Why the Morrison government’s ‘double-dipping’ gambit fails the pub test



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Joo-Cheong Tham, University of Melbourne

It’s almost unimaginable: an Australian government proposes a law that would wipe out billions of dollars of employers’ entitlements.

Even more unimaginable: it does so on the basis of mistakes made by employees.

Yet right now a “Black Mirror” scenario lies before Australia’s federal parliament, in the form of the Morrison government’s “ominbus” industrial relations bill.

It proposes to extinguish entitlements owed to workers due to the mistakes made by employers. If passed, thousands of low-paid workers stand to lose billions of dollars in entitlements.

But that’s not even the worst thing that can be said of the bill. Worse still is the cynicism of its premise, the need to “fix” a problem that does not really exist.

To appreciate the depth of that cynicism, let’s recap the smoke and mirrors that have made “double-dipping” – the “horror scenario” of paying workers misclassified as casual employees both a 25% casual loading and paid leave entitlements – a hot-button issue.




Read more:
So much for consensus: Morrison government’s industrial relations bill is a business wish list


Paying the costs of employer mistakes

Action is needed, the government claims, to address the “uncertainty” over employers incurring up to A$39 billion liabilities because of a Federal Court decision in May 2020.

Known as Rossato v Workpac, the case was unusual because the defendant, labour-hire company WorkPac – with the federal government’s support – funded the legal action against it by former mine worker Robert Rossato.

Rossato argued Workpac should have employed him as a permanent worker, rather than a casual worker, given his regular work roster. Workpac wanted the Federal Court to hear the case so its lawyers could try some arguments not used in Workpac’s unsuccessful defence of a 2018 court case (involving similar claims by fly-in-fly-out worker Paul Skene).

One of Workpac’s new defences was that Rossato (and workers in similar situations), even if misclassified as casual employees, had been paid a casual loading that should be “set off” against leave entitlements now accrued to them.

As Andrew Stewart summarised at the time: “In other words, if he was entitled to the benefits he claimed, he had already been paid for them.”

The Federal Court rejected this argument comprehensively.

In finding for Rossato, it ruled the casual loading paid any worker wrongly classified as a “casual employee” did not offset their separate entitlement to paid leave, as guaranteed to all permanent employees under the Fair Work Act.



CC BY-NC-ND




Read more:
The truth about much ‘casual’ work: it’s really about permanent insecurity


Different entitlement types

Presumably the Federal Court must have had its reasons – and indeed it did. It laid them out in terms so clear it is hard to see where uncertainty arises.

The key distinction, said the court, was that casual loading and paid leave are two different kinds of entitlements.

The casual loading is a monetary entitlement supposed to compensate casual employees for the downsides of being casuals. Casual employees are meant to get 25% more than what a permanent employee would be paid, though research suggests in reality the loading is often neglible.

Does the loading cover casual employees not accruing annual and other leave? That is a matter of confusion, with differing approaches taken by courts and industrial tribunals. It some cases, the casual loading might be framed as compensating for the disadvantages of casual employment. Sometimes the loading might simply be paid due to prevailing “market rates”, as a wage premium to attract workers to jobs with few other benefits.

Whatever the circumstances, the Federal Court stressed that paid leave was not just another monetary entitlement when it came to permanent employees (including those wrongly classified as casuals).

As the judges put in their Rossato ruling, there is a “temporal dimension” to paid leave.

That is, it was an entitlement to an absence from work “in order to facilitate rest and recreation”. This made it qualitatively different to a cash entitlement.

So the Federal Court’s ruling was clear. There was no uncertainty. It saw no double-dipping. Its ruling did not require employers to pay twice. It required them to honour different types of employee entitlements.




Read more:
What defines casual work? Federal Court ruling highlights a fundamental flaw in Australian labour law


Return of a living dead argument

Now the federal government is arguing what WorkPac (with the government’s backing) argued unsuccessfully to the court. Its industrial relations bill proposes making that losing argument the law.

If passed, courts will be required to deduct the value of any casual loading paid to misclassified casual employees from any claim they now have to compensation for not being being given the leave entitlements owed to permanent employees.

It creates a “back door” for employers to cash out paid leave obligations, leaving even more workers in the “employees without leave entitlement” category.



CC BY-NC-ND

In doing so, the bill doesn’t just strip rights from wrongly classified casual workers. It undermines a fundamental principle in Australia’s national employment standards – reflected by the Fair Work Act having limits on cashing out paid leave.

These limits recognise leave entitlements aren’t just a personal benefit. The the whole community benefits; and 2020 has shown the community costs of failing to ensure all workers have paid leave entitlements.

Workers in risky jobs – such as aged care and meat processing – without sick leave or other entitlements have been clear transmission vectors for COVID-19 outbreaks such as that which enveloped Melbourne.




Read more:
Workplace transmissions: a predictable result of the class divide in worker rights


These limits have safeguarded low-paid workers signing away these rights out of financial need in lop-sided bargains.

If there’s only lesson one to be learned in the months since the Federal Court handed down its ruling, it’s this. Further impoverishing the value of leave entitlements is just about the last thing any COVID-inspired industrial relations reform should being doing.The Conversation

Joo-Cheong Tham, Professor, Melbourne Law School, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Chance for genuine industrial relations reform thrown under the omnibus




David Peetz, Griffith University

When Prime Minister Scott Morrison announced the formation of five working groups of employers, unions and government officials in June 2020, he signalled an unexpected twist to industrial relations reform.

Some observers anticipated a new politics of consensus — or even an Accord 2.0. The working groups met over several months.

They need not have bothered. The newly-released “omnibus” bill was mostly as partisan as if the working parties had never existed. To some, the omnibus looks old, oddly familiar and somewhat shady. Real reform is as distant as ever.

