Coalition Senators do not support the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (bill).
The Albanese Government has consistently said this legislation aims to 'get wages moving', yet there has been no evidence provided as to whether wages will increase, whose wages will increase and when wages will increase. They have also not mentioned how this legislation will lead to an increase in productivity.
The biggest problem with this legislation is that it breaches the trust of the Australian people. Coalition Senators note the Albanese Government did not take significant industrial relations reform to the 2022 federal election; in fact, the Albanese Government promised the Australian people that they would not introduce industry-wide bargaining.
While appearing on television in November 2021, Dr Jim Chalmers MP, the now Treasurer, when asked if industry-wide bargaining was on the agenda, replied, 'it's not part of our policy'. This legislation attempts to implement industry‑wide bargaining by stealth, a clear breach of trust of the promise the Treasurer made to the Australian people.
Holding a sham talkfest like the Jobs and Skills summit shortly after the election does not substitute as a mandate from the Australian people to introduce radical new industrial relations reform that will devastate the Australian economy.
Only a few short months ago, the Prime Minister was trying to suggest to the Australian people that he was all about building consensus between employers and employees. The Prime Minister said at the Jobs and Skills Summit:
Let's promise each other that we won't spend them playing our greatest hits, re-hashing the same arguments or re-heating old conflicts. We have not gathered here to dig deeper trenches on the same old battlefield. Our goal and indeed our responsibility—all of us—is to carry the conversation to the common ground, where the work is done, and the progress is made.
Less than two months later, the Albanese Government completely abandoned the façade of promoting unity in the workplace and introduced the most extreme changes to the industrial relations framework in decades.
This legislation could do significant damage to the Australian economy. The abolition of the Australian Building and Construction Commission (ABCC) alone is estimated to cost the economy $47 billion by 2030.
The moves towards multi-employer bargaining, where businesses are forced onto enterprise agreements against their will, could lead to a significant increase in strike action across the economy whilst not leading to a rise in either wages or productivity.
The Coalition believes this legislation should be opposed and calls on the Albanese Government to work constructively with all stakeholders, including the Opposition and crossbench when considering changes to our industrial relations framework.
Committee Referral
Coalition Senators find the haste and haphazard approach the Albanese Government has taken regarding how this legislation was introduced to the Senate unacceptable.
From the time of its referral to the Senate Education and Employment Legislation Committee (EEC), the committee had just 22 days to conduct public hearings and report back to the Senate while the Budget Estimates process was concurrently running.
The Albanese Government was motivated by pure ideology and displayed a blind disregard for the usual procedures and processes involving the scrutiny of legislation that usually accompany such a substantial piece of legislation, let alone an omnibus bill. It is simply unacceptable and a genuine concern if this is how the Albanese Government intends to operate regarding future legislation.
The Coalition Senators strongly object to the Albanese Government's flagrant lack of respect shown to the 'House of Review' and the critical role committees play in investigating and scrutinising proposed government legislation. Whether the Albanese Government agrees with the role of the committee process or not, this vital function has been an enduring safeguard against the excesses of the executive.
It is unacceptable that public hearings were hastily convened at extremely short notice and held on dates when some crossbench Senators could not participate. All merely to meet the Albanese Government's ridiculous timetable of having this bill passed before Christmas—presumably in the vain hope that the effects of the legislation will be forgotten in the New Year.
The due date for stakeholder submissions fell after the public hearings had already commenced, meaning stakeholders were appearing even before they had made their inquiry submissions. This was a point expressed by many stakeholders, including AgForce Queensland Farmers Ltd, who pointedly said:
… providing adequate time is a courtesy that should be afforded to all stakeholders in the interests of transparency and developing the most effective legislation arrangements.
The Minerals Council of Australia (MCA) concurred with this, saying in their submission:
… the timeframe for consideration of the bill by the Senate Education and Employment Legislation Committee stands in stark contrast to review periods for legislation or comparable complexity and risk. The ten working days (excluding public holidays) provided to make submissions since the bill's introduction does not allow sufficient time for representative bodies such as the MCA to consult with members on the bill’s many unintended consequences.
Clubs Australia said in its submission:
… it has not had sufficient time to scrutinise the entire bill plus the recent amendments, or to consult with our member stakeholders … there are sections of the bill on which Clubs Australia would otherwise have feedback, but for which have not been included given the timing.
The Civil Contractors Federation were frank in their assessment of the consultation period, noting:
… the time frame for response to such an important bill – a bill that risks significant unintended consequences for our industry if not all industries in Australia – is simply too short. Feedback from our Members is that the more they grasp the consequences of what is inside this significant piece of legislation, the more unanswered questions they have.
