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The Fifteenth Annual Kingsley Laffer Memorial Lecture, 2007

Australia's Future Challenges - The Role of the Workplace Relations System

Julia Gillard MP, Deputy Labor Leader, Shadow Minister for Employment & Industrial Relations, Shadow Minister for Social Inclusion.

Julia Gillard 2007 Laffer Lecture

Julia Gillard presents the Laffer Lecture


Thank you for the opportunity to present the fifteenth Kingsley Laffer Memorial Lecture.

This evening we commemorate the work of Kingsley Laffer, a leader in the development of industrial relations scholarship and teaching in this country.

Associate Professor Laffer joined Sydney University in 1944 around the time when the Conciliation and Arbitration Court was first providing for a 40 hour week in federal awards. Of course the Conciliation and Arbitration Court did not survive the decision in the Boilermakers case in 1956. Our current Prime Minister has proven in the last few days he remembers this case which was presumably riveting new law when he was in law school. Unfortunately the Prime Minister's ability to interpret the meaning of this case 50 years later has been found a little wanting.

Kingsley Laffer taught industrial relations at the University of Sydney for the next three decades and retired in 1976 as Head of the University's School of Industrial Relations.

I am proud of the opportunity to present this lecture and the company I join tonight: Justice Michael Kirby, Bob Hawke, Kim Beazley, as well as Sydney University Professors Russell Lansbury and Ron McCallum have all spoken in this forum.

The inaugural Laffer Lecture was held in 1993. The first speaker was Bob Hawke, who presented a speech titled 'Industrial Relations in Australia: A Turbulent Past - an Uncertain Future'.

In it, he said:

We are now witnessing one of the most dramatic periods of change in Australia's industrial relations system.

He was referring to the period when Australia's federal industrial relations system first provided for the registration of enterprise agreements under the then Industrial Relations Act.

He also spoke about the developments in Australia's industrial relations system over the preceding decade. He said:

In the last decade the industrial relations system has undergone more change than it has experienced since Federation. That change has been necessary to achieve our economic and social objectives. Further change is both necessary and possible.

Bob Hawke's comments could equally apply to today's industrial relations policy debates.

Australia has been forced, without any democratic consent, into a new era of industrial relations by the Howard Government. An era where the fittest survive and the weakest are shoved below traditional award safety nets.

An era where the High Court has reinterpreted the powers given by the Constitution to the Federal Government over industrial relations.

If Labor wins the forthcoming election, we will be in another period of change where a new and fairer balance will be struck in industrial relations. Amongst other reforms we will see the creation of a national industrial relations system for the private sector and the abolition of the Australian Industrial Relations Commission and its replacement by a new body called Fair Work Australia.

For the Labor Party, despite these periods of great change, there is a consistency of values.

This week May Day was celebrated - a day when we recognise the historic struggle in Australia, and around the world, for better pay and conditions for working people. In particular, the achievement of the 8 hour day; to provide a balance of 8 hours of work, 8 hours of rest and 8 hours of recreation for working people.

Over 100 years later, the same challenge, albeit in a modern form, remains a key theme of Australia's industrial relations policy debate. Today, instead of achieving balance through an 8 hour day, the challenge is to achieve balance between our work and family life in a 24 hour a day, 7 day a week economy.

Achieving this balance is one of the key pillars of Labor's recently released industrial relations policy - Forward with Fairness.

Indeed achieving balance is the core theme of Forward with Fairness.

In John Howard's Australia young people working part time in juice bars can be put on AWAs with 'Work Choices wages' - no penalty rates, no certainty in hours of work - or young people working at service stations can be put on AWAs which say they must make up the difference when a customer drives off without paying for fuel.

That isn't balance.

In John Howard's Australia workers can be sacked for no reason or any reason and have nowhere to go for help. That isn't balance.

In John Howard's Australia workers who work as a team may unanimously decide they want to negotiate their terms and conditions at work as a team and their employer can simply refuse to even talk to them. That isn't balance.

Our industrial relations system must promote productivity and high employment.

Our industrial relations system must be focussed on co-operation not conflict.

Out industrial relations system must balance fairness for working Australian families with the flexibility business needs.

The Howard Government's so-called Work Choices laws must be repealed and replaced because these laws fail against these benchmarks of a good industrial relations system.

