Brendan O'Connor (Gorton, Australian Labor Party, Shadow Minister for Employment and Workplace Relations) Share this | Link to this | Hansard source

I rise to speak on the Fair Work Amendment (Bargaining Processes) Bill 2014. Labor oppose this bill. However, we have sought to refer the bill to a Senate committee to examine whether the government's claims about its merits stand up to scrutiny. At this stage, we believe that the bill is not ideally constructed. It is ambiguous, imposes red tape on small businesses, may increase costs and create uncertainty. We do believe, however, that finding ways to increase productivity is of significant importance and so we will seek the view of stakeholders, through the committee, on the proposed changes. As the Chief Executive of the Australian Mines and Metals Association Steven Knott claims, Australian businesses are looking for reform 'to help sustain our nation's economic growth, living standards and employment'. Labor wants to ensure that any changes to the current system will increase productivity, growth and jobs. That is why we have taken the responsible decision to refer the bill to a Senate committee.

It is worth noting that this bill was introduced on Thursday and here we are, only one week later, debating the merits of a bill which could have very significant impacts on how employers, unions and employees conduct themselves during bargaining and how the Fair Work Commission operates. Given the Abbott government flagged the idea of these changes in their policy document, why has it taken so long? Why is the government now seeking to rush this through parliament?

The construction of the bill is clearly inconsistent with the government's election policy document. Labor is concerned that this will lead to adverse consequences—and who could blame us? Australians have been misled by the government with a proposed GP tax, fuel tax, cuts to the ABC and SBS, cuts to the indexation of the pension, cuts to health and cuts to higher education—the list goes on and on. And we do not want this bill adding to that already long list.

In short, Labor cannot support this bill as it currently stands because it may be ambiguous and may result in no change other than to create additional red tape, increase costs and generate uncertainty for employers, unions and employees; and, at worst, it is an assault on employees' democratic right to bargain effectively at the workplace. Labor contends that the bill is poorly constructed and is potentially bad policy. I will consider the bill sequentially and deal with the government's proposed 'productivity discussions' and then move to the protected industrial action proposals in the bill.

In addressing the government's proposal relating to productivity discussions as part of enterprise agreements we arrive at their first broken promise. Labor is concerned the government has gone further than their election policy and put the power directly into employers' hands. The coalition's policy document states:

Before an enterprise agreement is approved, the Fair Work Commission will have to be satisfied that the parties have at least discussed productivity as part of their negotiation process. The key is to make sure—

and this perhaps the most important part—

that workers and managers have at least considered how to improve productivity to help their workplace work effectively.

If the government was serious about addressing productivity in the case of both workers and managers they could have considered amendments to the good faith bargaining rules and made clear what was expected during that process. Instead they have opted for this new requirement which may not benefit the process of bargaining for and, eventually, completing an enterprise agreement. Due to the clumsy drafting of the provision two equally plausible situations arise. One scenario is the government's proposal does nothing but add red tape, increase costs and create industry uncertainty. Indeed, respected industrial relations academic Professor Andrew Stewart, from the University of Adelaide, has said the government's requirement for productivity discussions is 'completely token' and 'more red tape', which would not create much change.

Geoffrey Giudice, the highly regarded former President of the Australian Industrial Relations Commission and its successor Fair Work Australia, has said that requiring parties to formally take productivity into account in enterprise bargaining would create definitional and quantitative issues. On the implications, including productivity, Giudice has said:

In the case of parties who were already having difficulty reaching agreement, any additional requirement would not be helpful. Where parties are in agreement, there would be a temptation to find spurious productivity improvements where none existed in order to satisfy the statutory requirements.

Giudice goes on to say:

Building in further process would be unlikely to yield a net benefit.

It is for these reasons that Labor believes that further investigation needs to be done by a Senate committee to look at the implications of this bill.

The government claims it has a deregulation and red tape reduction agenda. Well, here is a perfect and simple example that the government may be doing exactly the opposite—in this case, inflicting unnecessary requirements on business. In practice the outcome of this bill, if it is passed, may only create a box-ticking exercise where the bargaining parties just place a tick to say they have discussed productivity—and that would be it. However, like everything with this government, we must dig a little deeper because we know the government's intention is not actually to deal with productivity. This Liberal Party's agenda has been to wage a continuing crusade against working people by imposing the requirements on unions while providing options for employers to avoid the requirements.