By contrast, Coalition Senators note the timeframe given to the Senate Standing Committee on Education and Employment to deal with the Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill 2020. From the time the bill was referred by the Senate to the committee for inquiry (10 December 2020) to the time the committee reported back to the Senate (12 March 2021) was four months. The original version of the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 was 111 pages. A stark contrast to the mammoth 249 pages of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022. Additionally, when the Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2019 came before the Parliament, there was a period of three and half months from the time the Senate referred it to the committee (4 July 2019) to when the committee reported (25 October 2019).
By its own design, the Albanese Government deliberately sought to advance the controversial pathway by cloaking less contentious aspects that would share broad political support with incendiary provisions in an omnibus bill. It could easily have split the less controversial elements of the bill into a separate piece of legislation. This would have facilitated a quick passage of the consensus bill before Christmas while providing more time for greater stakeholder participation and debate of the more contested aspects of the bill.
Therefore, Coalition Senators note it was evident early on that the Albanese Government's introduction of the bill blindsided many stakeholders and even crossbench Senators. On the day the bill was introduced into the House of Representatives, key peak bodies expressed alarm at many provisions contained in the legislation. It was hardly a shining example of conciliation and seeking 'a common purpose and promote unity' for the common good.
The head of the Australian Industry Group (AIG) remarked that growth in jobs and wage increases didn't come with a 'union gun being held to an employer's head'. The Business Council of Australia (BCA) stated the legislation would allow unions to organise industry-wide strikes and that the changes risked 'sending our economy over the edge'. The chief executive of the Australian Chamber of Commerce and Industry (ACCI) said that 'the significant broadening of the "single-interest employer" test exposes the economy to sector-wide strike action, disrupting supply chains and key industries at a time of global volatility'.
Further evidence of the rushed and ham-fisted approach of the Albanese Government was that shortly after introducing the bill into the House of Representatives, it immediately flagged it would water down some aspects of its bill following the vocal criticism from many sectors of the economy. It began making amendments to its bill while the committee hearings were simultaneously taking place. The Albanese Government also sought to downplay that 'many fear the proposed changes will bring back the bad old days of industrial turmoil of the 1970s' when trade unions were at their zenith and had unfettered access to Australian workplaces.
Australia has not easily forgotten the inglorious period of Australian history, in 1974, during the disastrous time of the Whitlam government, when for every 1000 employees, an astonishing 1200 days were lost to industrial action. Indeed, industrial action has been in decline since the Second World War. According to Dr Jim Stanford, from 1950 to 1990, there was an average of 1700 work stoppages per year. The 1970s saw the peak of work stoppages from industrial action when an average of 2,000 work stoppages each year of that decade. Unlike the current Labor government, previous Labor governments after the Whitlam era were acutely aware of the folly of facilitating industrial strike action to cripple the Australian economy. Thankfully, today's strike action is largely negligible and, in a historical context, 'have really never been lower'.
Multi-Employer Bargaining
During the first public hearing of the Education and Employment Legislative Committee, Coalition Senators sought to clarify whether, if passed unamended, the bill would weaponise strike action in the workplace. Professor McCrystal, on day one of the hearings, indicated:
… if the supported bargaining and single interest employer provisions get up, that will mean strikes will become available potentially in a multi-enterprise context, which is not currently the case … The only component of the bill that will potentially make it easier to strike is that you’re opening it up in a multi-employer context.
The Albanese Government has sought to promote this bill as an opportunity to increase wages yet has not provided any modelling or other information to indicate how this bill will raise wages and whether there will be an increase in wages.
Coalition Senators note this bill is simply an avenue by stealth which the Albanese Government seeks to re-energise and reward its trade union base, and a covert effort to increase trade union membership under the guise of sustainable wage growth. As Judith Sloan noted in her article Rushed IR reforms play squarely into the unions' hands:
… the new provision that will require a union official to formally consent before an agreement is presented to workers, whether or not they are union members, underpins one core purpose of the legislative amendments – to recruit new members in settings that have proven difficult for the unions to achieve much (if any) penetration.
This is when the economy is facing economic challenges not seen in a generation and when it is widely recognised trade union membership has been in freefall for several decades. Indeed, Master Builders Australia (MBA) note in the building and construction industry only 10 per cent of its workforce are union members. 'That leaves around 90% of a 1.1 million plus workforce who have chosen to not join a union. The rights of this overwhelming majority cannot be subservient to those of a small majority'.
Some academics are not convinced that multi-employer bargaining involving a single or common interest will lift wages. According to Professor Mark Wooden:
… a switch to multi-employer bargaining is no guarantee that wages are going to improve. I see a lot of attention has been devoted to the supported bargaining stream, which is going to replace what was the low-paid bargaining stream, but I sort of don’t get it. Why do we need a bargaining stream for low-wage industries or sectors when we have awards? Awards are there to protect low-wage workers. Twenty-five per cent are on awards, and awards are increased every year.