When an agreement over one issue was reached between the unions and the body representing large employers, it was quickly scuttled by other employers and the federal government itself.

The bill that the government released last week was organised along the five themes of the working parties.




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Casual employment

Employers wanted to overturn two Federal Court decisions that gave a legal entitlement to annual leave to many long-term leave-deprived employees. Employers wanted a definition of casuals that avoided any possibility of a leave entitlement, and retrospective voiding of any previous entitlement.

To unions, these court decisions had ended a long-standing rort enabling employers to avoid their legal responsibilities. Unions wanted the chronic insecurity facing casuals to be reduced.

The bill meets employer demands. It enables employers to define any employee as a casual, with no leave entitlements or job security, at the time employment commences, provided certain conditions were met. This is more about power than genuine flexibility in work. Existing casuals lose any previous entitlement to leave if they received the casual loading.




Read more:
The truth about much ‘casual’ work: it’s really about permanent insecurity


Award flexibilities

Employers’ initial agenda had been for simplification of awards, by reducing or removing penalty rates, overtime pay, or other payments. But the government was unwilling to face the political problems with this. It was haunted by the loss of the 2007 “WorkChoices” election. So the focus switched to award “flexibilities”.

The bill enables hours for part-time employees to be increased without any overtime premium. Part-time employees take on the hours flexibility that casuals currently have, but at lower pay rates.

The main effect, though, may be to minimise employers’ incentive to take on additional workers, as they could cheaply increase hours for existing workers.

The bill also allows employers to give “flexible work directions” to employees to perform new types of work, or at new locations, if it is reasonable to “assist in the revival of the employer’s enterprise”. As “revival” is not defined, there is a lot of scope for discretion by members of the Fair Work Commission to interpret this. This matters as some say that, since 2013, the notion of “balance” in appointments to the commission has “been abandoned”, with most appointments coming from the employer side of the table.

The Fair Work Commission will have a lot of scope for discretion.
AAP/James Ross

Enterprise bargaining

Both unions and employers claimed the enterprise bargaining system was too complex, but without any agreement over how to simplify it.

Some employers had called for the “better off overall test” (BOOT) to be abolished. The BOOT meant an agreement had to make any worker better off compared to under their award.

The bill tries to override it for a specific, albeit large, group (workers in firms that could claim they were affected by COVID-19) and for a specific time (agreements must be made within two years, though their effects could last many more). It has provoked so much opposition that the minister has appeared to back away from it — possibly throwing that idea under the omnibus.

The bill would reduce scrutiny of agreements, allowing only short periods before approval, cutting opportunities for employees to consider them and restricting the ability for unions to comment on non-union agreements. While non-union agreements cover only a small proportion of employees, they have lower average wage increases, are less likely to be genuinely negotiated. They are also more susceptible to loss of award conditions. This means they are more vulnerable to exploitation.

The main complexity in the enterprise bargaining system is the barriers put to unions seeking agreements. The bill addresses none of these, instead aiming to make non-union agreements easier to make. Nor does it address how an agreement with a few employees can deny the rights of a whole workforce, employed later. They lose all rights to negotiate through industrial action. Ironically, in other industrialised countries, non-union agreements are impossible anyway.

Greenfields agreements

Greenfields agreements are agreements that cover a new project, usually in construction, but also (less commonly) outsourced services, new ventures and, rarely, theatrical shows. The main employer objective here was to increase the duration of agreements on large construction sites. On this, the bill delivered.

For up to eight years, any employees recruited to a new “major” project initially approved by a chosen union will be unable to negotiate better conditions through industrial action. A major project is anything worth above $250 million that the minister declares to be “major”. That’s about the size of a motorsport entertainment complex in Toowoomba or a medicinal cannabis plant in South Australia. That’s a lot of employees denied the right to negotiate over a long period.

Compliance

Unions have long complained about systematic underpayment and “wage theft” by many employers (heightened since the loss of union rights of entry) and about business models, such as franchising and sub-contracting, that encourage it.

The bill partly addresses this by criminalising certain deliberate instances of this behaviour. It would override laws some states have.

These provisions are uncontroversial and indeed welcomed by unions.

However, the biggest problem is not that the maximum penalty is too low. Already the maximum is rarely used, and many offences are ignored. Not many are caught, and punishments are light.

True, increasing the threatened punishment for the most egregious offences might discourage wage theft. But the assertiveness of administrative action seems to be the main factor shaping employer behaviour. If you think you won’t be caught, let alone punished, you’ll keep on doing what you’re doing.

Employers win … again

Every industrial relations reform is proclaimed by its proponents as being “commonsense” and “practical”. This bill is no different.

Like most industrial relations reforms, though, it is principally about affecting who gains income and power in the workplace. The wage theft provisions purport to favour the most disadvantaged, though with uncertain effects. The remainder, more simply, favour employers over employees.

The most important changes that could be made to simplify enterprise bargaining — removing the many obstacles facing employee representatives — have been thrown under the omnibus.The Conversation

David Peetz, Professor of Employment Relations, Centre for Work, Organisation and Wellbeing, Griffith University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

So much for consensus: Morrison government’s industrial relations bill is a business wish list


Jim Stanford, University of Sydney

“We are all in this together,” Prime Minister Scott Morrison solemnly intoned in April – and for a brief few months, in the face of the economic crisis wrought by the COVID-19 pandemic, Australia’s industrial relations protagonists agreed.

Business groups, unions and governments put aside their usual differences and worked together to minimise job losses.

They quickly negotiated alterations to dozens of awards and enterprise agreements, adjusting rules and rosters to help keep Australians on the job.

