Chapter 3 - Opposition Senators' Report
3.1
This report is written in response to the latest set of amendments to Australia's
unfair and unbalanced workplace laws. And like preceding changes, this
legislation is driven by an extreme set of beliefs and cold-hearted politics.
However, this is the first set of changes that is solely focused on the
political survival of the Government and driven purely by public perceptions.
The subsequent illusion of repositioning drives the substance and navigation of
these changes.
3.2
The current Federal Government has taken historic revisionism and
hypocrisy more generally, to new and unprecedented heights. The previous Labor Government's
reforms of industrial relations in the early 1990s were based on workplace
level collective bargaining as a means of driving productivity gains. This was
a distinct move away from the long standing institutions and arrangements that
dated back to the era of Federation, and a move towards permitting people who work
as a team negotiating as a team. But for all of their baseless commentary of
the preceding administration, the current Government is in the process of
creating their very own bureaucratic Gordian Knot. Not only do these changes
require nearly 700 new inspectors and analysts to respond to an issue of
'perceptions', but it is on top of the existing 900 pages of the Workplace
Relations Act. These complicated, incapacitating and unfair laws will never be
amended back to a fair and balanced set of laws. They can only be replaced.
Conduct of the inquiry
3.3
Unfortunately, the Government's disregard for due committee processes
has become the norm following its attainment of a majority in the Senate. On
this occasion, the Government has rushed through this bill as a consequence of
evidence of increasing popular discontent with its Work Choices 'reforms'.
3.4
In its customary way, the Government has given the committee very little
time in which to consider the legislation. It dictated its terms for the
inquiry with even more arrogance than usual. The Government announced the
reference of the bill on 10 May, 18 days prior to the actual introduction
of the legislation. This left submitters with seven days to consider the bill
and provide submissions. The committee only had 10 days in which to consider
submissions, conduct a public hearing and produce a report.
3.5
These timeframes have also not been sufficient to allow members of the
public to properly consider the changes and represent their views and interests
to the committee in the form of submissions. This was noted by many of the
submissions and evident in the number of late submissions. Further, the single
day allocated for a public hearing also has not been conducive to a proper
consultation with the public about the potential implications of the bill. The
only real reason for the Government's urgency is to circumscribe Senate
scrutiny while providing a pretext of its observation. Despite the Government's
justifications for the urgency, the bill will have retrospective application
through the back-dating of the provisions.
3.6
Despite the short-time frame for the inquiry, the submissions and the
public hearing process identified numerous problems with the legislation.
However, the committee's majority report has ignored many of the concerns and
recommendations that emerged through these processes. This was also the case
during the original 2005 inquiry into Work Choices. The Government's timeframes
for the current inquiry were never designed to take advantage of the
consultation inherent in the committee process to redress the problems with the
bill. The disregard for the consultation process was also evident in the
advertising campaign, which was explaining legislation before it was introduced
and parliamentary debate or committee inquiry were able to redress problems.
3.7
Opposition members of the committee also have been frustrated by the overtly
partisan nature of the advertising campaign that has surrounded the inquiry,
especially considering it has occurred during the lead up to the election. The
Government maintained that the purpose of the advertisements has been to
explain the detail of the changes to Work Choices. However, if the Government
was genuinely motivated by an intention to explain the legislation, it would
have waited for the legislation to be drafted. The campaign was designed to
inform the public of a policy change, rather than legislative change. This did
not assist decent employers who were seeking genuine information with hundreds
of AWAs being formulated on a daily basis. There were almost 21 000 AWAs
formulated between 7 May 2007 and the introduction of the legislation on 28 May 2007.
3.8
The advertisements have been an attempt to promote an unpopular
Government policy with the use of tax payer funds. This Government has a proven
record of using such tactics to promote unpopular, unfair and divisive policy—as
opposed to explain legislative changes—as was seen with the $55 million
campaign for the original Work Choices bill. The seriousness of the Government's
misuse of public moneys has been compounded by the fact that it has occurred during
an election year.
Background to the bill
The Government's workplace
relations system
3.9
The industrial relations system devised by the Government has
fundamentally wound back safety net provisions that had been won over many
years, and which accounted for long established international labour standards.
Consequently, the Government has left employees more vulnerable to
exploitation. The Government's amendments are an acknowledgement that AWAs have
eroded standards of living, left many workers worse off and have attacked traditional
values and quality of life. They have created an industrial relations system
where the basis of social justice and 'a fair go', or protection for society's most
vulnerable workers have been undermined.