It is against this backdrop that we must consider an ulterior scenario that might arise from the successful passage of this bill. Just as there is the possibility that this provision is ineffective there is also a very real and equally conceivable risk that the construction of this provision could operate as a veto power for employers. The new requirement states that the Fair Work Commission must be satisfied that improvements to productivity were discussed 'during' bargaining for the agreement. However, the relevant section of the Fair Work Act 2009 refers to the requirements that must be met before the Fair Work Commission can approve an enterprise agreement. Therefore, it is not beyond the bounds of reason that a situation might arise where an employer says, 'I don't want to talk about productivity until we've discussed the cutting of wages, holidays or other conditions.' Does that mean that, if this bill is enacted, an agreement can never be completed if employees refuse to accept those adverse changes first? This looks like it may tip the balance of bargaining further in favour of employers. So already we are seeing the potential effect that this bill could have—supporting Labor's sensible position that this bill be referred to a committee for further examination.

Labor knows how important productivity is. That is why, when we were in government, we ensured it was included in the objects of the act. ABS data shows that labour productivity has increased over the last 12 quarters. Labor's workplace relations policies are working to deliver productive and sustainable outcomes for Australian employers and their workforce. What we know is that productivity was three times higher under Labor's Fair Work Act than during the draconian Work Choices regime. This productivity increase took place after the repealing of WorkChoices and, most remarkably, while we were enduring the greatest global economic shock since the Great Depression.

And just as we know how important productivity is, we know how insincere the government's sloganeering about productivity is. If the government were genuinely serious about productivity they would not be cutting trade training centres, they would not be gutting $2 billion from training and skills, they would not be seeking to open up the temporary migration streams while thousands of Australian workers are unemployed and they would not be removing protections for Australian workers. Instead, the government would be building infrastructure properly, including rolling out Labor's NBN and investing in rail. They would be training our young people in the skills our economy needs for the future. They would be investing in entrepreneurship and innovation and assisting small business.

But we see none of that from this government. No thinly veiled attempt to canvass productivity as part of the approval requirements of enterprise bargaining can hide the fact that the Prime Minister is failing on jobs, training, infrastructure and ultimately productivity. A further concern that Labor has with this bill is the definition—more appropriately, the lack thereof—of productivity. The bill simply does not define productivity, so there is a multitude of ways that it might be interpreted. We know that economists have many different definitions of what productivity is. Indeed, some employers would have a different view of productivity to that of their employees. For example, it can be rightly argued that including an additional week's training—for, say, technical employees who are party to an agreement—is a measure that will boost productivity, increasing skills and leading to productivity outcomes. However, it could also be argued—perhaps with less veracity and probably by those members opposite—that it is not a productivity-boosting measure at all but, rather, an unproductive measure, because the employee would be incapable of working for that week.

So, again, on the definition of productivity and the perspectives that parties bring to that definition you can see can see how it can create division, uncertainty and debate and may not lead to the certainty required for negotiating agreements. The government's explanatory memorandum uses examples of productivity improvements such as 'elimination of restrictive or inefficient work practices' and initiatives to provide employers with 'greater responsibilities or additional skills directly translating to improved outcomes'. What on earth does this mean? I guarantee that the government does not know—and that might very well be deliberate. We may conclude, as Professor Stewart has said, that the government is deliberately trying to make it difficult and ambiguous and induce doubt among employees seeking to take protected industrial action. And I would like to return to that point a little later. But the problem is that the construction of the examples is so inept that it will potentially lead to employers needing to take legal advice in relation to protected action matters as well.

I will now address the concerns Labor has around the changes to protected action. We contend that the Abbott government's proposals reflect a deep misunderstanding of bargaining and negotiation. We are concerned that the proposed amendments to the sections of the Fair Work Act that govern protected industrial action may have been introduced to appease those who have lobbied the government from a particular sector of the economy—namely, big business. Our concern is that the government's ideological war against unions continues in this bill. There are two parts to the government's proposed amendments to protected industrial action ballots. The determination about what constitutes genuinely trying to reach an agreement has been a matter for the Fair Work Commission based on all the circumstances since the institution of protected industrial action was created under Paul Keating. Indeed, there was no attempt to change that definition in the Howard years. In this bill the government is proposing to essentially codify elements of a Fair Work decision they deem favourable. The proposal is that the test for whether an applicant—an employee organisation—for a protected action ballot has been, and is, genuinely trying to reach an agreement would include a non-exhaustive list of matters, which are:

(a) the steps taken by each applicant to try and reach agreement;

(b) the extent to which each applicant has communicated the claims;

(c) whether the applicant has provided a considered response to the proposals made by the employer;

(d) the extent to which bargaining for the agreement has progressed.

