Ged Kearney address to Industrial Relations Society of Victoria Annual Convention

08 October, 2010 | Speeches & Opinion The Fair Work Act in a new political environment
Address by ACTU President Ged Kearney to
Industrial Relations Society of Victoria Annual Convention
Melbourne, 8 October 2010


I would like to acknowledge the traditional owners of the land on which we meet today and pay my respects to elders past and present.

Thank you for the invitation to speak at your conference today. I am very familiar with the work of  the Society having been regularly briefed by my colleague and your past President, Geoff Fary!

I note that Adam Bandt, the new Greens Member for Melbourne addressed you this morning – if Adam’s still in the room, congratulations. Not long ago, Adam could have been at this convention as a delegate in his old role as an industrial lawyer. Now it’s as an MP.

How times have changed. I refuse to use the word paradigm, but we really are in a new political environment, aren’t we?

Today one of the things I’d like to talk to you about is how the ACTU and our unions will function in this new political environment and that may well include working with Adam and his colleagues in the Greens – along with the independents - where necessary.

Let me make it clear at the outset that I’m not an industrial relations professional nor a lawyer.

My background in the union movement is as a worker, then a delegate, and finally an elected official.

I’ve always believed in power of collaboration and dialogue as a mechanism for positive change. And in the new make-up of the federal parliament, these attributes are going to be more important than ever.

As I said earlier this week when I addressed the National Press Club in Canberra, I have the honour of becoming President at a new and exciting stage in Australia’s political history.

A minority government opens not just the possibility of new ideas inside parliament, but in the wider community as well.

But regardless of the novelty of the current political environment, the long term task of the union movement and my role as part of its leadership is to:

  • Help build our membership;
  • Improve our capacity to campaign; and
  • Broaden our agenda

This is a great time to be working in a movement that speaks and acts directly for some two
million Australians and their families.

We have over 120,000 volunteer workplace representatives - and half of all Australians work
for an employer where there is a union presence.

Through our work, millions more Australians are better off because their workplace standards
are set through collective bargaining and industrial awards.

We recently went through a closely-fought federal election. You may have noticed the
presence of the ACTU and some of our unions in that election!

This year the union movement had one overriding and primary objective. That was to ensure that the improvements to workplace rights gained since the abolition of WorkChoices were locked in.

WorkChoices was one of the major issues of the federal election, and the Rights at Work campaign successfully ensured that both major parties have committed to the retention of fair
work laws.

Indeed, with some notable exceptions, we now appear to have a national consensus on a fair
workplace system.

Australians have demonstrated that they believe fundamentally in a system that delivers a strong workplace safety net, fairness and decent workplace conditions.

This campaign by our members and unions around Australia has shown that wages, conditions and respect at work are key political issues.

We saw, from day one, Tony Abbott recant on his previous adherence to hardline, WorkChoices-style policies.

Remember “WorkChoices is dead, buried and cremated”?

The Coalition was forced to abandon its previous public commitments to individual contracts, to cutting protections from unfair dismissal, and to winding back the award safety net.

And he finished the campaign as he started: rejecting the adherence to deregulated labour markets that has been a central plank of Liberal philosophy since the party was founded.

The Liberals had finally got the message that Australians will not support parties that are committed to policies that undermine workers’ pay, conditions and rights.

Or so it seemed. The truth is that we never trusted Tony Abbott and the Liberal Party on this issue. We saw this as a cynical sham designed to con voters into thinking the Liberals had changed.

And look at what has happened this week. We’ve seen newspaper headlines like that in Tuesday’s Australian ‘MPs rail against Abbott’s IR policy’ and Wednesday’s Age ‘Libs put IR back on the agenda’.

It didn’t take long, did it? The veil has been lifted by the likes of Joe Hockey and Eric Abetz and we can see just how quickly a Tony Abbott government would have abandoned its election promise and returned to its agenda of labour market deregulation.

Because WorkChoices is in their DNA. They can change the name, they can try to avoid talking about it, but handing all power over to employers is core Liberal Party ideology. And I can’t help but notice their absence from the program of this important convention.

Well, you can rest assured that Australian unions will vigorously campaign against any party that threatens workplace rights.

Radical labour market deregulation that puts absolute power in the hands of the employer is not the Australian way.

Once the election was over, the ACTU commissioned polling to determine the factors that influenced voters’ decisions.

And what we found was that about 80% want the Coalition to keep its promise not to bring back WorkChoices by any means. Similar numbers said the Coalition should make sure there were no cuts to unfair dismissal protections and not expand on the use of individual contracts.