Amazingly, only days after the bill had been introduced, the head of the Productivity Commission told a public forum:
… the predominant view in the literature is you get better productivity outcomes from a firm-based system than an industry-based system because that’s what allows productive firms to grow, expand, offer a different deal to their workers. [It] allows workers to move towards higher productivity firms. And that’s a very important mechanism by which economy-wide productivity growth occurs.
Initially, the Albanese Government had attempted to frame a picture that the Jobs and Skills summit had smoothed the way with the business sector to ramp up multi-employer bargaining. This was discounted by the BCA during its testimony to the committee inquiry when it outlined that these conversations were 'fundamentally a discussion about low-paid workers and female‑dominated sectors of the economy'.
Multi-employer bargaining was also a surprise to the Australian Retailers Association, who were attendees at the Jobs and Skills Summit:
Senator O’Sullivan: Were you involved in the Jobs and Skills Summit at all?
Mr Zahra: I was.
Senator O’Sullivan: Did any aspects of the multi-enterprise bargaining provisions in this bill come as a surprise to you?
Mr Zahra: It was a total surprise.
Senator O’Sullivan: Were they raised at the summit?
Mr Zahra: Not that I can recall.
Senator O’Sullivan: Not in any substantial way or at all?
Mr Zahra: Not that was memorable.
It is disappointing that less than two months after hosting the Jobs and Skills Summit, which the Albanese Government claimed was about promoting unity, it introduced radical legislation into Parliament and is trying to ram through this bill without proper consultation or scrutiny.
In their submission, the Australian Retailers Association said multi-employer bargaining:
… will create confusion, add cost and complexity, and result in more disputes and fewer enterprise agreements being reached. While we are particularly concerned about the impact on our small and medium-sized members, we also hold that these changes are not fit-for-purpose for larger businesses. Nor do we believe multi-employer bargaining will drive wage growth in our sector, where a war for talent is already driving healthy competitive tension in pay and conditions.
Coalition Senators note the concerns the MCA has with this bill, particularly concerning multi-employer bargaining. The mining industry is one of the most significant drivers in the Australian economy and is this country's largest export industry, generating $413 billion in exports in 2021–22. The industry paid $43.2 billion in tax and royalty payments in 2020-21 and accounted for 30 per cent of all company tax paid that year. The mining industry will undoubtedly be pondering whether the federal government will next turn its attention to raising the minerals resource rent tax from the dead.
… the major changes the bill would introduce will undoubtedly have severe unintended consequences economy-wide – on investment, productivity, economic growth, job security and wages. Providing significantly enhanced rights for unions to force pattern agreements on non-consenting employers is the very antithesis of an economically responsible approach … the spread of multi-employer bargaining to all parts of the economy will replace flexibility with rigidity and stifle the ability of businesses to grow, innovate, compete and be productive. In the mining industry, this will lead to poorer wage outcomes and fewer jobs.
Coalition Senators acknowledge the fundament contribution the mining industry has made to Australia's economic wealth over the past several decades. For this reason alone, it defies logic that the government would attempt to move on this industry. According to the MCA:
… the bill would make it possible to take protected industrial action across the entire multi-employer agreement. The substantial contribution of mining – and the opportunities for minerals development and value-adding – must not be compromised by a reckless return to industrial disruption which characterised multi-employer bargaining in the 1980s.
Coalition Senators note the ACCI believes multi-enterprise bargaining:
… will ultimately see multi-employer bargaining significantly encroach on enterprise-level bargaining in Australia. This will see wages go backwards in Australia. The complexity of multi-employer bargaining and the increased risk of disputation arising from multiple employers, groups of employees and unions being forced to come to common positions will only serve to drive down wages to “low ball” outcomes if agreement can be reached at all.
Coalition Senators note the significant concerns outlined by the Laundry Association of Australia (LAA) in their submission. In an industry currently experiencing acute staff shortages of around 10 per cent vacancies in its workforce, the LAA contend 'the proposed multi-employer bargaining arrangements represent a lack of consultation and an actual lack of understanding of private sector business operations'.
Coalition Senators note the submission from Qantas that stated the bill would 'reverse decades of consensus about the importance of enterprise-level bargaining in our industrial relations framework'. While the airline agreed with some provisions of the bill:
… other elements of the bill aim to dismantle a multi-partisan industrial relations framework that, before the COVID-19 pandemic, helped to deliver more than a decade of uninterrupted economic growth and record low unemployment for Australia.
If, as the Albanese Government states, the purpose of this bill is to get wages moving, Qantas believes if the bill remains in its current form, it 'runs the very real risk of moving unemployment upwards, driving capital investment downwards, and slowing investment and competition'.
Coalition Senators note Qantas believes:
… compulsory multi-employer wage outcomes divorced from both productivity and the specific needs and constraints of individual enterprises will mean higher costs for consumers, that in turn will destroy demand on marginal routes especially, putting the viability of some services into questions.
