June 18th 2005

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Articles from this issue:

COVER STORY: OPINION: The European Union - charting the future

EDITORIAL: New industrial law needs amendment

FINANCE: Leading banker calls for Development Bank

CANBERRA OBSERVED: Kim Beazley's tactics backfire

WESTERN AUSTRALIA: New law to deny patients life-saving treatment

QUARANTINE: Pork industry wins major court victory

FOREIGN AFFAIRS: Behind the defection of a Chinese diplomat

DEFENCE: Australia ill-prepared for new threats

FAMILY: Is Australia facing a new baby boom?

OPINION: Bioethics and the biblical worldview

ENVIRONMENT: Debunking myths about the Great Barrier Reef

STRAWS IN THE WIND: Disillusioned Europeans / Can the Euro last? / Some more unintended consequences for the Greens / Not another oil-for-food scam? / The Year of the Octopus

Democracy vs. the courts (letter)

Destroying lives to benefit others (letter)

Informed consent (letter)

Washington's "Deep Throat" a hero? (letter)

BOOKS: C.S. Lewis for the New Millennium, by Peter Kreeft

BOOKS: Until the Final Hour: Hitler's Last Secretary / The Bonfire of Berlin

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New industrial law needs amendment

by Peter Westmore

News Weekly, June 18, 2005
The Howard Government's announced changes to workplace agreements risk accelerating the shift towards casual and part-time work.

Late in May, the Prime Minister announced changes to federal industrial laws which, he said, would boost Australia's productivity. The law has been introduced in the House of Representatives, and is expected to go to the Senate later this year.

Key features of the new law will be the establishment of a new Fair Pay Commission to set minimum wages, in place of the Industrial Relations Commission; lifting the threshold for firms exempted from unjust dismissal laws from 20 to 100 employees; and a request for states to transfer their powers to make laws in this area to the Commonwealth Government, as Jeff Kennett did in Victoria some years ago.

The Fair Pay Commission will also take over the work of the Industrial Relations Commission in relation to minimum junior wages, training and disability wages, wage rates in awards and casual loadings. That is, it will become the major wage-fixing body in Australia.

The Government's clear intention is to promote more flexibility in the workforce, to encourage workplace agreements and to reduce the role of unions in negotiations in individual workplaces.

Big business groups such as the Australian Chamber of Commerce and Industry, the Australian Mines and Metals Association, the National Farmers' Federation and the Business Council of Australia have welcomed the changes.

Dangerous trend

While the proposed changes are theoretically beneficial to business, there is a danger that they will accelerate the shift towards casual and part-time work, at the expense of employees and their families.

The replacement of full-time by part-time and casual work is already a major social problem, eroding the principle of the family wage and eroding job security. In turn, this has generated the need for families to have two incomes.

The new legislation should be encouraging full-time rather than part-time and casual employment. Further, it may have the effect of reducing family income, and contributing to a fall in living standards.

Employer groups have suggested that the process will lead to more simplification of awards and agreements. However, there will be little change: the law will still set a minimum of five core conditions against which agreements are to be tested, instead of the existing awards which are freely available and easy to understand.

It is obvious that the new legislation is designed to minimise the role of trade unions in negotiating workplace agreements, which will be conducted outside the structure of the Industrial Relations Commission, where the role of unions is institutionalised.

The main problem with the latest reforms, like earlier ones, is that they do not help small businesses and the self-employed, who are being strangled by red tape imposed by various government departments (particularly the Taxation Office), as well by as state and local governments.

This why the legislation has been criticised by one of the National Party's new senators, Barnaby Joyce, from Queensland.

Senator-elect Joyce has criticised the proposal to transfer the states' industrial powers to the Commonwealth, and the lifting of the threshhold for unjust dismissal claims. As to the first, the state Labor governments have unanimously rejected the planned transfer of powers, so it would seem that this part of Mr Howard's plan in unachievable.

As to the changes in unjust dismissal laws, the actual number of businesses involved will be relatively small, and there will be no change to unjust dismissal laws for either genuinely small businesses or for large firms.

One critic of the new law also made the valid point that increasing labour market "flexibility" may actually discourage industrial innovation.

He said: "Most innovations don't start with a bright idea around the board table or a flash of inspiration in the laboratory, but from working people listening to customers and turning their complaints and suggestions into valuable ideas, and because workers observe problems at their workplace and suggest ways to correct them.

"By putting two-thirds of Australian workers on hire-and-fire contracts, this source of innovation will be choked off ...

"Much has been made of the impact of the unfair dismissal regime, even though the number of actions taken under it is trivial and the number of workers obtaining reinstatement or damages is even smaller. The maximum penalty is $30,000." (The Australian, June 2, 2005).

In summary, the proposed changes in industrial law will have few benefits for employees or for most employers who treat their people with respect.

Whether the legislation is carried in its present form will depend on whether it is carried in the Senate. After July 1, the Coalition will have a very narrow majority in the Senate, but some National Party senators are understood to be nervous about aspects of it. There is also a Victorian senator from the Family First Party, Senator-elect Stephen Fielding, who could have a vital role in whether the legislation is carried.

  • Peter Westmore is national president of the National Civic Council.

CORRECTION (published 2 July 2005):

In my editorial published in News Weekly (June 18), I stated, "As to the changes in unjust dismissal laws, the actual number of businesses involved will be relatively small, and there will be no change to unjust dismissal laws for either genuinely small businesses or for large firms."

This is incorrect. Currently, unfair dismissal laws apply to all employers, regardless of size, and undoubtedly act as a strong disincentive to small businesses taking on additional labour.

Under the proposed changes announced by the Federal Government, unfair dismissal laws will apply only to businesses with more than 100 employees. The new law will cover the majority of businesses and employees. The new industrial law will therefore have a major impact on both employees and employers. When carried by Federal Parliament, the new laws will apply to all employees under the federal industrial system.

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