So for people like Joe Hockey, Andrew Robb and Eric Abetz to be again talking about changing the Fair Work Act is not just a betrayal of Australian voters, it confirms that many key Liberals continue to misread public sentiment on this issue.

I note the theme of your 2010 convention. The ACTU maintains that the Fair Work Act has been a great step forward for fairness and balance in the workplaces of this country.

Of course, the union movement will continue to press for Australia to catch up to the rest of the world in respect to rights at work.

But let me recap on just what has been achieved in the past couple of years.

First, let’s have a look at what was wrong with WorkChoices.

It slashed the safety net. Before WorkChoices, workers were entitled to award wages and 20 other award-based conditions. These entitlements could not be traded away in collective bargaining without full compensation.

However, under WorkChoices, employers could cut both wages and conditions through individual or collective bargaining, without providing any compensation.

In effect, the safety net was reduced to the right to receive the federal minimum wage (then $13 per hour) and 4 other minimum conditions.

WorkChoices encouraged unfair individual contracts. AWAs were designed and used for two purposes. In some sectors (such as retail and hospitality), workers were forced to accept AWAs that slashed their pay and conditions.

Research shows that about two thirds of AWAs cut award entitlements, usually without compensation. The victims were usually women and young workers.

In other sectors (such as mining and telecommunications), the motive for using AWAs was to bribe workers out of collective bargaining. Workers were offered a higher salary package if they accepted an AWA.

Although this involved a short term cost, employers knew in the long run that putting staff on individual contracts would end collective bargaining, and so would reduce labour costs.

Most fundamentally, WorkChoices undermined collective bargaining. Under WorkChoices, there was no right to genuine collective bargaining. First, an employer could simply refuse to bargain, or they could agree to bargain but then bargain unfairly. This included cutting the union out of bargaining, even if the union represented all of the workers!

Second, employers could make non-union agreements which left workers much worse off than the award.

For example, in retail and hospitality, 80 to 90% of non-union agreements slashed penalty rates, loadings and allowances, with no compensation provided.

Finally, employers opening a new business or a new site were allowed to make an ‘employer collective agreement’, without worker or union involvement, which imposed their preferred terms for up to 5 years. In many cases these greenfield agreements slashed conditions without compensation.

For many employees, the worst aspect of WorkChoices was that it cut unfair dismissal rights. WorkChoices excluded 80% of all employees from making an unfair dismissal claim.

The remaining 20% were denied the right to make an unfair dismissal claim if they were sacked for so-called “operational reasons”. And, as many of you know only too well, if an employer asserted that the termination was for operational reasons, it was a hard task to prove otherwise. The result was a climate of fear at work: workers came to fear losing their jobs if they spoke up about issues at work, defended a colleague in trouble, or made a complaint about their boss.

The low-paid fared particularly poorly under WorkChoices. WorkChoices removed the power of the Australian Industrial Relations Commission to determine minimum wages and gave it to the Fair Pay Commission.

It also rejigged the wage setting principles, removing the requirement to achieve ‘fairness’ from the statutory test. The result was that real wages for the low paid stagnated under WorkChoices, culminating in the infamous wage freeze in 2009.

And finally, WorkChoices prevented workers from accessing union help: the long-standing right of workers to speak to a union representative at their workplace, during breaks, was taken away from thousands.
So why is the Fair Work Act fair – and why is it working?

The Act restores a fair safety net consisting of the NES and modern awards.

Fundamental rights, such as redundancy pay and annual leave, have been put in the NES and cannot be bargained away. New entitlements have been won, including rights for working parents to request flexible working conditions, and paid parental leave.

Statutory individual contracts can no longer be used to slash conditions or bribe workers not to bargain collectively. The Act still permits appropriate individual work flexibility, for example through common law contracts, through ‘Individual Flexibility Arrangements’ made under awards and agreements, and through flexibilities that are permitted by awards and the NES. Unlike AWAs, these instruments contain strong safeguards against misuse, and must leave the employee genuinely better off.

Now employers have to bargain in good faith with their workers, if a majority of workers so desire. Employers have to respect the choice of union members to be represented by their union in bargaining. Genuine collective bargaining cannot be undermined by dodgy non-union agreements or greenfields agreements: all agreements must leave workers ‘better off overall’.

The new bargaining rules have helped spread the benefits of collective bargaining. Only recently, Telstra, the Commonwealth Bank and other major employers who resisted collective bargaining under Work Choices have concluded deals under Labor’s new laws.