Specifically, on this last point, Qantas emphasises:
… the bill places at risk a vigorously competitive, efficient, and innovative Australian aviation industry. For the Qantas Group, it will almost certainly mean less flying because costs will rise, and demand will be destroyed – particularly on marginal routes. This will result in less investment and fewer jobs in aviation, with a flow-on effect for communities and tourism.
Small Business Sector
Coalition Senators are disturbed that the sector with the most to lose from this bill is the all-important small business sector. This bill is nothing more than an attempt to provide the unions with a foothold in the small business sector, who can be roped into a bargaining process it does not desire and could have terms and conditions forced upon them.
This was a point the Franchise Council of Australia (FCA) concurred with when asked during a public hearing if this bill would grow wages or grow union membership:
Senator O'Sullivan: The government has stated that the purpose of this bill is to drive up wages. … Will [this Bill] lead to an increase in wages for employees or an increase in union involvement in small business?
Ms Aldred: We would suggest that union involvement in small businesses may ultimately undermine the sustainability and viability of many small businesses, which undermines the viability of jobs, so we have grave concerns on that basis.
Coalition Senators note in the evidence presented to the committee from Per Capita, a self-described 'Labor-ist think tank', it could be reasonably anticipated this bill would 'lead to an increase in union membership'. Ms McKenzie stated:
I don’t think that is a bad thing. I think the reason for that is because … unions do a lot of work for the workers of Australia, workers who are not union members…
Coalition Senators agree with the BCA that, at the very least small businesses with fewer than 100 employees should be excluded. The small business sector is an integral pillar of the Australian economy. It represents 98 per cent of all business in this country, and for reasons only known to the government, or more accurately, trade unions, are intent on causing as much disruption to this sector as possible.
Small businesses do not have HR departments and legal departments to shield union meddling and fend away applications being filed against them by organisations who don't respect the law and have stated they believe it is ok to break the law. Small business operators are mums and days who work long hours, often seven days a week, who just want to get on with running their business, not examining reams of complex legislation that would seek to undermine workplace harmony by introducing pay secrecy clauses.
Coalition Senators are very concerned small businesses could be compelled into a bargaining process involuntarily and swamped by larger employers in the same sector under the majority vote support proposition. This was illustrated during the first inquiry public hearing:
Senator O'SULLIVAN: As another example, let's talk about grocery stores. Obviously, Woolworths and Coles are big employers, but then you've got lots of independent grocers. Those independent grocers could easily be brought in if the majority of employees, who presumably would be within those larger employers, agreed, and then all those others could be added to it.
Ms Westacott: If the amendments that we're proposing are made, which is that Coles and Woolworths would basically continue to bargain—they've got a long history of bargaining—what's more likely, I think, is that all of those shops could be compelled to bargain together, irrespective of whether or not people want to.
Senator O'SULLIVAN: In that workplace, yes.
Ms Westacott: Say you've got a shopping centre, leaving the big supermarkets and the big department stores to one side, subject to these changes that we're proposing going through in the normal way, then you might have someone with 100 employees, someone with 50, someone with 25—suddenly they're dragged into an agreement. I mean, theoretically, everyone could be dragged into an agreement with Coles and Woolworths. Our biggest concern is Coles and Woolworths being compelled to bargain together, and that would have a very, very serious impact on those smaller businesses. And let me be super-clear: we represent those companies; they have a great history of bargaining; we think they should be allowed to bargain. But we simply do not understand what is trying to be achieved in these competitive provisions. Why would you want to drag Coles and Woolworths into the same bargaining arrangements? It would be very bad for those smaller enterprises in that shopping centre.
Even after the Albanese Government made substantial amendments to its own bill— while budget estimates and the EEC inquiry into the bill were still ongoing—the BCA called on the government to scrap the 'right for unions to sign off on agreements made between workers and their employers before the agreement could go to a vote'. This also includes making the single interest stream for multi-employer bargaining voluntary.
It was a point echoed by the FCA, which said, 'in a modern economy, it makes no sense to lump the employees of one business in with employees at a totally separate business in the same industry'. Furthermore, the provisions to expand multi-employer bargaining 'lacks sufficient safeguards to ensure that it won’t impact sectors or employers that are already capable of bargaining at the enterprise level'.
According to the ACCI and Industry, the impact on multi-employer bargaining on small to medium size businesses is:
… ill-suited collective agreements have the potential to significantly constrain how business owners can manage their businesses, which will eventually risk the viability of the business. This will lead to business closure and job losses.
Coalition Senators note the concerns of the Council of Small Business Organisations Australia and agree that this bill in no way makes things simpler for small businesses. Instead:
… it creates more layers of complexity and additional regulatory requirements and adds to the already stifling burden of reporting. This takes small-business people away from managing, growing, and innovating their business and, ultimately, employing more staff.
