Thursday, 22 September 2011

No Tony, contracts were and should still be Liberal policy

I was surprised and disappointed when I heard that Tony Abbott announced on the ABC's 7.30 (September 20, 2011) that "we don't support statutory individual contracts. We did once, but we don't now".
He seems to think that contracts were a philosophical position and he wanted to focus on solving practical problems. I thought his position was that he wanted to hear what business thought about the Fair Work Act before making any policy pronouncements.
There are a lot of issues for him to consider before he takes his proposal to the party room let alone to the party organisation. I have no doubt many colleagues will encourage him to keep some form of individual agreement. The employer associations are "disappointed" and that includes Heather Ridout of AiG who Abbott referred to in his TV comments. That is what they say in public; the comments are a lot stronger behind closed doors.
The first point he might consider is that when he was the minister for workplace relations his policy was to give employees and employers the choice of instruments for agreement-making. So they could use awards, collective agreements with unions, non-union collective agreements and individual agreements (AWAs). Today, Labor has awards and only allows union agreements. So, unless Abbott has some other idea, then by ruling out individual agreements, he is ensuring that in the private sector the union movement, with only 14 per cent of members, will call the shots over the 86 per cent non-unionised workforce. This will be resisted strongly by the Coalition's business supporters; large and small. His comment has already sparked concern in some quarters that he will not fight for small business on unfair dismissal. If he opts for the status quo then the philosophy of choice will not be resurrected by the Abbott Government. Instead the philosophy will be union-controlled collectivism.
The Labor Party is controlled by the union movement so they are full of ideology. But that ideology masks their real interest which is power in the market place and political clout. So the issue is which philosophy do you support? Personally, I like the choice idea because it means that employers and employees make the decisions in their mutual best interest. This is the point that Keating advocated and he was right also because it helped productivity. I also like what Abbott said a few weeks ago; "I think we ought to be able to trust businesses and the workers of Australia to come to arrangements that suit themselves". If he takes his own statement as a guide he will soon be back on a good tack.
There are some good reasons for having individual agreements, some very useful evidence to counter Labor and lots of data that support their use. There have been a lot of such agreements in the federal system since 1996 to 2008 and earlier in WA from 1993 to 2002.
On the matter of wages, Professor Sloan analysed the figures in The Australian (September 20, 2011). The evidence is that under WorkChoices wages were increasing for men and women. The data on AWAs is not clear because of other factors affecting pay and the fact that the Howard government reinstated the 'no disadvantage test'.
An Australian Mines and Metals Association (AMMA) paper published in 2007 sets out an interesting case study on how AWAs helped the mining sector improve productivity. These AWAs were the subject of scrutiny in the Federal Court in a matter involving BHP and Rio Tinto. AMMA explains:
In the 2001 AWU v BHP Iron Ore Pty Ltd decision, Justice Kenny discussed in detail the reasoning why BHPIO introduced AWAs into its workplace.
Of particular concern to BHPIO were the excessive costs associated with its current collective agreement and this included the requirement for paid union meetings and excessive transaction costs associated with changing shift rosters. This resulted in BHPIO looking to 'get union representatives back on the job instead of spending large amounts of time on union business'.
During the due diligence exercise, it became apparent that Hamersley operations were 25-30 per cent more efficient than BHPIO due to its industrial relations arrangements, namely the use of individual agreements. Of particular importance was Hamersley's ability to implement change quickly, once business and occupational health and safety tests were satisfied. This was something that BHPIO took months to do.
Justice Kenny found that while BHPIO recognised that 'structural issues such as railing distances and ore-to-waste ratios contributed to the productivity gap between the two companies, it became apparent that the key difference was their relative flexibility in the workplace'. This represented a $51 million gap between the two operations.
As a result of these findings, BHPIO considered that by bargaining with the union, a sufficient compromise could not be reached that would ensure it met its increased productivity target.
It is simply not right to say that the use of AWAs was philosophical in Telstra or the CBA, both big users of AWAs. Even today a lot of Australians have unregistered agreements. Thousands of small and medium-sized businesses want individual agreements back, not for reasons of philosophy but for the sensible and practical reasons that they were good for employers and employees.
Liberal policy on this has been clear for many, many years. Our philosophy is choice. Employers and employees should have choice in their agreement making. Labor has taken away choice. We need to bring it back.

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