Then, in late May, seeing opportunity in that spirit of cooperation, Morrison heralded a new consensus-based approach to industrial relations.

The federal government set aside its effort to impose more legal restrictions on unions and established new “industrial relations reform roundtables” for employer groups, unions and government officials to work together on reforming workplace laws Morrison said were “not fit for purpose”.

“We’ve got to put down our weapons,” he declared. The change in approach was even compared to the historic Accords of the 1980s, in which the Hawke-Keating Labor government convinced unions to accept wage freezes in return for enhanced social benefits (like Medicare and superannuation).




Read more:
Australian politics explainer: the Prices and Incomes Accord


Well, the Kumbaya moment didn’t last long.

Within weeks the parties retreated to their corners and their standard speaking points. No meaningful consensus emerged on any issue from any table.

Even tentative proposals – like an idea supported by unions and the Business Council of Australia to combine fast-track approval of union-negotiated enterprise agreements with greater flexibility in determining their suitability – were shot down in partisan gunfire by more strident business lobbyists.




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Morrison government invites unions to dance, but employer groups call the tune


Now, in the absence of consensus, the government has picked up its traditional hymn book and is once again singing the praises of “flexibility”.

Today federal industrial relations minister Christian Porter revealed the rotten fruit of the roundtable process, the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020.

If passed, it will further skew the already lopsided balance of power towards employers.

The bill doesn’t just take the employers’ side in the five issues debated at those roundtables (award simplification, enterprise agreements, casual work, compliance and enforcement, and “greenfields agreements” for new enterprises).

One of its biggest changes is to suspend rules that prevent enterprise agreements from undercutting minimum award standards. This proposal wasn’t even discussed at the roundtables.

This confirms the gloves are off once again in Australia’s interminable IR wars.

Here are the most significant ways the bill will weight the scales further to the disadvantage of workers.

Suspending the BOOT

As the law now stands, enterprise agreements cannot undercut minimum standards in industry awards. This is known as the “better off overall test” – or BOOT. The new bill instructs the Fair Work Commission to approve agreements even if they fail this test, so long as the deal is nominally supported by affected workers (more on this below) and deemed to be in the “public interest”.

Australia is unique among wealthy nations in allowing employers to unilaterally implement enterprise agreements, without involvement by a union. The BOOT is thus necessary to prevent enterprise agreements from undermining award rights.

The bill proposes suspending BOOT for two years. But even if it were restored after that (which is uncertain), agreements approved during that window would remain in effect (enterprise agreements typically last four years). Even after they expire, under Australian law they remain in effect until replaced by a new agreement, or terminated by the FWC – neither of which is likely in a non-unionised workplace.

Apparently in anticipation that unions will actively oppose non-BOOT-compliant agreements, the bill also includes measures to speed their approval by the Fair Work Commission. The process must be completed within 21 days (with some exceptions). This will limit the ability of affected workers to learn about and resist their loss of benefits and conditions. Unions will be restricted from intervening around agreements they were not directly involved in negotiating (including intervening against agreements that had no union involvement at all).

Broadening the definition of casual work

The growing use of “casual” employment provisions was a hot topic at the IR reform tables. The new bill clarifies the definition of casual work in the most expansive way possible: a casual job is any position deemed casual by the employer, and accepted by the worker, for which there is no promise of regular continuing employment.

In other words, any job can be casual, so long as workers are desperate enough to accept it. This will foster the further spread of insecure employment without paid leave entitlements. Most importantly, it removes a big potential liability faced by employers as a result of recent court decisions, under which they might have owed back pay for holidays and sick leave to employees improperly treated as casual workers.




Read more:
What defines casual work? Federal Court ruling highlights a fundamental flaw in Australian labour law


Casualising part-time workers

Further casualisation will be attained through new rules regarding rosters and hours for permanent part-time workers. The bill extends flexibility provisions originally implemented earlier this year – during that brief moment of pandemic-induced cooperation. The rules allow employers to alter hours for regular part-timers without incurring overtime penalties or other costs (currently required under some awards). This will allow employers to effectively use part-time workers as yet another form of casual, just-in-time labour.

Doubling new project agreement times

Finally, the bill grants one more big wish from the business list.

It allows super-long enterprise agreements at major new projects. Agreements can last for up to eight years – double the time now allowed – and be signed, sealed and delivered before any workers start on the job (thus denying them any input into the process).

Under revised BOOT provisions, they could also undercut the minimum standards of any industry awards.

Back to business as usual

These changes are being advertised as a spur for post-pandemic job creation. But this claim is hollow.

In reality, the changes in part-time and casual rules will actually discourage new hiring. Since existing workers can be costlessly “flexed” in line with employer needs, there is no need to hire anyone else.

Weaker BOOT protections will spur a wave of new enterprise agreements, most union-free, and aimed at reducing (not raising) compensation and standards. This makes a mockery of the goals of collective bargaining, and grants employers further opportunity to suppress labour costs (already tracking at their slowest pace in postwar history).

So what to make of that short-lived spirit of togetherness that purportedly sparked this whole process? In retrospect, it seems to have been just an opportunity for the Coalition government to pose as visionary statesmen during a time of crisis.

Now, mere months later, the government is back to its old ways – and the pandemic is just another excuse to scapegoat unions, drive down wages and fatten business profits.The Conversation

Jim Stanford, Economist and Director, Centre for Future Work, Australia Institute; Honorary Professor of Political Economy, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Businesses hit by COVID could give the boot to BOOT hurdle under workplace changes


Michelle Grattan, University of Canberra

The government’s industrial relations legislation, to be introduced on Wednesday, would allow businesses affected by COVID to be exempt from the Better Off Overall Test (BOOT) in enterprise agreements.

More broadly, the planned changes would make it easier for agreements to comply with the BOOT and speed up the approval process.