The FCA has raised several concerns with the bill. The franchise sector contributes around $172 billion to the economy, which has around 94 000 individual franchised outlets, each are small businesses, employing more than 565 000 people. Coalition Senators note the FCA believes 'the lack of widespread, meaningful consultation can also be seen by the fact that, to date, the government has already introduced more than 150 amendments to the legislation'. Regarding the expansion of the single interest bargaining provisions, this:
… would enable employees and union representatives to organise protected industrial action, such as strikes, at multiple workplaces across the country – as long as the businesses share an extensive common interest. This would devastate many businesses and ultimately undermine the security and substantiality of thousands of jobs.
Coalition Senators agree the 'common-interest test' for multi-employer bargaining is too broad, is not appropriately defined and could force large competitors to be compelled to bargain together, which in the words of the BCA, 'that's bad for wages, bad for competition and bad for consumers'.
The Australian Hotels Association, in its testimony before the committee, underlined how the complexity of this bill would impact small businesses. Of its members, around 65 per cent of businesses are family-owned—mum and dad-run enterprises. When it came to bargaining, it would remove them from the business for six months while they negotiated with the unions:
You’re taking that person out of the business and putting them into an area where they have fewer skills than other people. They don’t have the resources, unless we’re able to go and help them. But if these things are springing up all over the place, we won’t be able to get there. They may have to, unnecessarily, divulge information to their competitors. We’re just saying that’s far too complex a place and we think it will probably drive suboptimal outcomes, rather than just negotiating in that workplace for that business.
Better Off Overall Test (BOOT)
Coalition Senators note the concerns of MBA, FCA, BCA and other stakeholders, regarding the veto power included in part 16 of the bill related to the Better Off Overall Test (BOOT). According to the MBA, unions will have more significant input than the employees the agreement will cover on whether a proposed agreement meets the BOOT:
The bill makes it clear that the FWC must give consideration to any views of the employer, employees and bargaining representatives as to whether the agreement passes the BOOT. However, this consideration is subservient to a further new step that requires FWC to give primary consideration to any common view of the employer and employee bargaining representatives (unions) as to whether the agreement should pass the BOOT.
The inclusion of this provision will be of strong concern to employers because it gives unions a foothold in the process. At the same time, the employer does not have the ascendency unless their position is also the 'common view' as held by the union. 'The effect of this amendment is that unless a union agrees, a proposed EBA risks being rejected for non-compliance with the BOOT'.
… the union veto on employers and employees agreeing to vary a single interest employer agreement, a supported bargaining agreement or a cooperative bargaining agreement, to remove the employer and its employees from the coverage, is unfair and inappropriate.
Clubs Australia point out that 213A and 213B of the bill:
… would empower employees or unions to approach the FWC for reconsideration of BOOT after the Agreement is approved. Enterprise Agreements give clubs certainty and stability, under which investment and operational decisions are made. Allowing the entire Agreement to be varied would remove this certainty and the accompanying benefits.
Greenfield Agreements and Sovereign Risk
This is a silent provision that has gone largely unnoticed but has fundamental repercussions on the mining industry if the provision is successful as it relates to 'greenfield agreements' for major new resources and energy projects. According to the Australian Resources and Energy Employer Association, (AREEA), 'should this section be repealed, it will again become a common bargaining tactic for unions to stall and delay greenfield agreements for at least six months, in order to get their claims before a Full Bench of the FWC for arbitration'. This provision is terrible for job creation and bad for projects that are pipeline economic drivers.
Coalition Senators, like AREEA, are 'bewildered as to why the Albanese Government would seek to make the IR framework for investors more risky and more uncertain'. Additionally, the framework proposed by the government will increase sovereign risk. In its submission, this point was reinforced by the MCA, which asserted that 'multi-employer bargaining will cement Australia’s reputation among international investors as a high-cost jurisdiction with complex and prescriptive workplace regulations'.
Specifically related to sovereign risk vulnerabilities, Coalition Senators pressed the MCA on what threats this bill potentially posed to future investment:
Senator O'Sullivan: … Do you see any sovereign risk to the industry?
Ms Constable: That sovereign risk has already been pointed out by some countries at the moment who are asking very pointed questions of the government about what Australia might be doing to change the industrial relations system to put more uncertainty into the system and to reduce the flexibility of employers. That then makes those investors and those countries very cautious about whether they invest here. That is a fact. It’s been raised publicly. It’s been raised privately in discussions. Its raised regularly with me and with the CEOs in the mining industry.
Denmark
Proponents of the bill have fondly cited Denmark as the bastion of multi‑employer bargaining. However, they overlook the Danish system is 'profoundly different', which includes not having an awards system and not having a National Employment Standards, which forms the safety net Australia has. According to Professor Wooden, real wages growth averaged just 0.7 per cent in each year from 2011 to 2021 in countries where multi‑employer bargaining was dominant.
… Australia has a system of industry awards that set a safety net of wages and minimum conditions across numerous industries. Australia’s modern award system, combined with the National Employment Standards, provides a comprehensive set of legally enforceable wage rates and conditions of employment at the industry level. There is no point in having an award, if the employers in the industry are covered by a multi-employer agreement that overrides the award.
