Preliminary Comments on the Australian Productivity Commission’s Draft Report on Workplace Relations

"On 5 August 2015, the Australian Productivity Commission released its draft report on Workplace Relations. In some quarters it is suggested that the report only recommends minor adjustment to the current system, however this is not the case. Australia has a unique industrial relations system, but as the economy changes and union density decreases, there are greater synergies being proposed with overseas systems.

Whilst the report contains many recommendations with significant impact, a couple of issues will attract the focus of public debate and should be mentioned. It is important however to read the report.

If adopted by the Australian Government, it will represent a fundamental break from over a hundred years of history in at least two important respects, The first is the fixation of minimum terms and conditions of employment. The Australian approach has been to fix such minimum standards without regard to the bargaining power of various employment groups. Market power has always been left to bargaining. Earnings have not been the same between different groups in the market, but minimum standards have not discriminated on the basis of market power. The report suggests a market power approach to the application of wage levels for working beyond normal working hours- i.e penalty rates for weekend work.

The other fundamental change is the recommendation that members of the industrial tribunal no longer have tenure until age 65, but that such tenure be replaced with 5 year appointments. In the Australian context, tenure recognised that people who arbitrate very difficult labour disputes should have some protection against powerful interests. In particular it should be noted that the industrial tribunal deals with public sector employees. The obvious difficulty arises where a member of the tribunal may be arbitrating a case involving government where that government has the power not to re-appoint the person to the tribunal after the fixed term. This will be argued as an attack on independence by those in the tribunal but not so by those who see the Australian system as being too reliant on the past rather than the future needs of industry.

The other area which will create significant political debate is the proposal to permit an enterprise to impose terms and conditions upon employees as a condition of employment and bypass the relevant minimum standard, although certain tests may apply.

In all, this draft report, should it become a final report, will create a significant political debate leading to the next federal election.

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Greg Smith

Regions & Countries
Labor Relations

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