3.10
The flexibility often promoted as the benefit of the Government's
industrial relations policy is one-sided and mostly delivers flexibility to the
benefit of employers. The rhetoric associated with 'flexibility' as the most
desirable characteristic of workplace agreements is wilfully misleading. There
is rarely any real negotiation, with employees often faced with the prospect of
signing an AWA as a condition of employment. Most AWAs are standardised
documents that do not take account of an individual's circumstances.[1]
Indeed, the burden on employers to negotiate AWAs in good faith would be quite
onerous if the Government's rhetoric was to be believed. The tacit
understanding between the Government and employers is that theory may be
quietly laid aside so that companies can simply impose their agreements.
3.11
The Government's legislation has made it easier for employers to remove
entitlements and undercut wages. Those on collective agreements can be paid
less or denied promotions and other benefits only available to employees on
AWAs, as a coercive measure to force them on to AWAs. But in many cases the
benefits of AWAs are only short term benefits, designed to destroy collective
bargaining and to disempower workers and as a prelude to forcing down wages and
entitlements. As Mr Joe Lazzaro submitted to the inquiry, often 'an ordinary
individual worker cannot bargain properly with bigger employers'.[2]
3.12
This is a deliberate policy on behalf of the Government, as it believes
the rate of employment is dependent on the cost of labour. However, the
relationship between wage levels and the employment rate is more complex than
has been set out in the Government's propaganda. Its position that driving down
wages will result in a reduction in unemployment is not only unfair but is not
supported by research.
3.13
The Government's rhetoric about a supposed link between individual
agreements and productivity improvements is not supported by the evidence. AWAs
only deal with pay and conditions of employment, not to practices that promote
high productivity. In fact, although Australia was a leading country in labour
productivity during the 1990s, productivity has not improved under the current
Government.
3.14
The only economic evidence the Government provides to promote its
workplace relations system is broader and unrelated evidence pointing to the current
strength of the economy. However, this has not been the result of the
Government's unfair workplace relations changes, but rather global and regional
economic growth driven by the rise of China and India, the resources boom and
reforms instituted by Labor Governments in the early 1990s.
Data on the progress of Work
Choices
3.15
Empirical evidence on the performance of Work Choices and AWAs does not
support the Government's assertions about their benefits for workers. Some of
this evidence was heard during the public hearing and noted that collective
agreements deliver better wages and conditions than individual agreements.
Nevertheless, this has not stopped the Government drawing the unsubstantiated
link of Australia's economic success to its industrial relations policy. The
data on the adverse effects of Work Choices is concerning, especially as the most
serious of the consequences will not be felt until the economy experiences a
downturn.
3.16
While the Government has withheld data on the effects of Work Choices, information
leaked in April from the Office of the Employment Advocate—to be renamed the
Workplace Authority under the bill—highlighted the adverse consequences.[3]
The leaked information suggested the majority of AWAs were abolishing employee
entitlements in regard to shift loadings, annual leave loadings, incentive
payments and bonuses and declared public holidays. In most cases, this has
affected employees in already very low-pay industries. According to the data, a
third of the individual agreements lodged during the first six months of Work
Choices did not provide for a pay rise during the life of the agreement—not to
reward productivity increases—or even to keep pace with inflationary rises in
the costs of living. This is particularly worrying because the Government
allows AWAs a life of up to five years. While some of the agreements allowed
for pay rises of more than the minimum rates, there was no indication of
whether these were sufficiently high to compensate for the benefits stripped
away. The reports also suggested 27.8 per cent of the agreements did not
include entitlements provided in the Fair Pay and Conditions Standard.[4]
3.17
Most independent commentators have argued that the workplace relations
system of the Government is neither equitable nor balanced.[5]
In particular, the Victorian and Queensland Governments have produced
preliminary reviews of the effects of the legislation. In January 2007, the
Queensland Industrial Relations Commission published its report following an inquiry
into the effect of Work Choices in Queensland. The report noted that:
The inquiry has serious concerns about the social and economic
impact of Work Choices....The Inquiry is strongly of the view that the most severe
impact of Work Choices will be felt by those less skilled and vulnerable
workers identified in this Report.[6]
3.18
The report highlighted the increased insecurity and vulnerability to
exploitation experienced by workers. It argued:
The evidence before the Inquiry has highlighted a trend towards
lower wages and conditions of employment through the use of Australian
Workplace Agreements (AWAs) as the relevant industrial instrument governing
employment. In the AWAs reviewed and from the evidence before the Inquiry, the
only outcomes evident are lower wages and conditions for employees. There has
been no evidence whatsoever of reciprocal productivity and flexibility gains
for employees and employers to justify such one-sided outcomes.[7]
3.19
In a March 2007 review for the Victorian Government on the progress of
Work Choices, Professor David Peetz found that the wages share of national
income was at a 35-year low, while the profit share was at an all-time high. He
indicated that this was an extremely unusual occurrence in an economy
experiencing low unemployment and labour market shortages.[8]
He also found that protected award conditions were being abolished and that the
lowest-paid employees were the most disadvantaged. Wages declined in low paid
industries such as retail and hospitality, probably due to this increasing withdrawal
of overtime and penalty rates.[9]
Professor Peetz found that 'Women are particularly disadvantaged under AWAs'.[10]
The study concluded that:
Under WorkChoices, AWAs and, it appears, other non-union
agreements have led to the loss of conditions of employment, particularly in
areas like penalty rates, overtime rates and shift allowances. This has very
likely led to lower rates of pay than workers would otherwise have enjoyed,
particularly by comparison with if they were employed under collective
agreements. The hourly rates of pay for workers on AWAs are, on average, lower
than those for workers on collective agreements, but the impact on particular
employees depends on their position in the labour market, in particular whether
the particular skills they have are in short supply and the alternative
employment opportunities available to them locally. Vulnerable groups,
including women and workers in low wage industries, appear to have been
particularly disadvantaged.[11]
3.20
Lower wages and reduced conditions will not be an incentive for
increasing work participation, especially with disillusioned young people,
older workers on the verge of retirement or managing their exit from the
workforce, and carers with family responsibilities seeking to re-enter the
labour market. Many will find the jobs unsatisfactory either because of poor
wages or being compelled to work excessive and unsocial hours, forcing them to
drop out of the labour market with a sense of failure and reduced inclination
to try again. The Government's workplace relations system is yielding a less
fair society with an increased population of working poor experiencing greater
inequality.
3.21
The Opposition is concerned that the deleterious effects of AWAs is
increasingly affecting the proportion of workers to whom they apply. Natural
turnover is increasing the shift of workers onto poorer working conditions.
Motivations for the Stronger Safety
Net bill
3.22
The Government's amendments have acknowledged the Government's
industrial relations policy has hurt working families. However, the amendments
themselves have simply been motivated by awareness that the Work Choices
legislation is endangering the Government's chances of re-election. Less than
one month before the stronger safety net provisions were announced, senior
Government ministers denied the need for any amendments to the legislation. One
week before the fairness test was announced, the Minister for Employment and
Workplace Relations, the Hon Joe Hockey MP, said on The 7:30 Report that:
Look, I'm prepared to debate the Labor party's policy because
they're promising a revolution in the workplace. We, our laws are set, we are
not for turning on the fundamentals Kerry, because those fundamentals are helping
to deliver a strong economy, a robust economy. But the Labor party is going to
the next election and it says it's going to tear up more than one million
agreements out there between workers and employers. One million agreements, Kerry.[12]
3.23
On 22 May, Mr Hockey asserted that the Government 'under-estimated' the
potential for employees to be pressured into trading away penalty rates without
fair compensation.[13]
This is another example of the Government's dishonest attitude on the issue, as
it was always aware that its Work Choices reforms would result in downward
pressure on the wages of ordinary workers. Further, the example of Billy used
in the Government's own information booklet on Work Choices highlights that
this was advocated by the Government. It stated:
The job offered to Billy is contingent on him accepting an AWA.
The AWA Billy is offered provides him with the relevant minimum award
classification wage and explicitly removes other award conditions....The AWA
Billy is offered explicitly removes award conditions for public holidays, rest
breaks, bonuses, annual leave loadings, allowances, penalty rates and
shift/overtime loadings...Because Billy wants to get a foothold in the job
market, he agrees to the AWA and accepts the job offer.[14]
3.24
This is exactly what industry was calling for. After all, why would the
Government abolish the no-disadvantage test unless it intended to allow wages
and conditions to be reduced and allow for the exclusion of all award
conditions including so-called protected award conditions?