Clubs Australia says any international comparison is inherently fraught with danger as there are complex differences between Australia and other countries, particularly Denmark. In its testimony, they pointed out Australia has 'a tried and tested method of increasing wages, being single-enterprise agreements'.
The Bills Digest has made similar observations. It asserted:
… the evidence concerning macroeconomic linkages with collective bargaining was weak and faced numerous methodological constraints – bargaining systems differ considerably across OECD countries, even among those sharing similar characteristics. This limits the practicability of international comparison for policy makers.
Abolition of the ABCC
Unsurprisingly, Coalition Senators note it did not take long for some of the more militant unions to think the bad old days were back and felt emboldened by this new legislation, even when it purportedly did not include them in this bill's remit. It was reported an Adelaide property developer was reconsidering a large-scale project in view of the increased activity of the South Australian CFMEU, a union led by the notorious John Setka. This does not bode well for the building and construction industry generally, and jobs and economic growth more broadly, when one provision of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 is the abolition of the ABCC.
Coalition Senators strongly oppose the removal of the ABCC as the building and construction watchdog. According to the MBA:
The ABCC has made a significant difference in ensuring building industry participants comply with the rule of law, and it has driven much-needed positive industry cultural change. The work of the ABCC is not yet done, and its removal will undo the significant improvement it has delivered for our building and construction industry.
This was a point supported by AIG, which said:
… the Australian Building and Construction Commission is carrying out a vital role, and it should not be abolished. The higher penalties that apply to building industry participants should not be reduced, given the ongoing lawbreaking of the CFMMEU (Building and Construction Division).
The current government's loathing of this vital regulator is well known since the ABCC was first established in 2005 and then reintroduced in 2016 after it had been abolished by the Rudd/Gillard governments. As recently as 27 July 2022, the Minister for Employment and Workplace Relations said of the ABCC, 'this has not been a good regulator. This is a regulator that has simply increased conflict, and that has got in the way where agreements exist and where agreements are possible'. The reasons for their dislike of the ABCC are hardly surprising. Time and again, the ABCC prosecuted the bad behaviour of their union allies, which included verbal abuse and threats against inspectors and outright breaking of the law.
Under this bill, some of the former responsibilities of the ABCC will be transferred to the Fair Work Ombudsman (FWO). Coalition Senators are not persuaded the FWO is the agency best equipped or adequately resourced to apply the law at building and construction sites rigorously, particularly concerning the outrageous behaviour of the discredited CFMMEU, whose outright recidivist disregard of the rule of law is consistent and well publicised. Nor do Coalition Senators believe that it is a like-for-like replacement, as the FWO will not be providing oversight for both the building code and workplace infringements.
These concerns are reaffirmed by the MBA, who said the bill:
… does not give the FWO any new powers, allocate the necessary resources, or do anything to ensure it is appropriately equipped to tackle the unique sector problems that have been forensically documented over several decades and are widely known.
The Housing Industry Association of Australia (HIA) supported this position saying, 'charging the FWO with sole responsibility for enforcing industrial relations laws in the building and construction is a flawed approach'. HIA went on to further say in its submission, 'sole coverage by the Fair Work Act means that the maximum penalties for illegal misbehaviour are significantly lower'.
In their submission, AREEA outlines its opposition to the abolition of the ABCC, saying this regulator has performed 'necessary work to hold militant unions, most notably the CFMMEU, to account for persistent recidivist lawbreaking'. Regarding the new functions of the FWO to oversee this industry, AREEA believes 'nothing less than the same level of policing and prosecution of CFMMEU thuggery would represent a significant failure in this space'.
The ACCI accurately described that even with a specialist enforcement regulator like the ABCC, 'there has been no observable change in the cultures of the workplaces in parts of the building and construction industries'. Imagine then what the behaviour and culture will be when that regulator is removed.
The Civil Contractors Federation (CCF), as the peak registered employer organisation representing nearly 2000 members who are responsible for the construction and maintenance of Australia’s civil infrastructure, are highly alarmed at some of the provisions included in the bill, particularly around the removal of the ABCC.
… the retention of the ABCC is paramount until the Government can demonstrate an alternative and effective regulatory framework will deliver an equal if not more robust compliance and enforcement regime. The abolition of the ABCC without a ‘like replacement’ runs the risk of increased industrial disputation, conflict, coercion, unlawful behaviour, and sites being brough to a halt due to industrial action as per the findings of previous Royal Commissions.
Coalition Senators note what perils the CCF believes this bill presents for the civil construction sector. According to the CCF:
An infrastructure sector embroiled in industrial disputation has the possibility of threatening the quantum of private sector investment whose collective sum total represents approximately 50% of Australia’s total annual investment pipeline, or around $40 billion per annum. CCF contends this unintended consequence is live and a likely probability that will have catastrophic ramifications for displacing workers.