Enterprise bargaining has become sclerotic and addressing this problem is a central part of the government’s industrial relations reform package.

In December 2010 there were 25,197 current federal enterprise agreements covering some 2.6 million employees (23% of the total workforce). By June this year, the number had declined to 10,701, covering just under 2.16 million employees (20.8% of the workforce).

The BOOT considers whether the workers would be better off overall if a proposed agreement applied rather than the relevant award.

Under the current law, the Fair Work Commission (FWC) can approve an agreement that doesn’t comply with the BOOT if there are “exceptional circumstances”. The government proposes the impact of COVID effectively be the exceptional circumstance. The FWC also would have to consider the extent of support for a proposed agreement from employees and employers, and there’s a public interest test. There would be a sunset clause set at two years.

ACTU secretary Sally McManus said the government’s changes were extreme and would allow employers to cut workers’ pay and conditions.

Industrial Relations Minister Christian Porter invoked the name of Paul Keating in arguing for the changes. He said the government aimed to restore Keating’s “vision when he launched the enterprise bargaining framework almost three decades ago”.

Porter said this was for workers and employers to sit down and “agree on ways to increase productivity in exchange for higher wages and better conditions.

“But in reality, the system has been slowly choked by increased technicality, complexity and regulation, leaving it almost unrecognisable today – so much so that many employers no longer even attempt to get agreements across the line,” Porter said.

The government says application of the BOOT has become complicated because the FWC has increasingly taken into account “hypothetical” working arrangements unlikely to arise. This has led to long delays in approvals.

Apart from the COVID exemption, the changes the legislation proposes for the BOOT would

  • remove the requirement for the FWC to consider patterns or kinds of work that are not reasonably foreseeable

  • replace the requirements for assessing whether an agreement is “genuinely agreed” (for example, the requirement for employers to explain every clause to their workers even when the new agreement is largely unchanged) by a test that considers the substance of the agreement

  • require the FWC to determine applications within 21 days (the median approval time in 2018/19 was 122 days), or explain the exceptional circumstances preventing this

  • require the FWC to take into account the views of the employer and employees on the BOOT (including non-monetary benefits)

  • restrict intervention at the approval stage to employees and bargaining representatives unless the FWC is satisfied exceptional circumstances exist for why a non-bargaining representative should be heard

  • allow a new franchisee employer to join an agreement (e.g. McDonald’s, KFC) by only requiring that franchisee’s employees to vote, rather than everyone already covered by the agreement.

In other changes, existing agreements made before the Fair Work Act of 2009 will end in July 2022, and the government will initiate a review of the low paid bargaining provisions.

Porter said both unions and employers knew the present enterprise bargaining system was broken and wanted it fixed.

“The government recognises the BOOT’s importance as a key safeguard for workers,” he said.

“But a situation cannot be allowed to continue where the Fair Work Commission considers completely unlikely hypothetical situations.

“Similarly, the bargaining system has become grindingly slow due to the ability of third parties who were not involved in the initial bargaining process to object to agreements being made in the commission.

“Given that many industries are still reeling from the impacts of the pandemic, it is also makes good sense for the FWC to be able to consider agreements that don’t meet the BOOT if there is genuine agreement between all parties, and where doing so would be in the public interest,” Porter said.

But McManus said the changes were dangerous and extreme and the union movement would fight them.

“Workchoices allowed employers to cut wages, and this proposal will do that as well. When Workchoices was introduced employers rushed out to cut wages, the same will happen if this law passes.”

She said these proposals were “never raised during months of discussions with employers and the government. This was not the spirit of the talks with employers and the government,” she said.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Vital Signs: Morrison’s industrial relations peace gambit is worth a shot. Even if it fails, it’s shrewd politics


Richard Holden, UNSW

Australian Prime Minister Scott Morrison this week announced plans for a potential “grand bargain” on industrial relations.

Speaking at the National Press Club, he framed the issue as one of boosting economic productivity:

We must enable our businesses to earn Australia’s way out of this crisis. And that means focusing on the things that can make their businesses go faster.

Rather than directly introducing legislation into the parliament, Morrison’s plan involves creating five “working groups” of union and business advocates to look at issues from simplifying awards and the enterprise bargaining system to the treatment of casual workers and “greenfields” agreements for new enterprises.




Read more:
Morrison government invites unions to dance, but employer groups call the tune


This is shrewd politics. If the working groups find agreement, the government can push the required legislation through parliament with a claim to a mandate. And claim the credit.

If it fails, Morrison can say nothing can happen without business and workers agreeing. So the government avoids blame.

But it may also be canny economics.

Going for broker

Perhaps Morrison has realised his real power is not as an advocate but a broker.

This process might have less in common with Australia’s prices and incomes accords of the 1980s, where unions agreed to limit wage claims, than with the Dayton Accords, the peace agreement that ended the Bosnian War in 1995.

The accords between the Australian Council of Trade Unions and the Hawke and Keating governments between 1983 and 1991 were a response to the wage-price spirals that plagued advanced economies in the 1970s and early 1980s.

High inflation led to large wage claims, which further fuelled inflation. The 1983 accord broke this spiral by guaranteeing wage increases every six months tied to the consumer price index. As I’ve noted previously:

Once people knew that wages weren’t going to gallop ahead of prices, there was less of a reason to raise prices, which put less pressure on wages, and so on.

The Dayton Accords (officially the: General Framework Agreement for Peace in Bosnia and Herzegovina) were brokered by the US administration in Dayton, Ohio, in November 1995 between the presidents of Bosnia, Croatia and Serbia.

