organisations'.(44)
  • Other commentaries including those prepared for Workforce, and for the Industrial Relations and Management Newsletter and a 'Critical Analysis of the Reith Proposals' (humbly) prepared by '80 of Australia's Leading Industrial Barristers and Solicitors', are collected at the Parliamentary Library's intraNet site.(45)

Concluding Comments

Earlier in this Digest reference was made to both the volume of labour law enacted at the federal level under this and previous Governments. Industrial laws are generally enacted:

  • to clear up legal uncertainties
  • in the hope of producing better economic outcomes
  • to re-balance the bargaining power/position of the parties (labour and capital).

Critics of the present Bill have argued that its key purpose is to enhance the bargaining power of employers at the expense of unions and the workforce in general. There is some argument that the 1996 Act has in fact led to better economic outcomes but it is beyond the scope of this Digest to canvass these questions in detail.

The point may be made, however, that centralised and de-centralised systems have each produced good and poor results in Australia. Earlier international research suggested that it is the mixed or hybrid systems that perform less effectively from a purely economic perspective than either of the polar opposites, ie the corporatist (regulated) or market ('de-regulated') models. Later research suggests that agnosticism may be the best position on these matters. It is one thing to say that a particular caste of industrial relations system is associated with a particular outcome and another matter entirely to say that it is responsible for it. (46)

More generally, however, it is not entirely clear that this torrent of labour law has produced better economic outcomes, fairer, and more rewarding workplaces, or made it any easier for workers to strike a better balance between their working lives and their private lives.(47) Constant changes to the law may have reached a point where they have the perverse effect of working against the development of a 'change culture' by inhibiting medium to long term planning and contributing to general uncertainty and a perceived lack of security.(48)

What is clear is that federal labour law has become lengthier, more complex, and more technical, a point recognised by the present Minister.(49) Combined with the operation of dual federal and 5 State systems, even in relatively simple matters such complexity costs thousands of dollars to individual employers, workers and their representatives.(50)

The present Bill arguably would add to both the complexity as well as the length of the Principal Act.

A 'New Wave' or the Last Wave?

At the time of writing, and as noted above, it appears that the Government may not proceed with the present Bill.

The fate of any further legislation (which may include elements of the present package) also remains unclear.

The position taken by the Australian Democrats on the legislation would suggest that only minor portions of the Bill would pass both Houses in whatever form they may be re-introduced. Senator Murray has expressed particular interest in promoting changes to the federal laws governing Victorian private sector employees who are presently within the scope of matters covered by Schedule 15 in the Bill. At the same time he has noted that not all the changes embodied in that Schedule could be treated as 'positive'. Moreover, he has expressed a willingness to ensure that better minimum standards are available to all Victorian workers than those presently available to those 600 000 or so employees covered by Schedule 1A of the Workplace Relations Act 1996 (Cwth).

In any event, the provisions of the Workplace Relations Act in question were enacted by the Commonwealth by virtue of powers referred to it by the Government of the State of Victoria. That referral is governed by an inter-governmental agreement that requires consultation between the parties and also provides that the Victorian Government retains the capacity to revoke the referral unilaterally by the Victorian Governor making an Order in Council. Clause 7 to that agreement further provides that '[e]xcept by written consent by Victoria, if the Commonwealth proposes to amend or repeal any provision of Part XV of, or Schedule 1A to, the Commonwealth Act, it will give not less than 6 month's notice in writing of the proposal to Victoria.'

Senator Murray has also shown support for the idea of developing a unified national system of industrial relations but has not specified the mechanics or the constitutional underpinning of such a system.(51) Senator Murray's dissenting Report on the Bill, however, hints at a number of possible proposals that the Australian Democrats may support. These are:

  • a refining the 'no disadvantage test' to include a second distinct element or additional threshold. That second threshold test could cover agreements which include trade-offs that increase either the number or the span of hours worked by employees affected. Such a test may address some concerns about the effect of bargaining on the balance between work and family (or, more inclusively, 'work and private life')
  • building mediation into existing conciliation processes
  • establishing agreed codes of practice to regulate union visits to businesses.(52)

As also noted earlier, the Government itself has also suggested further 'evolutionary' changes, including proposed legislation dealing with registered organisations. More ambitious proposals involving greater reliance on what the Hancock Committee called the 'exotic' constitutional powers are under consideration, principally the Commonwealth constitutional power in respect of the activities of certain types of corporation.

The theoretical arguments for a single national system of industrial laws are compelling. Albeit 90 years in the making, and recently rocked by the over-turning of cross-vesting legislation (see below), the savings and efficiencies flowing from a national system of company law have not been seriously questioned.

A single set of labour laws would reduce complexity and reduce costs, particularly for businesses operating in more than one market/jurisdiction.

Whether a truly unified system is achievable remains to be seen. Apart from any union opposition, it would not be surprising to see some State Governments oppose such a move. Some employers, who are relatively comfortable with existing arrangements and 'personalities' in State-based unions, might also be less than enthusiastic about any move to a single national system.