A number of decisions have now been handed down by Fair Work Australia under the good faith bargaining laws. Unions have won some of these cases, employers have won others. For example, in the NCR case, FWA ruled that bargaining did not come to an end just because the employer declared that it no longer wished to bargain. On the other hand, in Tahmoor Coal, the tribunal ruled that it wasn’t bad faith to put an agreement to a vote in circumstances where negotiations had reached an impasse.

Almost all employees now have unfair dismissal protection, after serving a short qualifying period. Redress for bogus redundancies can be sought as an unfair dismissal. The needs of small business are catered for by providing a longer qualifying period (1 year) and a ‘Fair Dismissal Code’ which explains, in simple language, how to provide fairness when there is a performance or disciplinary issue with a worker.

Despite increasing coverage, there has not been an explosion of claims, as employers had predicted. As has always been the case, only a tiny proportion of employees who are dismissed challenge their sacking.

The Fair Work Act helps the low paid. Wage setting functions have been restored to the independent umpire, Fair Work Australia, and the wage setting principles have been evened up to restore balance between the needs of workers and employers.

The result was a strong minimum wage increase of $26 per week in 2010.

In addition, by providing one-off arbitration, the low paid bargaining stream will provide assistance to low paid workers who want to get off the award and into the bargaining sector.

This arbitration will provide wage increases with productivity offsets, and will be of great importance in getting low paid workers into the mainstream bargaining system. There is currently a test case in the aged care sector, led by the LHMU. We look forward to seeing what the new provisions can do for underpaid and undervalued aged care workers.

Now all employees have rights to get help from a union representative in their workplace, during breaks. They have rights to meet with their union in a location that is ‘fit’ for the purpose, such as the lunchroom. Moreover, workers can bargain with their employer to get better rights to union assistance, and this can be put in an enterprise agreement.

However, as I have said before, for the union movement the Fair Work Act is an unfinished canvas and there are several areas that we believe can be improved.

Unions strongly believe there should be one law for all workers. That law is the Fair Work Act. Workers in the building industry should not be singled out and subjected to discriminatory treatment. We want the BCII repealed, the ABCC abolished and its compulsory powers of interrogation removed. The Fair Work Ombudsman has more than enough powers to ensure that all players in the building industry understand their rights and responsibilities and comply with the law.

Labor’s Bill is a step in the right direction, but is not enough.

The safety net can be further improved to give greater flexibility for people to balance work and family or caring responsibilities. We want all workers to have the right to flexible working conditions, unless there is a good business reason why this cannot be provided.

As a first step, we want the government to extend the right to flexible work to workers who provide care, including care for school-age children or elderly parents.

Unions support good faith bargaining, but are looking for some improvements to make it more fair and efficient. In some cases bargaining at the enterprise level is inappropriate – for example, where some third party controls the wages and working arrangements at the enterprise. In these cases, workers should be able to bargain directly with the third party. We want this to occur in these cases, and in other cases where it is in the public interest.

Second, the Act currently restricts bargaining to a limited range of matters. This prevents workers from bargaining on a range of issues that are vital to their interests. We want restrictions removed on bargaining about arrangements that enhance job security, consultation rights, access to union help, and the rights of workplace representatives.

Third, if a collective agreement is made and the employer interprets or applies the agreement in a way which is unfair, we want workers to be able to challenge the employer’s decision in Fair Work Australia. FWA should be given the power to settle the dispute by making orders about how the agreement should be applied, in future, in the workplace, in a way that is fair for all parties.

Fourth and finally, the ILO has consistently found that our laws do not comply with the fundamental right of workers to associate, because they unduly restrict workers’ rights to take industrial action. Unions want Australian law to conform to the ILO’s rule that industrial action must not be arbitrarily stopped, except where it endangers people’s health or safety.

We also need to improve workers’ rights to representation: union delegates play a vital role in representing workers’ concerns and interests and in preventing or resolving workplace conflict for the benefit of both workers and employers. Unions want the law to recognise this important role and to help delegates fulfill their role effectively.

We also will continue to monitor the right of entry provisions to ensure that they are operating as intended. For example, the law gives workers a right to meet with their union in a venue that is fit for the purpose, such as the lunchroom. However, we continue to hear from our affiliates that workers are facing difficulty in exercising this right.

And what about workers who are not called ‘employees’: Our law makes a distinction between employees and independent contractors. Employees have a range of rights and protections that contractors lack, even though contractors are often just as vulnerable to exploitation. Unions want better rights for vulnerable contractors, such as the right to bargain collectively, and the right to have an unfair contract reviewed and varied in a way that is cheap, accessible and informal.

We are pursuing amendments to the Trade Practices Act and Independent Contractors Act to make this happen.