Booking a room

The shadow minister for industrial relations, Tony Burke, reacted to Morrison’s announcement by saying:

Let’s be clear: all the government has done so far is book a room. This is not an IR agenda – it’s a series of meetings.

Burke meant this as a criticism, but in fact it might be a virtue. It’s hard to imagine a deal on industrial relations without representatives of employers and employees agreeing. That agreement may be better served by a government acting as a broker rather than pushing its own specific agenda.

There is an emerging school of thought in economics that coordinating beliefs plays a crucial role in reaching value-enhancing deals. Having the participants believe there can be a deal might be the heart of the issue.

That was arguably the role US chief negotiator Richard Holbrooke played in the Dayton Accords, and the role federal industrial relations minister Christian Porter will need to play in this rather different setting.

Very different starting points

That said, the parties don’t agree on all that much – at least as a starting point. ACTU secretary Sally McManus has emphasised that:

We can only secure a better, stronger Australia if working people have permanent, well-paid work and the entitlements that come with it.

The head of the Business Council of Australia (BCA), Jennifer Westacott, says the issue is needing:

… a system that delivers higher productivity, letting people work more effectively, produce more and find new and innovative ways to work.

Can permanence and job security be reconciled with effectiveness and innovation in the workplace? I’m an optimist. But we shall see.

Are the representatives representative?

This possible grand bargain needs to be between employers and employees. Those at the table will be representatives of those groups – namely unions and employer groups such as the BCA and Ai Group.

A crucial question is how representative these representatives are.

As Leigh Sales observed on the ABC’s 7:30 program this week:

The vast majority of Australians aren’t members of unions, only 14% of people are. In this process, shouldn’t workers be represented by other voices that more likely speak for them?

In the private sector, union membership is even lower – about 10%.




Read more:
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One should ask similar questions of the BCA and Ai Group. For instance, do they represent the views of smaller businesses as faithfully as they do the big ones?

This is crucial because it affects the credibility of any potential deal, and how any benefits are spread. A cosy deal between big business and unions on greenfield construction sites is one thing. A grand bargain that helps workers not in unions and employers across the economy is quite another.

Will it work?

Morrison did frame the issue adeptly in his address. He was clear about the inputs needed to increase the economic pie:

The skilled labour businesses need to draw on, the affordable and reliable energy they need, the research and technology they can draw on and utilise, the investment capital and finance that they can access, the markets they can connect to, the economic infrastructure that supports and connects them, the amount of government regulation they must comply with, and the amount and the efficiency of the taxes they must pay.

Given all that, Australia’s industrial relations system does arguably need reform. And it won’t happen without the key players agreeing to it themselves.

Morrison’s gambit may not work, but it is certainly worth a shot.The Conversation

Richard Holden, Professor of Economics, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Morrison government invites unions to dance, but employer groups call the tune


Anthony Forsyth, RMIT University

Prime Minister Scott Morrison this week proposed a new deal in industrial relations, bringing together the government, employers and unions to agree on reforms to create jobs and lift the economy in the post-CIVD-19 pandemic recovery phase.

“”We’ve booked the room, we’ve hired the hall, we’ve got the table ready,” he said on Tuesday. “We need people to get together and sort this stuff out.”

Comparisons have been made with the “accords” of the Hawke and Keating Labor years between 1983 and 1991.

It’s not the same.

The Morrison government is simply recasting an agenda that business groups have pushed for the past decade, and inviting unions (and other stakeholders) into the room.

The Hawke-Keating accord era

This is a long way from the seven accords agreed between the Hawke-Keating governments and the Australian Council of Trade Unions.

The agreements secured union support for the government’s economic reform program by promising improvements in the “social wage” in exchange for unions curbing claims for pay rises.




Read more:
Australian politics explainer: the Prices and Incomes Accord


As a result, landmark social improvements, including the establishment of Medicare and guaranteed employer contributions to superannuation, were achieved for all Australians.

As the accords wore on, though, unions paid a heavy price as “efficiency” became an element in deciding the merits of claims for higher wages. The last accord, for example, ended centralised wage-fixing and ushered in enterprise bargaining. This did more for business productivity than for employee gains.

The WorkChoices era

The election of John Howard in 1996 buried the accord era. His government embraced an overtly anti-union posture, culminating in the 2006 “WorkChoices” legislation that allowed individual workplace agreements. Howard championed this as giving flexibility to both employers and employees. But it really shifted the balance in favour of employers. The backlash helped end Howard’s reign in 2007.

The Labor government of Kevin Rudd then brought in the Fair Work Act, which reinstituted union-centred collective bargaining.

Since then the business lobby has fought back on two fronts: continuing to campaign for deregulation, and developing strategies (including through litigation) to enable employers to sidestep the Fair Work Act’s collective bargaining provisions.

The success of this approach for many employers largely explains the ACTU’s “Change the Rules” campaign before the 2019 election.




Read more:
Where to now for unions and ‘change the rules’?


Industrial relations has therefore remained hotly contested. Prior to the COVID-19 crisis it was almost like a war of attrition. The Coalition’s Ensuring Integrity Bill exemplifies its aggressive agenda. It would have enabled union officials to be removed from office, and unions deregistered, for minor breaches of workplace laws.




Read more:
‘Louts, thugs, bullies’: the myth that’s driving Morrison’s anti-union push


Lay down your guns

Now the prime minister wants everyone to put down their weapons.

In fact this has already occurred in the past two months, with the government, businesses and unions co-operating over emergency measures to deal with the pandemic.

Unions have agreed, for example, to the removal of award restrictions, enabling changes to business operations and work-from-home arrangements. They pushed hard for the JobKeeper wage subsidy scheme.

But how much more will union leaders be prepared to concede when it comes to considering permanent changes to workplace regulation?