Use of the corporations power would not of itself produce a single national system as employees of sole traders and partnerships, State public servants and others employed by even some incorporated bodies would not come within the ambit of the corporations power.

Executive salaries, however, would on the presently accepted reading of section 51(xx) be subject to possible control by federal government regulation.

The dangers of underpinning a legislative scheme using what may prove to be an unstable cocktail of constitutional powers recently has been brought home with some force. (It will be recalled that on 17 June 1999 the High Court struck down certain aspects of two cross-vesting schemes.(53) Under these schemes, the Commonwealth, the States and the Territories conferred jurisdiction on each other's courts. In Re Wakim(54) the High Court said that neither the Commonwealth nor the States can confer State jurisdiction on federal courts because federal courts can only be empowered to hear matters provided for in Chapter III of the Constitution.(55))

Alternatives to such backdoor approaches to shifting responsibilities between the States and the Commonwealth are either the referral of powers under section 51(xxxvii) of the Constitution or constitutional amendment. The former mechanism was relied on for the partial incorporation of the Victorian industrial relations system into that of the Commonwealth in 1996. The latter path, constitutional amendment, as much as it may appeal to supporters of direct democracy, has proven hazardous in the past.

Nonetheless, the Attorney-General, Hon Daryl Williams, has announced that the Government is contemplating, as one of a number of options, a constitutional referendum to coincide with the next federal election to overcome the cross-vesting problem created by Re Wakim.(56) There would appear to be no technical reason why a referendum enlarging the Commonwealth's explicit industrial powers could not be held at the same time.

Endnotes

  1. The Digest complements the material drawn together by Stephen O'Neill of the Economics, Commerce and Industrial Relations Group at http://libiis1/services/clientindex.htm

  2. If not always correctly. Every system of labour relations in Australia has always contained strong elements of de-centralised bargaining, eg common law contracts and over-award payments.

  3. For example, it was not until the 1980s that the High Court finally made it plain that white -collar workers such as teachers came within the jurisdiction of the Commonwealth tribunal. At various stages prior to that the Court had given a narrow construction to the term 'industrial' in section 51 (xxxv) of the Constitution, including a view that those not engaged in 'manual' or industry-like activities were outside the scope of the Commonwealth's industrial power. Refer Neil Gunningham, Industrial Law and the Constitution, Federation Press, 1988, especially pp. 82-129. George Williams, Labour Law and the Constitution, Federation Press, 1998, especially pp. 68-85.

  4. ABS, Catalouge No.6315.0.

  5. Which addresses its critique to the later and less heavily centralised era of the Hawke and Keating Governments.

  6. Productivity Commission, Annual Report 1997-98, p. 10.

  7. For further elaboration on this argument see Des Moore, 'The Case for Further Deregulation of the Labour Market', Research Paper for the Labour Ministers' Council, November 1998.
  8. Department of Employment, Workplace Relations, Small Business and Education, Submission to Senate Committee, Submission No.329, September 1999. Industrial Disputes, ABS (Cat Nos. 6321 and 6322).

  9. Workforce/ACIRRT, IR Intelligence Report, Issue 5, 1999, pp. 7-9.

  10. Senate Employment, Workplace Relations, Small Business and Education Legislation Committee, Consideration of the Provisions of the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999, 29 November 1999, pp. 26-29.

  11. ibid, p. 390.

  12. ibid, p. 156.

  13. ibid, p. 175.

  14. ibid, p. 184.

  15. House of Representatives, Parliamentary Debates, 30 June 1999, p. 7853.

  16. ibid, 2 September 1999, p. 9841.

  17. ibid, 28 September 1999, p. 10815.

  18. But see also Media Releases of 6 May 1999 and 9 July 1999, respectively by Senators Andrew Murray and Meg Lees. These show the Australian Democrat spokespersons expressing grave concerns about the proposed legislation at a relatively early stage.

  19. ibid, 29 November 1999, p. 10732.

  20. ibid, p. 10731.

  21. Media Release, 'Democrats toughen opposition to Workplace Relations Bill', 30 November 1999.

  22. Arguably, the law is further lengthened and complicated by the degree to which governments have sought to issue legislative 'directions' to the AIRC in relation to when and how it should exercise its discretions under the Principal Act.

  23. Submission No.90, Senate Employment, Workplace Relations Legislation, Small Business and Education Legislation Committee, Inquiry into Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999, September 1999, pp. 270-271.

  24. AGPS, April 1985.

  25. Other Members of the Inquiry were Mr George Polities and Mr Charlie Fitzgibbon.

  26. Hancock Report, volume 2, p. 334.

  27. Some leaders such as the then Premier of NSW, Hon Neville Wran QC, have contemplated the idea. (Refer: Australian Financial Review Seminar, 'Prospects for Arbitration, the Significance of the Hancock Report', 5 June 1985; and Address, Annual Convention of the Industrial Relations Society of South Australia, 1980.)