In pursuing this amendment, again, two scenarios arise. First, the government's insistence to codify the matters is completely unnecessary given that commissioners currently are entirely free to have regard to all relevant circumstances and do not disregard the matters to which I have just referred. Second, the government is introducing the additional requirements because they are applicable only to those making an application for protection action—namely, employees' organisations: unions. There are no corresponding additional elements placed on employers.

If this were the case, it would be yet again an election breach. Given the government's propensity to break its election commitments, this is the more likely scenario. To be clear, the election policy of the government stipulated:

Workers and business must be genuine in their attempts to bargain so that realistic improvements in employment conditions can occur for everyone.

Yet, as the ACTU correctly states, by amending section 443 in the way in which it has, the government has imposed a different and higher standard on unions to take protected industrial action over and above that to which employers are subject in cases of employer lockouts. There is another difficulty that presents itself in this scenario. If the 'extent to which bargaining for the agreement has progressed' is included as a compulsory consideration, this again may encourage employers to frustrate the process of bargaining. What will happen if employers stall bargaining? Again, we think that is best examined further by a Senate committee. Also, the government's explanatory memorandum refers, at paragraph 17, to an applicant for a protected action ballot having to take 'genuine and reasonable steps to engage with an employer'. Perhaps we could think about this in another way: how many times is it reasonable for an applicant to go back to an intransigent employer?

The other component of the government's proposed changes to protected action is the new provision that means that the Fair Work Commission must not make a protected action ballot order if it is satisfied that the applicant's claim or claims:

(a) are manifestly excessive, having regard to the conditions at the workplace and the industry in which the employer operates; or

(b) would have a significant adverse impact on productivity at the workplace.

The bill still leaves much discretion to the Fair Work Commission, but this may add additional uncertainty. On reading the text of the bill, it appears that the Fair Work Commission is not required to consider matters going to claims that are 'manifestly excessive' or had an 'adverse impact on productivity' unless the parties made a case for it.

What we see also is a provision relating to the claims that 'would have a significant adverse impact on productivity' which is, we think, badly designed. On one hand, the provision means absolutely nothing because, of course, a claim cannot possibly lead to productivity. A claim is just that: a claim. Claims can only have an impact if they are granted. Only the other, different, interpretation might rule out the possibility of ever taking industrial action.

Again, the ACTU has raised the point that this amendment is best seen as a merits test which will be applied to the claims made in bargaining both on an individual basis and an all-in basis. The former could effectively defeat the latter. The ACTU quite rightly contends that, if the commission is satisfied that a claim of the applicant is manifestly excessive, the ballot application will fail—notwithstanding the fact that every claim or concession made moderates the impact of the individual claim being considered. This is most definitely a question that warrants further investigation by the Senate committee.

Consider this example posed by Professor Stewart. If a commissioner need only consider a single element of a claim, without having regard to other elements of the claim, any single element of a claim that seeks to impose an additional cost or create an additional burden on the employer may have an adverse impact on productivity. Therefore, even if a commissioner is satisfied an individual claim, if granted, would have a significant negative impact on productivity, there is absolutely no way the commissioner could possibly know what else might be agreed to offset that. What this means is a commissioner might possibly never be satisfied.

Professor Stewart goes on to say it is therefore possible that if the test is applied as strictly and rigorously as it is proposed, this could remove the capacity to take industrial action entirely. That may not be the intention of the government—then again, it may well be—but that may well be the consequence, unintended or otherwise, of this bill if enacted. With the construction of this bill, Labor believes a commissioner may take the purpose of the amendment as meaning unions should only be able advance claims that do not significantly impact on productivity. This would be a surprising step, which, we argue, could destroy enterprise bargaining as we know it. The whole bargaining process is about bringing two parties together where they may not start in similar positions, particularly on matters such as wages, conditions, flexibility and, of course, productivity.