Battleground issues

The scope for consensus is limited, especially given four of the five items on the government’s agenda align with that of business organisations such as the Australian Industry Group.

First, casuals and fixed-term employees.

This will be the most hotly fought area. The federal government is likely to address business concerns about the Federal Court ruling last week that “permanent casuals” have a right to paid leave as well as their casual loading. The likely outcome is a new statutory definition of “casual” to prevent this.

For unions, the court decision shuts down the ability of employers to treat workers as casuals long-term. A possible compromise might involve ensuring casuals have a legal right to convert to permanent employment after 12 to 18 months.

Second, “greenfields” agreements for new projects.

Employers in the resources and construction sectors have long complained they are compelled to negotiate with a union for new project agreements. Unions are unlikely to be willing to give this up.

Third, enterprise bargaining.

Employer groups complain the Fair Work Commission’s strict approach to the “better off overall test” and other technical requirements make reaching enterprise agreements too difficult. The unions contend some employers have perverted enterprise bargaining through tactics such as getting carefully selected employees to vote for substandard agreements. There is little room for common ground here.

Fourth, award simplification.

Employer groups have argued that wage-theft scandals are really due to awards being too complex. Yet we have gone from several thousand federal and state awards to 122 awards (one for each industry).




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It is hard to see unions agreeing to (for example) removing leave entitlements from awards when they are arguing in a case before the Fair Work Commission for pandemic leave to be included in awards.

Fifth, compliance and enforcement.

This is the one area where employee gains might be achieved, if the government makes good on its commitment to make systemic underpayment of workers a criminal offence.

Overall, however, the Morrison government’s agenda is skewed towards the reform ambitions of the business community without offering any equivalent of the social wage benefits of the original accord.

Unions may well regard his peace proposal as a request to surrender. They won’t, of course, and will try to ensure their concerns about wage stagnation and exploitation of workers in the gig economy form part of the coming discussions.The Conversation

Anthony Forsyth, Professor of Workplace Law, RMIT University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Morrison wants unions and business to ‘put down the weapons’ on IR. But real reform will not be easy.



Lukas Coch/AAP

Ray Markey, Macquarie University

In a bid to repair the economy, Prime Minister Scott Morrison has announced an industrial relations overhaul.

Business groups and unions will be brought together to try to change a system that Morrison says is “not fit for purpose”.

This is a positive step after years in which industrial relations has substantially divided interested parties. As Morrison told the ABC on Wednesday, “we’ve got to put down the weapons”.

But reaching meaningful agreement will not be simple or straightforward.

Accord 2.0?

Morrison’s move has invited comparisons with the Accord between the Labor Party and the ACTU when Bob Hawke became prime minister in 1983.

This was the basis for economic reform built on wide consensus between employers, unions and government.

However, there are many differences between the special circumstances of the Accord and now, which may indicate the chances of success for the current initiative.




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Hawke had the advantage of high levels of trust from both unions and employers, based on his years as a successful negotiator as ACTU president and industrial officer.

While Morrison talked positively about to the “constructive approach” between unions and employers during the coronavirus pandemic, he does not have any such record of trust to build on.

Another difference with the Accord is that in the 1980s, the industrial relations system was more centralised. So, employer organisations and the ACTU enjoyed greater coverage and authority among their own constituents to bring them to an agreement.

One indication of that difference now is the recent Jobs Protection Framework negotiated between the National Tertiary Education Union and the Australian Higher Education Industrial Association.

It has fallen over as a sectoral agreement because many universities have refused to participate and it has attracted criticism among some union members.

What needs to be fixed in 2020

Unions, business and government all agree that reform of the current system is needed. Finding common ground on what those changes are will be more difficult.

ACTU secretary Sally McManus says she wants to make jobs more secure for workers.
Joel Carrett/AAP

Morrison has announced five working groups, to be chaired by Industrial Relations Minister Christian Porter. The groups will look at award simplification, casual and fixed-term employment, greenfield projects, and compliance and enforcement for wages and conditions.

Most of the working group topics relate to employer groups’ reform agenda.
The Business Council of Australia has advocated for greater flexibility and simplification of the award system for the economy to successfully rebuild.

Employment relations professor David Peetz warns that this is code for shrinking the award safety net. Unions are likely to interpret this similarly.

Unions may be more interested in simplification of the enterprise bargaining system to benefit workers. They are concerned with the ease with which employers have increasingly terminated agreements and moved employees onto lower paid awards.

Casual workers

The casual workforce is likely to be a contentious area for discussion.

The Australian Industry Group has called for tighter legislative definition of casual worker status, after recent court decisions granted leave for long-term casuals.

Ai Group chief executive Innes Willox is concerned about the definition of workers.
Lukas Coch/AAP

Meanwhile, the ACTU has long sought a general right of conversion to permanent employment for long-term casuals of six to 12 months standing, whom they consider to be exploited.




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Notwithstanding the casual loading for casual workers, they earn less on average than permanent employees.

There may be grounds for agreement on this issue. Employers would need to concede a formula for long term casuals’ easy conversion, if they choose, to permanent employment. Unions would need to concede no leave entitlements for employees who choose to remain casuals.

Greenfields sites

Greenfields sites – which involve a genuine new business, activity or project – have been a battleground in the Fair Work Commission for years.

Greenfields agreements on large construction sites have enabled employers to reach enterprise bargaining agreements with a small number of employees before most workers are hired. Workers who are hired when the project gets fully underway are then bound by the agreement.

Compliance and enforcement

There may be more common ground over improved compliance and enforcement for wages and conditions. Employers and unions have condemned major cases of underpayment recently uncovered by the Fair Work Ombudsman.

However, better compliance may be difficult to reconcile with the government and employers’ desire for less regulation.