3.25
The Government is reminded that during the 2005 inquiry into Work
Choices, the Opposition warned that the consequence of abolishing the no‑disadvantage
test was that it would lead to a reduction in the wages of low‑income and
women workers, and poor and disadvantaged people. The no-disadvantage test maintained
a balance in the employer-employee relationship and provided a crucial
impediment to some employers seeking to drive conditions below the award entitlements.
It was especially important to protect workers in low-wage employment, with
little unionisation and little opportunity for genuine collective bargaining.
The Government's intention to allow the driving down of workers' conditions was
the specific purpose for the Government's creation of a safety net with fewer
minimum conditions and to allow the award safety net to be undermined.
3.26
Therefore, it is clear that the Government does not believe in the
provisions or the need for protections for working families. Consequently, the
Opposition remains concerned about potential for the provisions of the bill to
be repealed immediately following the election. In press conferences announcing
the reforms, the Prime Minister, the Hon John Howard MP, and Mr Hockey, made it
clear they did not believe in the improved safety net provisions but that they
needed to be introduced to address unfortunate public perceptions. The changes
have been introduced reluctantly and in an attempt to appease voters by
creating a perception of addressing the unfairness of Work Choices.
The stronger safety net provisions
3.27
The extensive data on the adverse consequences of the Government's
workplace relations reforms for ordinary workers suggest that improvements are
necessary to strengthen a safety net. The Opposition supports the principle of
restoration of safety net entitlements, especially considering the widespread
attack that has occurred under the Government's industrial relations policy, most
notably under Work Choices. However, despite the Government's substantial
rhetoric and a change of names to convince the public of good intentions, the
substance of the legislation does not provide the purported protections and
does not go nearly far enough to restore employee entitlements.
3.28
Despite claims from DEWR during the inquiry that the fairness test is
more robust than the former no-disadvantage test, the Opposition considers the fairness
test to be a poor substitute. It does not apply to all employees, does not
guarantee monetary compensation for traded benefits, does not apply to all
award conditions, is subjective, is resource intensive and imposes a large burden
on business, particularly small business. The bill also does not address the
fundamental aspects of its workplace relations system that allow the winding
back of what should be guaranteed conditions.
3.29
As has been explored at other inquiries into the Government's workplace
relations legislation, the Opposition retains substantial concerns about
employees being subjected to pressure to accept AWAs, which remove protected
award conditions. The Government has refused to acknowledge the myriad examples
of such cases across the country. As the Government advocates AWAs, it is not
in a position to take a disinterested view of the way employees and employers
negotiate.
Conditions excluded from the safety
net
3.30
As was heard during the inquiry, the reference of the fairness test to
only the limited number of protected award conditions is insufficient to
provide a genuine safety net for the majority of Australian employees. There is
a range of conditions that should be considered part of a safety net that have
not been covered or not restored by the bill. For instance, the Government has
not restored protections to workers from unfair dismissal, redundancy pay,
ceremonial leave, long service leave, required notice for shift and roster
changes, and paid parental leave. The inquiry heard numerous examples of
workplace agreements, which have excluded many award conditions with little or
no compensation. The bill does not do enough to ensure that this practice will
not continue.
3.31
Opposition members of the committee consider that a modern, simple award
system that provides a genuine safety net for bargaining is the best model for
providing minimum protections while accommodating the diverse conditions
relevant to different industries and workplaces. In particular, the inquiry
heard from the MEAA, the ANF and NSW Commission for Children and Young People
about the disproportionate effects on certain demographics or certain
industries as a result of the exclusion of important conditions from the protections
under the Act.
3.32
Many of these conditions are specific to certain industries, but are
crucial aspects of employees' entitlements in those industries. The MEAA
provided various examples pertaining to the entertainment industry where work
is irregular, contract-based and often involves multiple employers in different
cities. This highlights the need for notice of cancellation of work,
compensation for accommodation expenses for short-term engagements if residence
is in another city, notice for requirements to smoke or work in smoking
environments, and the issue of intellectual rights and entitlements to consent
or royalties with respect to use of work.[15]
Employees not protected by the
safety net
3.33
Despite the Government's misleading assurances, many workers will
continue to have no protections under the bill. Approximately 2.5 million
workers will not be covered by the fairness test, and this number will
increase. While the introduction of the bill is an admission that Work Choices
has seriously and unfairly disadvantaged many workers, the Government has no
intention of assisting the numerous workers excluded from the protections,
especially those who do not meet the annualised income threshold and those on agreements
prior to the 7 May. The Government is effectively conceding the workers on
agreements made between 27 March 2006 and 6 May 2007 are on unfair agreements but is allowing them to be so bound, potentially until 2012. As these
agreements were lawfully made at the time, the relevant employees are not
entitled to compensation for the unfairness of these agreements.