Another concern with this proposal is the determination of what is 'manifestly excessive'. The government's explanatory memorandum, in paragraph 21, states:

The phrase 'manifestly excessive' is intended to be directed at claims that are evidently or obviously out of range or above and beyond what is necessary, reasonable, proper or capable of being met by the employer, when compared to the conditions at the workplace and the industry in which the employer operates.

There is a risk that a claim with an element of ambit in it, say above CPI, may mean that a protected industrial order cannot be granted. This is yet another reason why the bill must be referred to the committee for investigation.

The final practical problem, which is supported in the government's explanatory memorandum, is that, if one union has one 'excessive' claim in their log, it would prevent all unions' applications from proceeding—that is, if they were jointly applying for protected action pursuant to the act. Yet again, this is a case of punish one, punish all. It very much looks like the government is seeking to stymie the rights of employees to effectively bargain by, in certain circumstances, denying protected industrial action. Professor Stewart goes on to say, 'It could happen in all circumstances, theoretically.' Remember, this is about denying the rights not just of construction workers, the workforce that the government likes to attack every day, but also of nurses, paramedics, teachers, administrative workers and workers throughout the land. This is, on the construction of the bill, potentially very unreasonable and indeed could be very damaging to the way in which enterprise bargaining has operated in this country.

A final matter that must be touched upon is how this bill will intersect with the government's plans to appoint an appellate jurisdiction to overturn decisions of the Fair Work Commission. The Liberal Party's election policy document states they will give 'active consideration to the creation of an independent appeal jurisdiction' of the Fair Work Commission. We know this plan is the government attempting to undermine the independence of the commissioners, giving the final say on matters to the government's hand-picked appointees. By creating and appointing its own appeals body with the power to overturn full bench decisions of the Fair Work Commission, the government would turn the independent umpire into a partisan body, which would make ultimate decisions on the matters I have addressed, including productivity and protected action. When you have a bill such as this, which is so ambiguous and leaves much to be interpreted by commissioners, this is a serious concern, and it could mean that partisan government appointees are effectively making judgements on the pay and conditions of average Australians.

As I have said, there is much to be concerned with in the provisions of this bill. It is for that reason that we seek to have the matter reviewed. We believe that it would appear to be badly constructed. It may well have unintended consequences. Some would argue that the consequences are indeed intended. We would say that the bill, being ambiguous as it is, seems to misunderstand key elements of our workplace relations system. And, for that reason, Labor quite responsibly refers the bill to a Senate committee to hear the views of stakeholders and potentially affected parties.

David Gillespie (Lyne, National Party) Share this | Link to this | Hansard source

This bill is very essential to allow us to deliver what we said we would do in the last election. This bill encompasses amendments that go to the heart of fairness and productivity.

Before we go any further I would just like to bring to the House's attention what I, and most people, see as fairness. Fairness implies reasonableness: reasonable activity; being reasonable. It implies taking into account both sides of the argument—or the many sides to an argument—or the objectives and aims and the situation that the parties to negotiation find themselves in. It does not imply fairness to one party to the negotiations; it implies equal footings, equal validity and consideration of both sides of the argument.

In the Australian situation, one can almost justify anything by appealing to this higher Australian authority of something being fair or not, and our opponents on the other side have worked this principle of Australian society to the nth degree. The aim of this exercise is to put fairness back into the Fair Work Act because, to the humble observer, let alone large corporations or small businesses that are trying to get a new industrial arrangement in place, all the fairness seems to be on the side of the applicant. You have only got to see opposition to our budget. There is no economic angle in their arguments. There is just all this appeal to something being unfair. Fairness is a bit like beauty. Beauty, the old saying goes, is in the eye of the beholder. Fairness is also in the eye of the beholder, and what we have in the Fair Work Act is a one-sided situation where applicants for an agreement can come in, strike first and argue later. This amendment addresses that situation.

It is also addressing the issue of productivity, which is not enshrined in this amendment, but it is just putting it on the table to make sure it is considered by the commission and by the people in good-faith bargaining. Everyone in the industrial space wants the business to succeed. Everyone who is employed wants to have a job. But, when applications cross over to manifestly unreasonable or excessive, you have to have the ability in our negotiation system to make sure the unreasonableness or the economic reality of a situation come to bear. So productivity is at the essence of this bill.