Where to now?

Unions and employers have indicated willingness to participate in good faith, despite the huge challenges they face. But the omens are poor.

There is already disagreement over the Fair Work Commission’s annual minimum wage decision, due in July.

The ACTU is arguing for a 4% increase, angering business groups.

Industrial Relations Minister Christian Porter will chair five working groups to try and overhaul the IR system.
Joel Carrett/AAP

The Australian Chamber of Commerce and Industry has argued the minimum wage should remain frozen until at least mid-2021. It has even cited a precedent of the 10% reduction awarded on the basis of capacity to pay during the Great Depression.

The fact that wages growth had been at record lows before the COVID-19 crisis will not help matters.




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View from The Hill: Can Scott Morrison achieve industrial relations disarmament?


There is also a serious question as to whether industrial relations reform is the right place to be looking to reboot the economy.

Former top public servant Michael Keating was head of the Employment, Finance and Prime Minister’s departments during the Accords era.

Writing last month, he said Australia’s industrial relations regulation was more flexible than that in the United States, and the reforms of the past 25 years have had little substantial impact on productivity, labour market adjustment, wages growth or industrial disputation.

Keating also warned that industrial relations reform is mainly “camouflage for lower wages, which is the last thing this economy needs right now”.The Conversation

Ray Markey, Emeritus Professor, Macquarie University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

View from The Hill: Can Scott Morrison achieve industrial relations disarmament?



Lukas Coch/AAP

Michelle Grattan, University of Canberra

Scott Morrison has indeed taken to heart that adage about not wasting a crisis. He insists he is going to put to advantage the opportunity brought by these most unfortunate circumstances.

His plan for a government-employer-union-community effort to reform this country’s industrial relations will, if it comes off, be a substantial achievement (although the actual magnitude would depend on just how much was done).

Politically, success would give Morrison something positive for the next election, which will be fought in the testing circumstances of likely high unemployment and sectors of the economy still struggling.

Labor would be outflanked.

If Morrison’s effort ends as a busted flush, he’ll say he tried and move on to something else.

Despite his pragmatism, Morrison aspires to be remembered as a leader who delivered reform. Remember when as treasurer under Malcolm Turnbull, he pushed strongly to change the GST and talked up his mission?

In Tuesday’s address to the National Press Club, he was the ambitious consensus prime minister, declaring “we’ve booked the room, we’ve hired the hall”, to get everybody to the table in pursuit of better industrial relations arrangements.

The present system had “retreated to tribalism, conflict and ideological posturing,” he said. It had “settled into a complacency of unions seeking marginal benefits and employers closing down risks, often by simply not employing anyone”.

As a “good faith” gesture, the government won’t pursue another Senate vote on its controversial Ensuring Integrity bill which would give the Federal Court the power to cancel the registration of a union or an employer organisation and introduce a public interest test for the amalgamation of such organisations. The Senate rejected the legislation last year.

In his speech Morrison announced a structure for talking, and broad topics to talk about. Industrial relations minister Christian Porter will chair five groups – they will consider award simplification; enterprise agreements; casuals and fixed term employment; compliance and enforcement, and greenfield agreements for new enterprises.

“Membership of each group will include employer and union representatives, as well as individuals chosen based on their demonstrated experience and expertise and that will include especially small businesses, rural and regional backgrounds, multicultural communities, women and families,” Morrison said.

The process will run until September. “It will become apparent very quickly if progress is to be made,” he said.

Indeed, it is not as if Porter is starting from scratch. After being appointed industrial relations minister following the 2019 election, Porter set up a process of IR reform which has produced several discussion papers and consultations on a range of issues.

A frustrating feature of the Coalition government, if you take it as a whole from its election in 2013, is its failure to finish what it starts.
Key reform processes have previously begun but run up dry gullies or been overtaken.

For instance Tony Abbott commissioned white papers on taxation and federalism. After overthrowing Abbott, Turnbull aborted the white papers. Turnbull in turn flirted with tax change, not just possible GST reform but even the states raising their own income tax. Tax reform as well as federalism are among the issues Morrison has in his sights.

As for Morrison’s declared determination to get a better system for training and skilling workers for the jobs of the present and the future – we have heard this from governments of both stripes for a very long time.

Of course, the past isn’t necessarily a guide to the future, and Morrison’s handling of the pandemic points to his adaptability as a leader.

His agenda appears broad and ambitious (although we can’t be definitive ahead of the detail). He has talked skills and industrial relations this week, but there’s also deregulation (another recurring Coalition theme) and energy as well as tax and the federation.

Admittedly it is not a matter of all-or-nothing. Worthwhile but limited changes would be better than not making the effort.

The extent to which Morrison succeeds will depend on a number of factors.

On industrial relations, it is whether employers and unions put the interests they share above those that divide them – whether each side will be willing to give ground for a larger common cause. The chance of agreement will differ according to the issue.

ACTU secretary Sally McManus responded on Tuesday: “The ACTU will measure any changes to industrial relations law on the benchmarks of: will it give working people better job security, and will it lead to working people receiving their fair share of the country’s wealth?”

They could be challenging benchmarks.

A co-operative discussion will go against the instincts of some of the Coalition’s anti-union hardliners, and be resisted by some in McManus’s constituency.

Asked his message to people in his own party who might see this as an opportunity to finally neuter the union movement, Morrison said: “I think everybody’s got to put their weapons down on this”.

On making progress with reforms involving federal-state relations, including the training system, the attitude of the states will be crucial.

Morrison lauds the national cabinet, and the government contrasts it with the more bureaucratic Council of Australian Governments processes.

But national cabinet and COAG are the same people. The difference is national cabinet is operating in a crisis and totally focussed on that, and on the moment.