3.34
An instance of workers seriously disadvantaged that will not be offered
protections by the bill was provided to the inquiry by the ANF. It noted that
many nurses had lost substantial benefits and protections between March 2006
and May 2007. It provided an example of a real non-union collective agreement,
not due to expire until 2010, applicable to a large number of workers in the Northern
Territory. The agreement abolished a large range of key award entitlements
including penalty, overtime, on-call and public holiday rates; annual leave
loading; uniform, meals, vehicle and travelling allowances; redundancy; higher
duties; meals; minimum time off between shifts and payment for jury service. It
did not provide compensation for the loss of these entitlements or a pay rise
over the life of the agreement and prescribed the minimum pay of the Standard.[16]
These employees receive no benefit from this legislation.
3.35
The Opposition remains particularly concerned that although the bill
prevents reductions in the $75000 threshold, increases are not guaranteed in
the legislation. This will have the practical effect of allowing a watering
down of the protection, as the value is not indexed to rises in inflation, the
costs of living or minimum wage increases. Inevitably it is likely that workers
on average wages will be pushed over the threshold, thereby losing the
protection and further undermining the genuineness of what little protection is
provided.
3.36
Opposition members of the committee also remain concerned by the
potential exclusion of employees not usually regulated by an award. Estimates
of the number of workers excluded amounted by over a million according to the
ACTU.[17]
The SDA argued that this would exclude 73 per cent of employees in the retail industry,
which is one of those most in need of such protections.[18]
Various submitters also highlighted that section 52AAA would also exclude many
workers whose employment was governed by NAPSAs, unless this was immediately
prior to the formulation of a workplace agreement that is subject to the
fairness test.
Application of the fairness test
Subjectivity
3.37
The Opposition has serious concerns about the degree of subjectivity in
the application of the provisions of the bill, leaving the interpretation to
the discretion of the Workplace Authority Director. Many employees, employers
and their representatives are confused about how the system will work, and the
likelihood is that it will result in inconsistencies. It is also likely that unfair
agreements will be passed. It has the potential to be exploited by some
employers presenting trade-offs as employee preferences. This subjectivity is
particularly relevant to the calculation of the value of non‑monetary
benefits, determinations of whether businesses meet the exceptional
circumstances criteria relevant for exemptions from the fairness test and the
sources of information used to ascertain whether or
not a workplace agreement passes the fairness test.
3.38
Opposition concern with the subjectivity of the application of the
fairness test has been underscored by evidence provided in various submissions
and to the hearing of numerous instances of conflicting advice on agreement
content provided by the Office of the Employment Advocate (OEA)—to be renamed
as the Workplace Authority under the bill. As was highlighted in the submission
of the NSW Government, the Workplace Authority—like the OEA—has a conflict of
interest in promoting AWAs which encourage employers to strip back employee conditions,
while, at the same time purporting to protect the rights of workers such as in
the application of the fairness test.[19]
Lack of accountability and review
3.39
As was articulated by many of the witnesses, the concern of Opposition
members of the committee about the application of the fairness test is
compounded by the lack of accountability. This includes the lack of a review or
appeal process, the fact that the Workplace Authority Director is not even required
to provide reasons for its decisions, and the lack of guidance or any detail
about how the test should be applied. This undermines accountability but is
also a breach of natural justice as the relevant parties will not even know
whether or not they have grounds to pursue the matter further in a legal arena.
Blatant errors in assessments of agreements—which is highly likely considering
the subjectivity of the test and the past performance of the Office of the
Employment Advocate—will not be picked up. As was asserted by various witnesses,
this process is substantially different from the requirement of the Australian
Industrial Relations Commission to conduct public hearings and provide public
justifications for such decisions.
Use of personal circumstances in
determining fairness
3.40
Opposition members of the committee are concerned at the potential
misuse of the provisions under the bill that allow consideration of employee
circumstances in determining the fairness of an agreement. This has the
potential to result in exploitation of vulnerable employees with little
bargaining power. The example provided in the explanatory memorandum of David,
a waiter at Bill's Steakhouse, is a case in point. It did not suggest the
business had financial problems but could still trade away penalty rates for
unsocial hours without sufficient financial compensation simply because the
worker was out of work for a year, lived in a region with few other job
opportunities and was gaining work experience in an area related to his TAFE
studies.[20]
This example demonstrates the bill will allow vulnerable workers to be
exploited in bids to enhance profits in circumstances where business viability
is not a consideration.