As with the CCF, the HIA is also very concerned with the provision in this bill to abolish the ABCC. According to the HIA:
… the ABCC had been doing a sound and effective job of law enforcement, clamping down on unions and others for illegal industrial behaviour and right of entry breaches ... However, its work was far from finished. Aggressive and unlawful industrial action persists as an area of concern for the industry ... The building industry still needs an effective deterrent and enforcer of the rule of law.
Coalition Senators note not only would the bill abolish the ABCC, but it would also remove the Code for Tendering and Performance of Building Work 2016 (Building Code). Additionally, the bill would also 'remove particular parts of the Building and Construction Industry (Improving Productivity) Act 2016 (BCIIP) Act that exists to tackle conduct and illegal behaviour that commonly occurs in building and construction, including unlawful picketing and specific types of coercive conduct.’ In relation to this, the MBA points out that:
… the abolition of the ABCC and associated Code means that, for the first time since 2001, there will be no industry-specific body to regulate industrial relations and enforce compliance with workplace laws for building and construction workplaces. This will be a disaster for every single participant within the building and construction industry.
Coalition Senators believe maintaining the ABCC—an integral oversight body with a proven track record of winning prosecutions against union thuggery—would have been the agency more experienced and stronger placed to provide supervision of building and construction workplaces. At the very least, the building and construction industry should be excluded from the multi‑employer bargaining stream. As a result, in the absence of this, there will be a pernicious increase in union militancy on building and construction worksites in Australia (which is well documented), as already evident in Adelaide. Only the Minister and the CFMMEU will be pleased about this.
Intractable Bargaining Declaration
Coalition Senators note part of this bill will energise the arbitration process at the expense of the conciliation process. The BCA highlighted this during its testimony, where it expressed concern the threshold to trigger the arbitration process was low and the definition of 'intractable' not precise. There is a risk that such a low threshold will dramatically increase the volume of cases received by the FWC—as it will have to arbitrate a bargaining outcome—and it will be too readily used as an instrument when two disputing parties should first 'have genuinely tried to reach agreement'.
Coalition Senators note apart from the BCA, many other stakeholders have raised concerns regarding intractable bargaining declaration provision. On this, the opinion of the Laundry Association of Australia is this provision has been included in this bill in order 'to facilitate the ability of unions to access arbitration in pursuit of wage rates and entitlements in addition to the already existing regulation through awards. We believe it will increase costs for small and medium-sized businesses'.
… the proposed new power for the FWC to arbitrate 'intractable bargaining disputes', including for some types of multi‑employer agreements, would be harmful for businesses, workers and the community. The ability for a union to force an employer to bargain for replacement agreement, even if the employer and the majority of its employees do not wish to bargain, is unfair and inappropriate.
Concerns with the loose intractable bargaining definition were also raised by the Australian Public Transport Industrial Association (APTIA) (Bus Industry Federation) in their submission. According to APTIA:
What needs to be made clear is how the FWC will arbitrate. I assume they will arbitrate an agreement where the parties cannot reach an agreement. What is not clear is whether the FWC will accept one claim against the other or find some common ground that might appease both sides. APTIA’s view is that having a winner and a loser would ensure that this mechanism wasn’t used too regularly, as it detracts from the concept of enterprise bargaining if the FWC steps in every time. Consideration needs to be given to the method the FWC will follow when arbitrating, this needs to be clarified in the new legislation.
The Civil Contractors Federation expressed concern 'the proposed expanded capacity of the Fair Work Commission to arbitrate the content of workplace agreements will only encourage unions to make unreasonable demands and risk taking us back to a system of centralised setting of wage and conditions'. Additionally, CCF also envisages that there could be:
… a significant increase in the FWC involving itself in protracted bargaining disputes and could potentially be abused by more militant bargaining parties. While it could be desirable to have an arbitration in this regard, there is no definition as to how serious a bargaining dispute must be for such declaration to be made.
Indeed, during the second hearing, when pressed the Department of Employment and Workplace Relations conceded 'intractable' was not defined in the bill:
Senator O'SULLIVAN: Part 18 of the bill addresses bargaining disputes, and the bill refers to the scope the Fair Work Commission will have in relation to making an intractable bargaining declaration. Can you explain this to me, and, in doing so, can you provide me with a definition of 'intractable'—or is that left to the discretion of the Fair Work Commission?
Ms Sheehan: The commission can make what's called an intractable bargaining declaration, where the parties have tried to resolve the issues through using the section 240 process. That might be conciliation, if the commission is satisfied that there is no reasonable prospect of agreement being reached and that it's otherwise reasonable in all the circumstances, taking into account the views of the party. The term 'intractable' is not defined in the bill. The test gives reference to no reasonable prospect of agreement being reached. The amendments that were agreed in the House now include a minimum period of good faith bargaining before that declaration can be issued.