Tonight I want to detail how Work Choices is failing this nation. And I will detail how this nation can have an industrial relations system that would meet these benchmarks and that system is detailed in Labor's policy Forward with Fairness.

Work Choices - Failing the test

In making its so-called Work Choices laws the Government failed the test of transparency and competence.

Earlier, I remarked that we are in an era where our current industrial relations laws were made without democratic mandate.

The full picture is even worse. The Government has precluded any proper electoral, political or economic analysis of Work Choices. It has not sought a democratic mandate for the reforms, nor conducted economic analysis to demonstrate the need for, or benefits of, its industrial relations policy.

The industrial relations policy the Government took to the people at the 2004 election was not Work Choices.

The Government now claims that Work Choices is a 'key reform'. But it was not a policy reform significant enough to put to the Australian electorate.

The Government's industrial relations policy program changed after it won control of the Senate.

But for such a 'key reform', the Government guillotined debates in the Senate about the proposed laws.

For such a 'key reform', the Government held a token Inquiry which was given a three week time frame from commencement to reporting.

And that's not all.

For such a 'key reform', the Government has only ever commissioned one piece of economic modelling.

But the results of that research, the only analysis ever conducted of such a 'key reform', was received by the Government after it had already announced the key elements of Work Choices.

The current and former Ministers still refuse to release this report - the single piece of modelling ever conducted by the Government about the impact of Work Choices
particularly one sold as a of 'key economic reform'.

Work Choices, which was hurriedly cobbled together, is riddled with errors and complexity. Indeed, so technically flawed is the legislation that even pretence of competence can't be sustained.

The Government has amended Work Choices six times since its introduction just over 12 months ago to fix what they call the 'unintended consequences' of rushed drafting without consultation. And businesses have had to fight and fight for something as simple as pay scales after a minimum wage adjustment.

Work Choices has demonstrably failed the test of fairness leading to an attempted Government cover up of statistics which show that 44% of AWAs now exclude all so-called protected award conditions.

Work Choices has failed the test of flexibility with its overburdening complexity and its preclusion of industrial arrangements people want, like project agreements.
And Work Choices is failing the economic test.

  • While employment growth since March 2006 has been strong, it has not been as strong as the same period in 2004-05, at the comparable point in the cycle, when it was almost 20 per cent higher.

In the 12 months to March 2005 over 50,000 more jobs were created - at a time where the no disadvantage test, unfair dismissal laws and a stronger independent umpire were in place.

  • In the first two quarters following Work Choices, labour productivity in Australia was in negative territory. Today, labour productivity is still languishing at only 1.5 per cent.

Compare this to Australia's historical average is 2.3 per cent and the 3.2 per cent growth in labour productivity over the five years following Labor's industrial relations reforms in the mid 1990s.

  • Australia's economy is strong, but the resources boom is the key. For each job created in that sector, at least three additional jobs are created in construction, retail and accommodation.

The resource rich states of Queensland, the Northern Territory and Western Australia have been responsible for over 50% of the nation's employment growth since March 2006, even thought they account for only about one third of our workforce.

  • ABS wages and earnings data tells us that non managerial employees on AWAs earn less per hour and work more than those on collective agreements. Women are particularly affected. Women working full time on AWAs take home on average $87.40 per week less than their colleagues working on collective agreements. And women working on AWAs in casual jobs earn $94 per week less than women on collective agreements.

On any benchmark - economic, social or administrative - one would set for an industrial relations system, Work Choices is a failure.

Labor's Forward with Fairness

Compare this to Labor's approach to the development of our industrial relations policy.

Last Saturday, three months before the earliest possible time for an election, and five or six months before the likely election date Labor released a substantial industrial relations policy document.

The document was developed in consultation with business, trade unions, employers, employees and industry, but it is Labor's own.

The key areas of our policy include:

  • A national industrial relations system for Australia's private sector;
  • A decent safety net of legislated minimum conditions and industry awards;
  • A simple, efficient system of collective enterprise bargaining;
  • A new process for unfair dismissal claims; and
  • A new industrial umpire.

This is the latest in the long line of contributions the Australia Labor Party and broader Australian labour movement have made to the development of Australian industrial relations policy and practice.

