Monday, 31 October 2011


The public understand workplace relations partly by observing strikes and the level of disruption caused by unions.

This is understandable but reducing strikes is just the tip of the policy iceberg.

Some still think that the waterfront was one of the best things about the Howard government. And it was but actually, the even bigger change made by the Howard government was the change to the legislation in 1996 because that made the waterfront dispute possible and the changes improved the system for employees and employers in businesses and industries all round Australia. Under the Howard government the number of disputes fell to record lows, employees enjoyed increases in real wages, unemployment dropped and more people joined the workforce.

However one dispute, whether Qantas or the waterfront, can be very important by demonstrating how recent legislation like the Fair Work Act can impact on behaviour more generally in Australian workplaces.

On Saturday night, in a special hearing before Fair Work Australia, Qantas acquiesced in termination of the Qantas dispute apparently on the grounds that arbitration is a better option. Qantas CEO Alan Joyce has been saying that a mere suspension of industrial action by both sides would advantage the union. Qantas wanted an end to the cloud of uncertainty discouraging customers from booking flights. As Fair Work Australia considered this issue, and as I wrote this column, there was no doubt that the dispute will embolden militant unions to take further industrial action. That has already happened against BHP, and recently Customs and Toyota and others have been under threat. I expect the unions could soon be ramping up their attack on the resources sector.

Then, early this morning Fair Work Australia ordered an end to all industrial action by both the airline and the unions. Qantas will be back in the air and its workers back on the ground as early as this afternoon.

As soon as I heard premiers Baillieu and O'Farrell calling for government intervention, I had the awful thought that Australia could soon be on the rocky road back to arbitration. Later that Saturday morning, I noted that Professor Judith Sloan had blogged a similar view. I shuddered when I realised that senior Liberals including Tony Abbott were publicly encouraging PM Gillard to intervene and thus take the first steps to compulsory arbitration. I had not realised how quickly matters would develop and by the afternoon, Qantas announced the lock out. By Sunday morning Tony Abbott was saying that the Government should use all of the powers under the Fair Work Act. The Act includes a power to arbitrate. The Coalition should be supporting Qantas but instead Abbott says he does not take sides. Hawke supported Ansett and Howard supported Patricks. Reagan opposed the air traffic controllers and Maggie Thatcher confronted the coal miners. Abbott said of the dispute that "it is not a policy problem, it is a competency problem". These comments are obviously inaccurate. Of course PM Gillard is incompetent, but Tony only said that because, as everyone knows, the Abbott Coalition no longer has a policy on industrial relations.

Australia has not used compulsory arbitration since the Fraser years and earlier. Until this weekend, compulsory arbitration was part of our economic history. Neither side of politics have supported arbitration since the late 1980s. It represents a system that was largely discredited for having depressed Australian living standards by failing to promote better and more productive workplace relations. It was a system that was supposed to advantage workers with a fair day's pay for a fair day's work. But it did not work and, together with the policy of protection, it became a drag on Australia's success.

The point about compulsory arbitration is that it is premised on the concept that ultimately the responsibility for sorting out how people in a business manage their affairs should be determined by a government agency, Fair Work Australia (FWA) and not the people in the business. The people best able to understand the needs of a business are those working within the business. A governmental third party can never equal or do better than private sector participants. More importantly, only the people within the business can really have the necessary motive to promote the success of the business. Good businesses spend every day trying to improve. It is a dynamic and continuing process. Only within the enterprise will you find the motive to compete with competitors to deliver better goods and services to consumers. That competition includes the competition to have good workplace relations. To my knowledge there is hardly a successful modern economy anywhere that believes that compulsory arbitration is a good idea. Even the communists in China now accept that competition is the way to lift people out of poverty. Free enterprise and capitalism, with all their many faults, reward success achieved through competition to meet the demands of consumers. Of course, modern societies temper this approach by legislating protections for employees and consumers but the engine of our economic society is competition and the freedom to compete.

The reality is that under Labor's legislation, the unions have more power. And Labor is dragging Australia back towards arbitration. There is no question that the reregulation of the workplace has triggered this dispute and, as John Howard said fairly recently, this policy will have to be overturned. Only the Coalition can do that because Labor is hopelessly compromised by the unions. The Coalition should not be saying this dispute is not about policy. This dispute is all about Labor's policy. At a minimum, the Coalition needs to have a policy that includes restrictions on the right to strike to matters pertaining to the employer/employee relationship, strikes should be used only as a last resort, the JJ Richards case should be overturned, the bargaining rules should be tightened, exemptions should be given to small business for unfair dismissal and individual agreements should be reinstated.

I can't say I predicted this dispute but I and others and many people in business have for months been saying there are growing problems with Labor's legislation. The Coalition and the Government need to stop pretending that Gillard's system is OK. It is not and needs to be changed before it does a lot more damage.

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