I commend the Labor Government – and in particular, the Prime Minister, Julia Gillard, in her previous role for the achievement of getting the Fair Work Act passed by a hostile Senate.

No-one realised it at the time, but the subsequent legislative traffic jam shows that the Fair Work Act was one of the most significant achievements of the first term of the Government, and an great example of negotiation and consultation by Julia Gillard.

The ACTU worked closely with Labor to see that legislation passed. But it should be clear to everyone that in the new parliamentary environment, to be effective unions have to be prepared to work with all political parties and that may mean forming relationships with the Greens and independents, as well as Labor.

That enduring affinity with Labor will remain, but we will be forthright in speaking up when we believe Labor’s policies are not in tune with our members. We’ve done it in the past, over the ABCC and OHS for example, and we will do it again where necessary.

And it may also be that in areas where the Greens or independents have superior policies, we will work with them to convince the Government to change and support a better outcome. This is nothing less than what our members expect.

Separately from further improvements to the framework of the Fair Work Act, unions are concerned about the changing nature of work in Australia. I’m talking about the shift away from the security of permanent, full-time employment to precarious casual, part-time or contract work.

This has been a continuing trend for more than a decade, and we recently got to the point – no doubt hastened by the Global Financial Crisis – where fewer than 50% of the workforce is classified as being in permanent full-time employment.

It was once the case that full-time work was the basis of our economic security, and also of all our social structures; but no more.

I recently had the privilege of visiting dozens of workplaces around Australia during the election campaign but was struck time and again by the stories I was told about the precariousness of employment.

I remember standing in a chilly warehouse in western Sydney as the union delegate pointed at two of his workmates, one who was employed permanently and full-time, the other, who worked alongside him, was employed by a labour hire company and could be told at any moment, ‘sorry, your time is up’. That’s not right.

Earlier this week, we released a report – ‘Shifting Risk’ by researchers from the University of Sydney’s Workplace Research Centre that identified the transformation in the nature of work.

Inequality in Australia has grown – despite strong increases in productivity since the 1980s, returns to labour as measured by real wages growth has lagged significantly. After a hiccup during the GFC, profits as a share of national income are back to record levels, while wages’ share is the lowest since 1964.

Casual, contract and precarious work is now the norm. Workers in this situation face enormous difficulties in bargaining for fair wages or organising their family needs.

At the same time, there has been a massive increase in financial risk among working families with household debt levels above 150% and vulnerable to rises in interest rates. A growing proportion of household budgets are spent on services like health and education that were once provided by government.

And this highly leveraged economy is vulnerable to shock – as we have seen in the US, which is still to recover from the widest and deepest recession in generations.

I’m not saying that casual and contract work doesn’t suit everyone. There are some employees for whom this is the right work solution.

But, for most, taking up the risks of insecure employment means job flexibility that does not work in their favour.

This is a particular concern for women workers, who are more likely to be in casual work than men. The lack of secure, decent jobs has a concrete effect on their careers and their incomes — with the gender pay gap continuing to widen.

The time has come to have another look at some regulation of the labour market to provide more job security.

At its last national conference, the Labor Party committed to a broad public inquiry into income security and job protection.

But this is not enough. There is ample evidence before us, and now is the time for broader action on the structure of work that leads to real and enforceable rights at work.

The ACTU has called for the establishment of a formal national process that involves industry, government and unions. We need dedicated resources to produce real long term solutions that ensure equitable sharing of the benefits of productivity and economic growth with all working Australians.

With the input of unions and businesses, it would focus on the promotion of more secure jobs, higher skills, better pay and conditions.

It would examine the needs of industry, the changing structure of the workforce, and the interaction between people’s work and their lives outside of work.

It would establish a brief to come up with practical solutions that ensure the workplaces of today actually meet the needs of modern families.

I am very positive about the future for Australian working people under the Fair Work Act.

And I am excited about the future of our union movement.

We are in a good space. We have seen off WorkChoices and that campaign told us that Australians value a union movement that is independent and central to all the major public policy debates of this nation.

And we are growing – both in numbers and density. No other organisation in this country can claim to represent almost 2 million members and their families.

No-one else can play this central role, extending beyond party politics and sectional interests to speak up for working people and their families as a whole.

In the new political environment, the ACTU and our unions will always be speaking up as an independent voice that reflects consistent values and represents our members ahead of anything or anyone else.

We will continue to pursue improvements to workers’ rights in the areas I have outlined today, and we will oppose anyone that seeks to undermine them.

I wish you well for the rest of your convention, and for your education at the hands of the redoubtable Sir Murray Rivers tonight!

Thank you for your time.
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