Chapter 1 - Overview
Australian Workplace Relations in Context
1.1
A comprehensive commentary on the development of
Australian employment law and practice is available in the earlier report of
the Senate Economics References Committee, tabled in the Senate before the
introduction of the Workplace Relations Amendment and Other Legislation Bill in
1996.[1]
An evolutionary set of reforms?
1.2
Evidence provided to the Committee during the
course of public hearings indicates that there is a divergence of views about
the nature of this Bill, and whether the reforms it contains are evolutionary,
or broader in scope.
1.3
The Government describes the Bill as part of an
evolutionary set of reforms, a further step in an incremental shift from
centralised regulation of employment to a deregulated labour market
environment.
1.4
Evidence presented to the Committee by employer
groups supports this view. The Australian Chamber of Commerce and Industry, in
emphasising the moderate nature of the Bill’s amendments, notes that that there
is scope for considerably more fundamental labour market reform:
Both the 1996 Bill and this
current Bill were essentially evolutionary sets of amendments. They retained
the award system, they retained the Industrial Relations Commission and they
retained all the existing features of the labour relations system. As such, our
policy does not involve that. It does involve major substantial changes to the
existing key features of the labour market. So those comments apply both to the
1996 Bill and to this Bill...We are dealing here with an evolutionary, moderate
Bill that makes amendments and refinements relating to existing labour market
institutions, rather than making wholesale radical change to them.[2]
1.5
The Business Council of Australia also supports
this view:
We see the Bill as a
progressive evolutionary step after the 1996 workplace relations reforms...We
believe that there are no grounds for consideration of a policy shift back to a
more highly regulated and centralised system. Rather, looking to the future,
the main game should be encouraging high performing workplaces with more and
more employees negotiating workplace agreements...This Bill is primarily
addressing problems exposed since the passage of the 1996 amendments.[3]
1.6
Unions and employee associations reject the ‘evolutionary’
description of the Bill. The Secretary of the Victorian Trades Hall Council
made the following comments:
We say that indeed this
package of legislation is not, as claimed by the minister in his second reading
speech, a matter of evolution. We believe you do not need a 300-page Bill to
tinker with legislation. We believe this is fundamental change that is proposed
and it is, in our view, to take workers in the industrial system backwards in
terms of regulation.[4]
1.7
Given this divergence of views about the
significance of the Bill’s provisions, it is necessary to place the Bill in its
recent historical context to shed further light on the issue.
Recent historical context
1.8
In the last 20 years, Australian wage fixation
has moved incrementally from a centralised model of awarding national wage
increases to match increases in the cost of living, to a much more devolved
system, where wages are primarily set at the workplace level, based on
improvements in productivity.
1.9
This shift first started to occur in 1987, with
the Commission’s introduction of the Restructuring and Efficiency Principle[5], was reinforced (albeit at an
industry level) by the Structural Efficiency Principle[6] which accelerated following the
development of the Enterprise Bargaining Principle in 1991[7].
1.10
From this time, the Commission’s decisions and
the Government’s legislative reforms (most significantly through the Industrial
Relations Reform Act 1993 and the Workplace Relations and Other
Legislation Amendment Act 1996) have facilitated this shift in focus from
national and industry level wage fixation to workplace level wage fixation.
These changes were made necessary by structural changes to the Australian
economy, which have required Australian businesses to become more
internationally competitive.
Workplace Relations Act 1996
1.11
Following the Coalition’s election in March
1996, the Government introduced the Workplace Relations and Other
Legislation Amendment Act 1996, which renamed and significantly reformed
the Industrial Relations Act 1988. The amendments focused on achieving
wage increases linked to productivity at the workplace level. The new name of
the Act reflected this, as did new provisions relating to negotiating and
certifying agreements. The Act also introduced a new form of agreement,
Australian Workplace Agreements, which could be made between an employer and an
individual employee.
1.12
Two other significant reforms were to restrict
the Commission’s ability to make awards in relation to matters outside a core
of 20 ‘allowable award matters’ set out in section 89A, and the introduction of
provisions requiring the Commission to review and simplify awards to remove all
provisions falling outside these ‘allowable award matters’ after a transitional
period of 18 months. These provisions achieved what the Commission had decided
it could not do itself under the former legislation, this is, limit the
contents of the award safety net to a set of core minimum conditions.[8]
1.13
The role of the Commission, and that of its
awards, have developed to reflect the increasing emphasis on setting wages and
conditions by agreement at the workplace. It was inevitable that the scope for
arbitration by the Commission would be reduced in line with these changes, and
the Commission itself had recognised this earlier.[9]
1.14
The limitation of the Commission’s arbitral
powers to ‘allowable award matters’ represents a logical development from the
introduction of the concept of awards as a safety net of minimum wages and
conditions in 1994. If parties are to be encouraged to set pay and conditions
at the workplace level, then it is necessary to remove from awards the matters
on which parties are expected to bargain. Matters left in awards are those
appropriate to the award safety net, as defined by legislation, and by the
Commission in its interpretation of section 89A of the Workplace Relations
and Other Legislation Amendment Act 1996.
1.15
Award simplification also represents a logical
development after the earlier award review requirements established under
section 150A of the Industrial Relations Act 1988.
Conclusion
1.16
The detail of the Bill’s provisions needs to be
considered in the context of this background. The Bill, and in particular
provisions of the Bill that are designed to:
- encourage employers and employees to reach employment agreements
that best suit the needs of their enterprises in terms of flexibility and
productivity;
- reduce the reliance of employers and employees on the Commission
to determine wages and conditions; and
- reinforce the safety net role of awards and simplify award
provisions,
can be described as
evolutionary steps, continuing the progressive developments of the last 20
years.
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