  28. Hon Peter Reith, Letter to the Prime Minister, 3 December 1998, p. 9. (This document was released officially by the Minister to the media on 17 February 1999.) Hon Peter Reith, Address to the National Press Club, 'Getting the Outsiders Inside - Towards a Rational Workplace Relations System in Australia', 24 March 1999, pp. 11-13; and Interview with Laurie Oakes, Sunday Program, 24 October 1999, http://sunday.ninemsn.com.au/

  29. Hon Peter Reith, Keynote Address to the National Key Centre in Industrial Relations, Monash University, 'Workplace Relations - The Reform Debate', esp pp. 13-14.

  30. Industrial Relations Bill 1987 and Industrial Relations (Consequential Provisions) Bill 1987, Industrial Relations Act 1988 and Industrial Relations (Consequential Provisions) Act 1988, Industrial Relations Reform Act 1993, Workplace Relations and Other Legislation Amendment Act 1996 and the Workplace Relations and Other Legislation Amendment Bill (No.2) 1996 and the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999.

  31. For a somewhat uninspired reaction to the proposals, refer: Ross Gittins, 'Second wave of IR reform seems more like a dribble', The Age, 10 October 1998, p. 3.

  32. See: http://www.dewrsb.gov.au/ministers/reith/mindisc1.htm

  33. See Hon Peter Reith, Media Release, 'OECD Economic Survey of Australia - Workplace relations', 18 December 1998.

  34. Speaking at seminar organised by the legal firm Freehill, Hollingdale and Page. 'The Workplace Relations Act 1996 - Progress to date and the need for further reform', p. 8.

  35. Speech entitled, 'Getting the Outsiders inside - Towards a rational workplace relations system in Australia'.

  36. Hon Peter Reith, 'The continuing reform of workplace relations: Implementation of More Jobs, Better Pay', Implementation/Discussion Paper, May 1999.

  37. http://www.oea.gov.au/ums_fs.htm

  38. Sixty-four Opposition amendments were defeated.

  39. http://www.Sunday.ninemsn.com.au

  40. Senate, Parliamentary Debates, 29 November 1999, p. 10760.

  41. Australian Financial Review, 1 December 1999, p. 8.

  42. Canberra Times, 3 December 1999.

  43. 'Democrats prepared to deal with IR Legislation to fix Victorian awards'. Senator Allison's release noted that the new Victorian Minister Industrial Relations, Hon Monica Gould, had written to Senator Andrew Murray requesting assistance to allow for federal common rule awards to cover Victoria workers.

  44. http://www.dewrsb.gov.au/ministers/reith/mindisc1.htm

  45. http://libiis1/services/clientindex.htm

  46. Lars Calmfors, 'Centralisation of Wage Bargaining and Macroeconomic Performance: A Survey', Economics Department Working Papers No.131, OECD, 1993; Giuseppe Bertola and Andrea Ichino, 'Crossing the river: a comparative perspective on Italian employment dynamics', Economic Policy, October 1995, pp. 359-420. OECD, Employment Outlook, July 1997, Chapter 3.

  47. See preceding discussion of comparative economic outcomes at the end of the Menzies era and those in the 1990s under a re-regulated and less centralised and partially de-collectivised workplace relations regime. On the meshing of work and private life see: ACIRRT, Australia at Work, Prentice Hall, 1999.
  48. Ron Callus, 'The future of Australians at Work', Alternative Law Journal, June 1999,
    pp. 150-153.

  49. Hon Peter Reith, op cit, May 1999, p. 2.

  50. See also: Hon Peter Reith, Address to the National Press Club, 'Getting the Outsiders Inside - Towards a Rational Workplace Relations System in Australia', 24 March 1999.

  51. Senate, Parliamentary Debates, op cit, 29 November 1999, p. 10732.

  52. Senate Employment, Workplace Relations, Small Business and Education Legislation Committee, Consideration of the Provisions of the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999, 29 November 1999, pp. 389-400.

  53. The first scheme was found in the Jurisdiction of Courts (Cross-Vesting) Act 1987 of the Commonwealth, the States and the Northern Territory. The second was found in the Corporations Act 1989 (Cwlth) and the Corporations Act of each State and the Northern Territory. Solutions to the difficulties caused by the decision have been the subject of discussions between the Commonwealth and the States. The Commonwealth Attorney-General has foreshadowed the possibility of a constitutional referendum at the next Federal Election. Another possibility is a referral of powers from the States to the Commonwealth under section 51(xxxvii) of the Commonwealth Constitution. See Andrew Burrell, 'Referendum proposed for a national courts system,' Australian Financial Review, 15 November 1999.

  54. Re Wakim; Ex parte McNally, Re Wakim; Ex parte Darvall, Re Brown; Ex parte Amman, and Spinks v. Prentice (1999) 163 ALR 270.

  55. For a detailed commentary see Graeme Hill, 'The demise of cross-vesting,' Federal Law Review, 27(3), 1999, pp. 547-75.

  56. Australian Financial Review, 15 November 1999.

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7 December 1999
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