Fair is foul, and foul is fair in workplace relations dark tragedy

2nd September 2015

“Fair is foul, and foul is fair, Hover through the fog and filthy air”

The political maelstrom of workplace law and union governance in Australia resembles the dark moral tale foretold by the witches in Shakespeare’s Macbeth. Ambition, deceit, paranoia, bullying, violence and ultimately guilt, are all evident in this appalling tale of intrigue. Whether Bill Shorten, Dave Oliver, Kathy Jackson, Dyson Heydon, or Tony Abbott survives is yet to play out. However, it is clear Australian employers and employees are the losers in the battle for power.

Notwithstanding a review of the law, a royal commission and commission of audit, two reviews of modern awards, and productivity commission enquiry, nothing has changed. The pre-Keating era centralised award wage fixation is re-established, the cost of terminating employment escalating, collusion and pattern bargaining rife, productivity stagnating, unemployment too high and union corruption flourishing. Character assassination awaits anyone foolish enough to challenge the status quo and incompetence and self-interest rule the parliamentary benches. The picture is somewhat pessimistic, and maybe it’s not that bad for some. But surely, some practical steps to improve the system should not be so difficult.

It seems to me the key impediments to useful reform are institutional, that is, vested interests organising the system for their own benefit. How should this be problem be tackled?

Conservative governments invariably fall into the trap of focussing on symptomatic inefficiencies such as penalty rates, rather than the institutional framework that is the progenitor of inefficiency. On the other hand Labor governments are hopelessly conflicted and often lack leadership to pursue public rather than sectional interest. Consequently, specifically targeted reforms and incremental change would seem to be the best and most practical path to success. Overreach is the fools journey.

Two glaring examples of institutional impediments to useful reform are union governance and wage fixation. As I wrote in December last year, there is absolutely no good reason for representative unions and employer bodies to continue as registered organisations under the Fair Work Act. The interim report of the Royal Commission into Trade Union Governance and Corruption provides a compelling argument for them to be regulated in the same manner as Australian companies. Rather than proposing another institution to register unions and linking this to the re-establishment of the Building and Construction Commission, the government should pursue a single legislative reform based on normalising the governance of trade unions. Corruption flourishes because the union operational and financial management is unaccountable. This simple message and a clear goal of a single structural reform must resonate with the Australian public and the parliament.

Every reform doesn’t require parliament’s consent. During the period of the Prices and Incomes Accord between the Australian government and the ACTU the Industrial Relations Commission and State governments were variously bullied and courted by the Australian government to ensure the Accord objectives were delivered. In contrast, the current government stands on the sidelines offering neither guidance or leadership whilst the Fair Work Commission collaborates with its ‘stakeholders’ (unions and employer bodies), to progressively re-establish centralised wage fixation and the primacy of the Commission in Australian workplaces.

The power to influence and in some instances direct the work of the Commission, is available in the legislation. All the government needs to do is identify a single theme, say terms that impede flexibility and international competitiveness, and then apply its considerable departmental research capability, financial resources and levers to achieving reform in that area.

The current 4-Yearly Review of Modern Awards is taking four years to complete and it has not made any attempt to implement genuine reform to create efficiencies or enable productivity improvements. The Fair Work Commission spends endless amounts of time reviewing claims, counter-claims, submissions, responses and so-called expert witness evidence on the most banal matters whilst ignoring the antiquated award wage structures. Meanwhile, the Australian manufacturing industry desperately in need of reform to make it internationally competitive, is untouched. Even the Productivity Commission’s insipid Draft Report into the Workplace Relations Framework recognises the slow pace, tendency for uniformity and overly legalistic methodology of the Commission. Notwithstanding this perfect example of institutional inefficiency, the government continues to obediently fund the Commission’s misadventures.

There are undoubtedly many more examples, but it seems to me that there are some simple measures that could be applied to achieve useful reforms to improve Australian workplaces and economic performance. The tragedy is the current government sits idol whilst the institutional system of vested interests continues unabated. The irony is the government stands accused by its enemies even though the system is unchanged. It may as well do something useful whilst it still has time.