Dozing through an IR nightmare

The word 'productivity' didn't make it into Bill Shorten's press release yesterday announcing a review of the Fair Work Act, or into the terms of reference. There is no one from business on the panel and nothing in the terms of reference about asking businesses whether the Act is working for them.

It is, in short, a whitewash – the review you have when you don't want to have a review. What's more, the new minister for workplace relations and former union leader went one step further than the old principle of never announcing an inquiry unless you already know the result: he actually laid out the result in the press release.

It is that the Act "works well”. He said: "The Fair Work Act underlines a balanced system for good workplace relations – one that promotes national economic prosperity and social inclusion for all Australians. Real economic prosperity and growth requires fairness and security in the workplace.” There you have it Messrs Moore, McCallum and Edwards, work backwards from that.

The review is not meant to look at whether Australia's current IR laws are working or not, it is merely the reluctant fulfilment of a commitment to review the Act after two years that had to be made because the then minister, Julia Gillard, exempted the Act from the usual regulatory impact statement at the drafting stage.

The word 'productivity' does appear a few times in the Act, including in its objectives, so the review panel will have to at least pay some deference to it. But there is no one from business on the panel and the list of bodies from which evidence will be taken does not include the Productivity Commission.

The fact that Australia's industrial relations system is divorced from reality was well demonstrated by Bill Shorten's third press release as minister, commenting on the resolution of Qantas' dispute with its engineers this week. "It … reflects the flexibility of the provisions in the Fair Work Act that allow the parties to engage in meaningful conciliation.”

Sure it does – after months of damaging industrial action, followed by a lock-out of all staff and grounding of the airline's entire fleet at huge expense and damage to the company's brand and then the referring of the dispute to compulsory arbitration.

His first press release expressed pleasure that WA stevedore POAGS had cancelled its lock-out and the parties were in four weeks of conciliation before Fair Work Australia.

The spate of lock-outs makes it clear that the Fair Work Act does not actually meet its first objective, which is to provide laws "that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia's future economic prosperity…”

What it does is entrench the position of unions and prevent businesses from negotiating directly with employees as an alternative.

So when a union won't budge, the only alternative is to lock out the staff – that is, for the business to go on strike – and thereby bring in the umpire. This is not a flexible system that promotes productivity.

Over the past two years, Australian business owners and managers have been getting increasingly frustrated with the way the system works.

Big businesses have much less flexibility thanks to union power over entry into the workplace and compulsory bargaining, and the low thresholds they have to meet to start a strike or work ban.

Small businesses are being hit by higher costs, such as loadings, penalty rates, overtime and casual rates; they are being forced to pay wage rises that are greater than the price rises they can get; and there is now a lack of flexibility in rostering and dismissal.

The Fair Work Act is all about empowering unions and is a nightmare for businesses, large and small. But the panel won't find that out.

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