In Australia, we are pricing ourselves out of so many of our traditional markets. We have, for many years, being very efficient miners. We have been very efficient farmers and producers of wonderful produce. But, if we have inefficient industrial relations without productivity gains, all our competitive advantage will go. You only have to look at the JJ Richards case from three or four years ago or the case in the north-west with the tugboat negotiations, where there were unbelievably generous ambit claims put in. That is what this regulatory change to the act is aiming to address. It compels the Fair Work Commission to consider productivity changes. It also addresses the process by which protected industrial action can be taken. 'Protected industrial action' means whoever goes on strike is not liable, in a civil sense, for any of the consequences of the strike.

These are two essential problems for the nation: the return of our productivity growth, which was the marker of income growth and national prosperity through the late eighties and nineties into the early 2000's. That is why our society was in a really sweet spot where people's household incomes were growing and there was growth in businesses which employ more Australians. But we seem to have lost that. We have been on vacation regarding productivity growth. If we do not become productive, things become more expensive. Our products that we try to sell are less competitive. So our trade suffers. To make the most of our free trade agreements with Japan, Korea and China, we have to lift our productivity. The trade deals themselves will not get us the wealth and prosperity that we have within our grasp. It will happen if we become more productive.

One only has to look at the LNG revolution. There is a whole new technology being delivered in these floating LNG platforms because it was more efficient and more productive for the LNG processors to do it out at sea. We would much rather it happened on shore using Australian workers, but efficiency and productivity was woeful. So they have invented this whole new technology that bypasses a lot of Australian workers, and it is a pity. We do not want that to go on continuously. We want our workplace to be productive and effective.

Some of the amendments, in particular, insert new sections which put effect to those principles. Industrial action still can be taken with these amendments, but there has to be a genuine discussion about the productivity gains. Some of these productivity gains were mentioned by the previous speaker with some shock, horror and surprise. But getting rid of restrictive and inefficient work practices is to be commended. I think it is an excellent idea. Employees having more responsibilities, but then becoming more productive is another great principle. Improving design efficiency and effectiveness in the workplace is another great principle. But the previous speaker looked on in horror and surprise, thinking that this might be, essentially, a bad thing.

As I mentioned, it does not force productivity into the workplace. It is very gentle. It is just saying that you have got to discuss it. It has got to be part of the negotiation process, and before you have protected strike action you have to have a protected ballot to see if the workers do actually want to undertake strike action. These are hardly revolutionary ideas. But, if you do get manifestly excessive claims like a 38 per cent wage rise without any productivity gains, no business can survive that. These regulatory changes will introduce common sense. We said before the election that we would work with the Fair Work Commission—we are working with the Fair Work Commission and we are putting sensible regulatory changes in place, and good outcomes should result.

Subsection 443(1) provides that the Fair Work Commission must make a protected action ballot order if it is satisfied that an application for a protected action ballot order has been made and that each applicant has been, and most importantly is, genuinely trying to reach an agreement. How often have we heard about the rush to a strike action happening without genuine negotiations. We are putting on the table that this has to occur in a genuine fashion. We are putting on the table that improvements to productivity have been discussed. It requires, at the minimum, that discussions about those radical ideas that I mentioned, such as improvements to productivity by removing restrictive work practices, have been considered. Under subsection 443(1), the protected action ballot from an applicant is enshrined.

These reasonable initiatives are going to increase our productivity, they are going to make us more competitive, they are going to make businesses sustainable and they will get rid of manifestly excessive claims—and, if the claims do have an obvious adverse effect on the productivity of the workplace, they will be considered. What we want to have is a two-way street; we want to put the 'fair' back into the Fair Work Act so that the employer or the developer of a project gets the economics of the situation considered. It is then a two-way street; it is not a one-way street with random manifestly excessive claims and rapid moves to industrial action occur before true negotiations take place, and that the workers, if they are involved in it, have had a ballot to see if they really want to go down that route. So, let us put the Fair Work Act back into a fair space so both sides get to do genuine negotiations. I commend this bill to the House.

Debate adjourned.