The Labor movement is a progressive movement and a reforming movement, particularly in this area. We have a proud history of working to achieve consensus between the key players for reform in the industrial relations arena.

In government, during the 1980s and 1990s, Labor reached agreement with the business community, workplace managers, unions and employees about what was needed to reform Australia's industrial relations system.

At that time we agreed that the centralised industrial relations system and centralised wage fixing of previous generations would no longer cut it if Australia was to move forward and be a member of the international economy.

And we agreed that enterprise bargaining was going to be the key.

Those of you aware of your industrial relations history may also be thinking about the introduction of superannuation, the Accord, collective enterprise bargaining without unions, the achievement of reasonable hours of work, maternity leave, parental leave and adoption leave.

Progressive reforms, brought about by the Australian labour movement and the Australian Labor Party.

Reforms which formed the backbone of our current prosperity and which today reflect Australian community standards.

We believe Labor will continued this reform with our Forward with Fairness policy.

Consider the following:

  • A national industrial relations system was not contemplated by the drafters of Australia's Constitution or federal governments throughout the last century. John Howard did not achieve it with Work Choices, and was not committed to the task.

Labor has committed to achieving a national system for the private sector and we are currently talking with the States about the mechanics of getting it done.

There is a real chance that this is one of the few occasions where the opportunity to create a truly national IR system will be available and we believe we cannot let the opportunity pass us by.

  • Our policy seeks the abolition of the Australian Industrial Relations Commission, an institution designed for 20th century industrial relations regulation through conciliation and arbitration, party principle stakeholders and special members of the IR Club.

Labor wants to replace the AIRC with a body designed specifically to assist employers and employees in the workplace, in a spirit of cooperation, to provide information and assistance, and with a focus not on industrial disputes but balance at work and balance between work and family.

For those of you with a sense of labour history, I ask you also to reflect on the fact Forward with Fairness adopts a number of matters which have never been part of the Labor Party's approach to industrial relations:

  • Labor will require secret ballots prior to protected industrial action
  • Labor has limited the content of awards
  • Labor does not provide for an automatic role for unions in collective bargaining, and no automatic arbitration when enterprise bargaining breaks down, absent significant industrial action.

We have been accused by some of pandering to unions, and by others of caving in to business.

We believe we have got the balance right - to continue the rich Labor tradition of industrial relations reform in the national interest.

The false debate

Despite this rich history of industrial relations reform under Labor, the battle lines for the current policy debate had been set even before our policy was released last Saturday.

Before the release of the policy the Minister was already warning that under Labor's policy there would be rules which said wages paid to miners in WA would be required to be paid to hospitality workers in Sydney.

Before the release of the policy the Prime Minister was already talking about the reinvigoration of 'union bosses' and compulsory arbitration.

And before the release of the policy the Treasurer was talking about the inflationary pressures which will be caused by a return to centralised wage fixing under Labor.

The fact the policy released on Saturday proves these claims to be demonstrably false hasn't stopped the Government continuing to make them.

The Treasurer said at the weekend that Labor is reintroducing a centralised wage fixing system.

The Minister for Employment & Workplace Relations said on Melbourne radio this week that our system would mean that unions would set the same wages acrossthe whole economy. He said:

… a drought affected farmer would have to pay a mechanic the same as perhaps BHP or Rio Tinto would in the middle of the goldfields.

The Small Business Minister said this week that our policy would mean small businesses would be forced to restructure around the family life of each employee and small business would be forced to pay redundancy.

And the Prime Minister said to Laurie Oakes on Sunday that:

…You run the risk, Laurie, if you put it [family friendly arrangements into] legislation that some employers will avoid employing women, in particular with young children.

This is exactly the same claim made nearly 30 years ago when women first won the right to unpaid maternity leave and ever since employers have been employing women in ever increasing numbers.

Many of you here tonight are academics or students of the University. Others work in business as employers or employees. I trust you understand the need for accuracy in your work and the need to provide precise and quantifiable evidence in support of your arguments or proposals.

Compare that to the claims made about Labor's policy this week.

Despite the rough and tumble of politics and the 30 second sound bite, there is no excuse for the deliberate misrepresentation and misinterpretation of Labor's policy perpetuated by the Government.