COAG deals with everything, and is mostly putting in place measures for the longer term. Inevitably, interests will diverge and corners are harder to cut (which doesn’t mean COAG’s working can’t be usefully shaken up).

Even if national cabinet continued, on some of these reform measures the states would probably behave more like they were in COAG – that is, there’d be more “process”.

Finally, there’s whether a crisis really does produce a climate conducive to reform.

It certainly concentrates attention, turns the page, sweeps away most else. (Asked on Tuesday about the timetable for the religious freedom legislation and the proposed anti-corruption body, Morrison had no answers. It was almost as though they were from another era.)

The road out of this crisis will be very tough for many people. Extensive reform is often painful. Whether the Australian public will be in the mood for it as they cope with the aftermath of such a trauma is an open question.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Morrison wants to unleash economy’s ‘animal spirits’ and foreshadows new look at industrial relations


Prime Minister Scott Morrison will lay out economic policies “to get Australians off the economic sidelines and on the field again” on Monday.
Dean Lewins/AAP

Michelle Grattan, University of Canberra

Scott Morrison will commit to getting consumers, business and investors “off the economic sidelines and on the field again” in his first major domestic speech of the new term.

Addressing a business audience in Perth on Monday, Morrison will set out the government’s economic priorities for the next few months, including delivering its tax plan when the new parliament meets, and “provoking the ‘animal spirits’” in the economy by removing regulatory and bureaucratic barriers to investment.

He will also foreshadow a new look at industrial relations reform while stressing that it must benefit both employers and employees.

Acknowledging the challenges and headwinds affecting the Australian economy, which registered low growth in the latest national accounts, Morrison will say political uncertainty in the election run up weighed on the confidence of consumers, businesses and investors. This saw them “sitting on the sidelines” until it was over.

“Our job post election is now very clear – to get Australians off the economic sidelines and on the field again.”

With shadow cabinet on Monday discussing the opposition’s position on the Coalition’s three-stage decade-long tax package, Morrison will seek to increase pressure on Labor to pass all stages, saying the plan doesn’t just have a strong political mandate but also “a compelling policy rationale”.

The first stage will boost consumption and be equivalent to at least two 25 basis point interest rate cuts, he says in his speech, released ahead of delivery.




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Labor agrees with stage one but is yet to decide whether it will wave through the second and third stages, both due to start after the next election. It has been particularly critical of stage three, which delivers to the highest income earners. The government says it won’t split the bill, which will be introduced when the new parliament begins next week.

While some in Labor believe it should pass the whole package, others argue it is irresponsible to commit to tax cuts years out in uncertain times.

Shadow treasurer Jim Chalmers, interviewed on the ABC, reiterated on Sunday that Labor wanted to know how the third stage – worth $95 billion of the $158 billion package – was distributed through the various tax brackets. He said Labor’s highest priority was to get the first stage flowing through the economy, while the government’s highest priority seemed the third stage which didn’t come in for another five years.

But Morrison says in his speech: “It still baffles me why Labor can readily sign up to spending schemes that run for decades, yet cannot do the same to let Australians keep more of their own money.

“Under our changes, from 2024-25, 94% of Australians will pay a maximum marginal tax rate of no more than 30 cents in the dollar, compared to only 16% if stages two and three are not delivered.

“Or to put it another way, almost 80% of hard working Australians will keep more of what they earn following stages two and three of our tax plan.”




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Morrison says that to provoke the “animal spirits” in the economy, regulatory and bureaucratic barriers to business investment must be removed.

This requires “reducing regulatory barriers to growth and driving improvements in industrial relations that improve outcomes for both workers and businesses”.

“Congestion is not just on our roads and in our cities. We also need to bust regulatory congestion, removing obstacles to business investment,” he says, instancing the experience of the mining industry in Western Australia.

“In 1966, the late Sir Arvi Parbo took the Kambalda nickel mine near Kalgoorlie from discovery to operation in 18 months. By contrast, the Roy Hill iron ore mine took around 10 years to complete around 4,000 approvals. Delays to the project meant delays to over 5,000 construction jobs and 2,000 ongoing jobs.

“There is a clear need to improve approvals timeframes and reduce regulatory costs, but in many cases regulators are making things worse.

“Look at the WA Environment Protection Authority and the uncertainty it has created over new emissions requirements for the resources sector. Business will also make valid criticisms of many Commonwealth agencies and departments.”

Morrison is appointing his close confidant Ben Morton, from WA, who is Assistant Minister to the Prime Minister, to work with him, Treasurer Josh Frydenberg and other ministers “to tackle the full suite of barriers to investment in key industries and activities”.

The government will focus on regulatory reform “from the perspective of a business looking, say, to open a mine, commercialise a new biomedical innovation, or even start a home-based, family business.

“By focusing on regulation from the viewpoint of business, we will identify the regulations and bureaucratic processes that impose the largest costs on key sectors of the economy and the biggest hurdles to letting those investments flow.

“What are the barriers, blockages and bottlenecks? How do we get things moving?

“Step one is to get a picture of the regulatory anatomies that apply to key sectoral investments. Step two is to identify the blockages. Step three is to remove them, like cholesterol in the arteries.”




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Morrison will highlight the need “to protect investment from the impact of militant unions” and reaffirm that the government plans to try to get through the new parliament its Ensuring Integrity bill, that stalled in the last term. This would strengthen its hand against militant unions, notably the CFMMEU.

Beyond this, Morrison will say he has asked the new Minister for Industrial Relations, Christian Porter “to take a fresh look at how the system is operating and where there may be impediments to shared gains for employers and employees.

“Any changes in this area must be evidence-based, protect the rights and entitlements of workers and have clear gains for the economy and for working Australians.”The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.