3.41
Opposition members of the committee concur with the views in many of the
submissions that such a practice is discriminatory and undermines the
entitlement of employees to remuneration for the work done. It will also result
in situations where employees will be working alongside others and doing the
same level of work but for different wages and conditions. Also, as the SDA
highlighted:
That opens up enormous scope for people to lose financially in
their employment in return for some flexibility in their working arrangements,
which may cost the employer nothing, which the employer might very well be able
to provide without any change to other conditions of employment.[21]
3.42
In this respect, Opposition members of the committee are also concerned
at the prospect that an employee's family circumstances could be used as
leverage to provide downward pressure on wages and other monetary remuneration.
There must remain strong debate about how serious the Government is in
advocating 'flexibility' for family friendly agreements. Work arrangements
where an employee's 'family circumstances' can be used as an excuse to reduce
their pay and conditions. There will always need to be some negotiation between
employers and employees to accommodate operational requirements and family
commitments. The ANF highlighted the concern that it would be unfair to require
weekend work for some family flexibility.[22]
Lack of guarantee of financial
compensation
3.43
Opposition members of the committee are also concerned that there are no
guarantees of financial compensation for the loss of entitlements. The reality
is that many ordinary workers rely on the additional monetary benefits of
overtime and penalty rates in order to survive from week to week. That these
could be traded without adequate financial compensation is particularly
alarming due to the lack of a requirement under the bill to mandate
consultation by the Workplace Authority with employees to confirm the value and
significance of traded benefits. As was argued by the MEAA, mandatory
consultation measures are essential to ensure that the bill provides both
'administrative' and 'substantive' fairness.[23]
This is because despite claims during the public hearing that the fairness test
is a review of consensual agreements, the existence of the bill is an
acknowledgement that many employees are unwilling parties to much of the
content of many agreements.
Disadvantaging of employees on
collective agreements
3.44
The Opposition members of the committee are concerned by the potential
significant disadvantaging of employees on collective agreements. As was
identified by the SDA, AMWU, the Victorian Workplace Rights Advocate, Professor
Stewart and the RTBU, collective agreements will be assessed according to the
'overall effect on the employees'.[24]
The inclusion of this caveat is clearly contrary to the objectives of a fairness
test and should be amended.
Changing conditions and agreement
durations
3.45
The Opposition members of the committee agree with the concerns in
various submissions that the bill does not provide for a review of benefits
over the course of an agreement. An example was highlighted during the inquiry
of benefits being traded for child care assistance where these needs change
over the course of the agreement, and of penalty rates being traded but
subsequent operational requirements being imposed that oblige workers to work
unsocial hours without additional compensation. The Opposition is particularly
wary of any encouragement for employers to make further demands on employees to
work excessive and unsocial hours. With the booming economy and tightness of
the labour market, a greater proportion of Australians have felt this pressure
of excessive and unsocial work hours. It is only fair that, at the least, they
be appropriately compensated for this additional work, which improves the
profitability of business.
3.46
The Opposition members of the committee are reminded that during the
2005 inquiry into Work Choices, the committee received evidence that workers
were usually worse off when subject to workplace agreements where penalty rates
were traded for a higher base salary. The committee heard that while a
significantly higher rate of pay was received to incorporate penalty rate
entitlements, a closer analysis revealed that it did not compensate for the
increasingly open and flexible hours of work. The open-ended hours of work were
incorporated under the rubric of flexibility. However, in practice, the power
inequality in the negotiating relationship meant that management and business
requirements—rather than worker needs or family responsibilities—were the key
determinates working hours. These findings were reported by the 2002 Australian
Centre for Industrial Relations Research and Training report prepared for the
Commissioner of Workplace Agreements.[25]
3.47
Similarly, although Opposition members of the committee recognise the need
for 'exceptional circumstances' that may lead to the temporary waiving
of the application of the fairness test, there appears to be no provision in
the bill to make such circumstances temporary. It is imperative that such
agreements be reviewed following the cessation of the 'exceptional
circumstances' and not permitted the duration of any other agreement.[26]
3.48
Further, the Opposition members of the committee have not been reassured
that the Workplace Authority will exercise the 'exceptional circumstances' exemption
responsibly. This is because of the wide latitude given to genuine operational
reasons for the unfair dismissal of employees across the country. Since Work
Choices was introduced, companies in Australia have been accused of using Work Choices
laws to dismiss staff only to re-advertise the same jobs at a lower salary.