Let me take the opportunity to clarify a number of these key points:

  • Under Labor's policy unions have no automatic rights in enterprise bargaining where an employer and employees agree to bargain together.
  • Under Labor's policy there is no automatic arbitration of collective agreements. Our policy clearly states that no one will be forced to sign up to an agreement where they do not agree to the terms.

The only situation where Fair Work Australia will become involved is:

  • Where the parties voluntarily agree that they want formal or informal assistance in bargaining. Fair Work Australia can sit down with the parties or provide them with sample agreements; or
  • Where there is protracted industrial action which is causing significant harm to the economy, to health and safety and to bargaining participants. It would have been irresponsible not to include a mechanism for the independent umpire to intervene where the effect of that action is being adversely felt in the community. The AIRC currently has this power and has had it for almost 15 years.
  • Fair Work Australia will be an independent body. We have advice from Senior Counsel and Queen's Counsel that the structure and operation will be Constitutional. It will not be staffed by ex trade union officials. The fact that Fair Work Australia will be in locations which are accessible does not therefore mean it has powers to intervene in every workplace issue. It will not. But if you do need it, you won't have to travel to the centre of the city.
  • Small business will not be required to restructure to accommodate a request from an employee for flexible work arrangements. They will not be required to pay redundancyentitlements. They will not be dragged away from their business for endless days of unfair dismissal hearings.

The list goes on.

Labor's industrial relations policy is balanced. Balanced and fair for working people, for employees and employers and for business and unions.

Our guiding principle in developing the policy was to ensure Australia had the tools to compete in the ever increasing and encroaching global economy without losing sight of the fundamental principles which make up the Australian way of life.

Forward with Fairness is designed to promote cooperative workplace arrangements - so employers and employees can work together to make their workplaces more productive and profitable, and then share the benefits. History shows this is the way to increased productivity.

Because Labor has released an industrial relations policy it means Australians will have a clear choice at the next election.

A choice between Work Choices and Labor's Forward with Fairness.

A choice between a system which allows for terms and conditions of employment to be set unilaterally or reduced without any compensation, and a system which says Australians deserve a fair day's pay for a fair day's work.

A choice between a system which purports to be simple and flexible but which is complex, complicated and represents unprecedented government intrusion in bargaining, and one where clear rules and the sharing of information to promote understanding and compliance will be key.

A choice between a system based on fragmenting workplaces and one with employers and employees working together.

A choice between a system which makes it hard for families to have time together, and a policy which is squarely and unashamedly based on helping Australian working families do just that.


Friends we need to raise the level of the current debate.

And I would like to remind you of the important role you will play in that debate.

Labor has released an industrial relations policy for the Australian people to consider as they make their decision about which party is best placed to take Australia into the future.

You will play an important part in providing comment and analysis, about our policy and about the alternatives.

Our policy has been criticised by unions and employees, Government and business. We believe this is because it is a balanced policy and not a policy for one group within the Australian community.

And Labor is happy to have this debate. Labor wants this debate.

Whether it is fought on economic criteria, or on fairness or flexibility or family friendly grounds I believe Labor can win the debate.

And unlike the Howard Government Labor will not stop debating the issues when we win Government.

In Government Labor will not refuse to provide responses to Senate Estimates Committees about the creation and effect of our policies. In November Labor Senators asked the Government questions about the policy rationale, the legality,the operation and economic effect of Work Choices.

Six months later there are still 400 questions outstanding from that hearing. Government agencies like the Office of Workplace Services and the Office of the Employment Advocate told the Senate in February that they had provided their responses to the Minister's office. But the Minister is still refusing to publicly release the responses.

I wonder what he has to hide?

In Government, Labor will not direct its agencies to stop doing their work just because it tells a story different to the one we want told.

The failure of the OEA to continue to analyse Australian Workplace Agreements after June last year, and the questions raised by the recent leaking of further analysis, is just one example.

And Labor will not resort to making the kinds of personal attacks on Australia's academic community of the kind we have seen from the Minister in recent months and from his predecessor last year.

We believe that you, as industrial relations scholars and practitioners, have an important contribution to make to Australia's industrial relations policy debates.

I look forward to continuing this debate with you into the future.