The LAA reiterated a one size fits all approach to every industry is not the answer to drive wage growth and reflected a poor comprehension about the capacity of some sectors to absorb new costs. According to the LAA:
… the Federal Government, by pursuing pattern bargaining will risk business viability and certainly increase costs, thereby driving prices for laundry and textile supply services up. This is bad policy that doesn’t appreciate the realities of business and is another inflation creating policy.
This is a point emphasised by Qantas, who contend:
… it is likely that some trade unions will weaponise the intractable dispute provisions… To be clear, even a six month (or longer) waiting period to bring an application for an intractable bargaining determination will not change this bargaining strategy by some unions.
The unions desire to strengthen intractable bargaining for its own vice and the risks associated with that was raised by the AIG during the fourth public hearing in response to a question from a Coalition Senator:
Senator Liddle: So how will an intractable bargaining provision in this bill affect your members?
Mr Ferguson: I think the big risk is that it takes us back to a system of, to some degree, centralised wage fixing – rather than having terms and conditions set at the workplace by the participants, it creates a dynamic whereby parties could be motivated to make ambit claims with a view to getting an arbitrated outcome rather then an agreed outcome. That’s a big risk, especially when you put that together with the proposition that unions will have greater rights to force employers to bargain, even if they’re not representing the views of the workforce, and, if there’s no agreement reached on that, that you could end up in an arbitrated outcome. That would be a very backward step.
Coalition Senators note the opinion of the LAA that 'this bill should also be considered and fully assessed by the Productivity Commission, so that all Australians will know how much it will impact on the cost of living for all Australians'.
Regional Universities
Coalition Senators note it is not only the business sector who are worried about the multi-employer bargaining aspects of this bill, but also the university tertiary education sector. In their submission, the Regional Universities Network (RUN) indicated 'the proposed amendments to multi-employer bargaining, if not implemented appropriately, could have unintended, negative impacts on Australia's world-leading university sector and the communities they serve'. RUN also pointed out a one size fits all approach did not appreciate the differences between metropolitan and regional universities. On this they noted:
The bill being considered potentially enables universities that are fundamentally different to be treated as if there were no differences – essentially assuming that apples and oranges are the same. If regional universities are joined with metropolitan, or one regional university joined with another, or two vastly different metropolitan universities joined in a single interest multi-employer agreement making process, there is a genuine risk that universities will be exposed to industrial action on matters that are not relevant to them and will result in poorer outcomes for each party. This could fundamentally undermine the international standing of Australia’s universities…
Conclusion
Coalition Senators reject this bill. The Albanese Government should immediately delay the passage of this legislation to allow for a longer and broader consultation process. As it is, this legislation is terrible for Australia. It’s bad for the economy at a time of high inflation and elevated cost of living pressures, it does not provide adequate safeguards against malicious union behaviour, nor does it demonstrate how it will provide for wage growth or increased productivity. This latter point is noted by Jennifer Hewitt, who wrote that:
… the biggest concern uniting the business community is their argument that Labor’s bill will be counter-productive for wages and productivity by effectively encouraging a return to the centralised system of wage setting abandoned by Paul Keating three decades ago in favour of enterprise bargaining.
The Albanese Government has sought to introduce this legislation at a time of great economic uncertainty in Australia. To date it has displayed an extraordinary level of tin ear from a significant number of key stakeholders, who when combined represent a wide range of Australia's economic output. Evidence provided to the Senate inquiry has repeatedly highlighted the dangers contained in this bill, the limited timeframe made available for consultation, and the lack of mandate the government has to deliver it.
This Albanese Government, as one of its first priorities since the election, has sought to rip open the scab of past industrial relations battles, merely to satisfy its trade union base—whose membership has dwindled to 14 per cent of the workforce and do not represent a majority of Australian workers. Ramming through such an ill-thought-out bill to grow union membership represents an antiquated era of class battles and civil strife long forgotten and not sought after. The government ignores all these concerns at its peril.
Coalitions Senators suggest as a priority the Albanese Government should be more focused on tackling the cost of living, including getting inflation under control and increasing productivity—key levers for real wage growth—and spend less time galvanising trade union membership in workplaces where they are not wanted. This bill will empower unions to be involved in small businesses, embolden them to increase militant behaviour in workplaces, and only achieve in returning Australia to the bad old days of the 1970s when trade unions wreaked havoc across the country and this nation was poorer for it.
Recommendation
The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 is not passed by the Senate.
Recommendation
The Albanese Government apologise to the Australian people for promising that industry wide bargaining was 'not part of our policy' before the election, and then attempt to legislate it by stealth once elected.
Senator Hon Michaelia Cash
Deputy Leader of the Opposition in the Senate
Senator for Western Australia
Senator Matt O’Sullivan
Deputy Chair
Senator for Western Australia
Senator Kerrynne Liddle
Committee Member
Senator for South Australia