These actions can be legal if 'at least part of' the decision making for the
redundancy is based on the justification of operational requirements.[27]
This has raised concerns about the breadth of circumstances allowing such a
justification to be used and the Opposition members of the committee remains
concerned at the potential for a similarly liberal interpretation of the
'exceptional circumstances' exemption.
Long-term effects of the provisions
3.49
A large proportion of the community have felt the effects of AWAs, but
the complete extent of their severity will not felt until an economic downturn
and the shift to AWAs increase over time through attrition. The undermining of
collective bargaining in the negotiation of pay and conditions leaves many
workers with little capacity to preserve the entitlements that are the subject
of the bill. Many workers have little bargaining power to negotiate a mutually
satisfactory outcome that is appropriate to their circumstances.
3.50
The competitive advantage to employers that have taken advantage of the
unfairness of Work Choices to drive down wages and conditions on agreements
between March 2006 and May 2007 has been entrenched by the bill and will
encourage broader lowering of wages and conditions in certain industries. This
is particularly the case in highly competitive industries where labour costs
are a key factor in successful bidding for a contract. Even well-intentioned employers
will find they have to conform their labour market strategies or become
uncompetitive, especially where margins are thin and labour costs represent a
large proportion of expenses.
3.51
Further, with the erosion of existing entitlements, the Opposition also
has no faith that developing community standards—such as with respect to family
responsibilities of dual-income households—and others, some of which cannot be
foreseen, will be taken up in future workplace agreements.
Effect on productivity
3.52
The Government's workplace relations policy will have an adverse effect
on productivity, as poor wages and working conditions contribute to a skills
shortage and a shortage of workers in a given industry. Further, exploited
employees will be more likely to be unproductive while at work. There will be
increasingly low morale and higher turnover of staff. As argued by the
submission of the NSW Government, many of the entitlements that have not been
protected under the bill have been designed to promote skills development and
improvements in productivity.[28]
3.53
Genuine productivity increases are brought about by enhanced training
and skills development, taking advantage of technological progress, and
collective cooperation between employees and employers for the alteration of
work practices. There is no such incentive in the Government's approach. The
legislation fails on these criteria, as has the Government's policy, as it has
failed to address serious skill shortages and a dearth of investment in
innovation. In fact, as the Government has made it easier to drive down wages
and conditions, there is less incentive on employers to invest in labour saving
technology or training and skills development.
Conclusion
3.54
The Government's long-term approach to industrial relations and economic
growth is fundamentally flawed. The crusade for AWAs is driven by outdated
ideological, rather than objective economic, motivations. The Government's
policy is predicated on the view that productivity increases are engendered by
lowering pay and removing entitlements. Further, it believes that the economy
is at its most productive when workers are forced to accept whatever terms an
employer is willing to offer.
3.55
The Government's amendments seek to undermine minimum employee entitlements
with a view to their erosion and eventual removal. This is simply aimed at
increasing shareholder and other profitability, rather than productivity. This
will have a long term effect of a reduction in overall standards of living.
3.56
It is difficult to believe that the Government does not regard the so
called fairness test as anything more than expedient; to be wound back after an
election if it is victorious. Further, there is also every possibility that the
Government will further deregulate industrial relations if it again wins power,
although it will not seek a mandate for such reforms knowing it would risk
electoral defeat.
3.57
The Opposition considers that the bill does not sufficiently address the
concerns that have been raised in the Australian community since the
introduction of Work Choices. Despite not achieving its aim, the legislative
provisions of the fairness test are complex, subjective and open to
inconsistencies and subjectivity in their application. The bill is simply an
attempt to deflect public criticisms, rather than provide a genuine attempt to
restore fairness in workplace relations.
3.58
The bill will require a huge resource investment, which is only likely
to increase over the years, to solve a supposed problem of perception. It is
notable that the Government's resource investment has not been matched in the
arena of compliance monitoring. This shows the Government is not interested in
determining the effect of the fairness test and policing breaches. The
submission of the NSW Government highlighted that the federal system costs
twice as much as the State system prior to Work Choices.[29]
It is clear that the government is injecting costly resources and a large
administrative burden to protect an unfair system. The only fair solution would
be to repeal its workplace relations policy.
