29 June 2020
It is ironic that on 26 May, almost precisely one year after the 2019 Federal Election, the PM made important announcements about Australia’s industrial relations (IR) system.
The irony of course arises from the quite radical IR proposals which were taken to the election by the Australian Labor Party (ALP). Much preparation was undertaken in anticipation of them being implemented.
The election result effectively repudiated IR reform, and saw a continuation of the status quo under a re-elected coalition government. On any measure, the government proposed no meaningful IR reform at all. Indeed, many of its own supporters have lamented its inaction in the area over successive parliaments.
But that’s all changed with COVID-19.
The national economic damage wrought by the pandemic has forced the government to look both sides squarely in the eye, and demand consensus for material change to the IR system.
You will have read about the developments. This article examines the process in light of some of the broader issues which have arisen, outside of the COVID-19 policy response, which will impact what is happening.
The first point to note of course, especially for those weary of promises of ‘IR reform’ is Scott Morrison’s language. It leaves no room for doubt that ‘fundamental change’ is on the cards. It’s language not heard from a Liberal leader since John Howard. Its significance cannot be under estimated.
He said:
“Our current system is not fit for purpose, especially given the scale of the job’s challenge that we now face as a nation.”
“Our industrial relations system has settled into a complacency of unions seeking marginal benefits and employers closing down risks, often by simply not employing anyone.”
He said that employers and unions had at times “succumbed to tribalism, conflict and ideological posturing”.
He described the system as “sclerotic”.
He directed ‘both sides’ to “put down their weapons”.
What a difference a year makes!
As you will have read, there are two phases which the Government has set upon:
- The first one of wide consultation, undertaken through five ‘working groups’, directed to achieving consensus for real change. The process will likely conclude at the end of September.
- The second is legislating changes to the Fair Work Act. The IR Minister Christian Porter has stated recently that he sees 1 February 2021 as the date by which legislation ought to be introduced to parliament.
Clearly agreements reached, or common positions adopted by the parties in the first phase, will guide the legislative changes in the second.
The IR Minister hopes each working group will be able to reach consensus on "the best way forward" that the Government can implement via legislation or regulation.
But Scott Morrison has made clear that there will be legislative changes in phase two nonetheless. The strength of the language he employed on 26 May, makes it very difficult to foresee a minimalist approach being adopted, or indeed reform being avoided.
Just like the work that was done planning for the changes promised by the ALP last year, so too will all businesses impacted by the IR system need to be attentive to developments through this process, and analyse opportunity and risk.
Ten members have been appointed to each working group. Each is a union or employer organisation. They will commence their meetings next week. The IR Minister will chair the first meeting of each group. He says that "several third party organisations and individuals will also be invited to present to or advise the groups" to provide "expert experience and real-world perspectives on relevant issues".
The five working groups are:
1. CASUALS
2. AWARD SIMPLIFICATION
3. ENTERPRISE AGREEMENT MAKING
4. COMPLIANCE AND ENFORCEMENT
5. GREENFIELDS AGREEMENTS FOR THE LIFE OF MAJOR PROJECTS
We will follow developments closely, and when firm news emerges, report that news and some analysis of its impact for Australian business.
For further information, please contact:
Anthony Longland, Partner, Herbert Smith Freehills
anthony.longland@hsf.com