3.59
It is highly doubtful that the Workplace Authority or the Workplace
Ombudsman will be able to recruit sufficient qualified staff to meet the needs
of the increased administration of this legislation. The labour market for graduates
is very tight, and competition from other Commonwealth agencies is intense. It
is remarkable that Australia will have one of the largest bureaucracies
regulating industrial relations of any country in the world. This is the price
to be paid for deregulation as considered by the Coalition.
3.60
Opposition Senators will support the bill, as it provides a minor improvement
to the existing legislation. However, the bill does not go far enough and does
not provide the protections it purports or do anything to stop the growth of
low paid precarious employment. Despite comparisons with the no-disadvantage
test that was enforced by the Industrial Relations Commission, the new fairness
test provides fewer protections. In particular, there remains no guarantee of
financial compensation for lost conditions and there will be fewer constraints
on requirements for employees to work on weekends, and excessive or unsocial
hours. Further, the Opposition is concerned that without amendments, the bill
contains deficiencies that could be exploited to the disadvantage of workers.
The necessity of the bill has illustrated that many employees have already been
disadvantaged and underscores the likelihood that further will be disadvantaged
unless flaws in the bill are addressed.
3.61
Opposition Senators endorse the need for a review of the legislation
with a view to considering the numerous concerns raised during the inquiry and
highlighted in the committee report. However, the Opposition members would have
preferred the committee to have recommended specific legislative changes to
ensure fairness is achieved, some of which have been outlined below. Some of
the necessary legislative changes that arose during the inquiry pertain to
deliberate policy decisions to exclude certain employees from access to the
fairness test.
Recommendation 1
3.62
Opposition members of the committee recommend that the bill be amended
to provide for increased transparency and accountability in the performance of
the duties of the Workplace Authority in its application of the fairness test.
In particular, the bill should be amended to provide for an appeal process, require
the Workplace Authority to provide reasons to the relevant parties for any
decision on the fairness of an agreement, articulate greater prescriptive
detail about how the test should be applied and define many of the subjective
terms relevant to the test.
Recommendation 2
3.63
Opposition members of the committee recommend that the bill be amended
to require the Workplace Authority to provide both parties to an agreement with
the opportunity to provide, verify or refute information obtained by the
Workplace Authority in the course of conducting the fairness test.
Recommendation 3
3.64
Opposition members of the committee recommend that the bill be amended
to abolish the $75 000 threshold. In the event that this is not supported,
the bill should be amended to index the $75 000 threshold to rises in
inflation to ensure the limited protection provided is not further eroded over
time.
Recommendation 4
3.65
Opposition members of the committee recommend the bill be amended to
ensure all conditions and entitlements of a relevant award or instrument are
considered in the application of the fairness test to ensure workers receive full
compensation for traded benefits so that they are not worse off under an
agreement.
Recommendation 5
3.66
The Opposition members of the committee recommend that the bill amended
regarding the application of the fairness test where employment was subject to
notional agreement preserving State awards or to preserved state agreements
(section 52AAA). This would be with a view to ensuring that the fairness test
would apply wherever the employees concerned have been covered by protected
notional conditions or protected preserved conditions at any time, other than
when the instruments ceased to apply following replacement by a federal award.
Recommendation 6
3.67
Opposition members of the committee recommend that the bill be amended
to prevent the failure of an agreement to pass the fairness test reverting to
an even less generous agreement for employees. In such instances, employees
should be entitled to the protected conditions that would have applied but for
the operation of the earlier less generous agreement.
Recommendation 7
3.68
Opposition members of the committee recommend that the bill be amended
to ensure that the fairness of agreements can be subject to review prior to the
lapsing of an agreement. This would ensure that entitlements and conditions of
employment under an agreement considered fair during the application of the
fairness test cannot subsequently be altered to disadvantage employees without
adequate compensation being provided. It would also allow investigation of the
changing value of non-monetary compensation provided over the course of an
agreement.
Recommendation 8
3.69
Opposition members of the committee recommend that the bill be amended
to provide a limited lifespan to agreements formulated under the 'exceptional
circumstances' provision (Section 346M(4)). Such an amendment should ensure the
review of such agreements after a certain time-period or a return to higher
remuneration and conditions following the remedy of the conditions responsible
for the 'exceptional circumstances', irrespective of the stipulated agreement
duration.
Recommendation 9
3.70
Opposition members of the committee recommend that the bill be amended.
Senator Gavin Marshall
Deputy Chair
Navigation: Previous Page | Contents | Next Page