Event: Jennifer Westacott opening remarks to the Senate, Education and Employment Legislation Committee
Speakers: Jennifer Westacott AO, chief executive of the Business Council of Australia
Topics: Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022
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Jennifer Westacott AO, chief executive, Business Council of Australia: Thank you, Tim.
Today, I will briefly go through the aspects of the Bill:
- that we support
- those where we disagree and
- the areas where we harbour deep concerns.
Areas we support
Let me first go through the areas that we support.
We are very supportive of the changes to the Better Off Overall Test.
The changes remove some of the real problems with the test which were holding back enterprise bargaining agreements.
We welcome key changes such as the:
- global assessment for the BOOT, rather than a line-by-line test, and
- giving primary consideration to the common view of the employer and bargaining representative.
The BOOT changes will mean agreements can be proper alternatives to awards – rather than generic add-ons to awards.
It paves the way for agreements to be:
- more ambitious in favour of employers and employees
- to focus on how an enterprise shapes itself
- the training it does
- its markets, and
- how employees and employers really work together – in that enterprise – to drive real collaboration to improve productivity and share the benefits.
And as the Minister said in his second reading speech, as an important safeguard –
“…the bill in a process to allow employees or their representatives to reassess the test in relation to circumstances that the commission did not have regard to at the time.
“This makes sure that no worker will be worse off.’’
These changes are not just good for workers - they are good for the economy.
They will drive innovation versus the cookie cutter approach we have ended up with.
They will also deliver faster results: once the parties have agreed, the Commission does not need to do a line-by-line test.
It means workers will receive wage increases faster … if we can fix some of the issues that threaten to hold us back.
However, the BOOT changes will lose their impact if we don’t clear the hurdles to employers and employees pursuing single enterprise agreements, which I’ll return to shortly.
We are very supportive of the intent of the gender equity clauses.
Obviously, the industrial relations system is not the only arena to advance the cause of women.
It would be a mistake to think the IR system could carry the burden of that.
This is about fundamental structural and cultural change across society – but the IR system is a small part of that journey.
Supported bargaining stream
We are supportive of the reforms to the low paid worker stream, which will be re-named “supported bargaining”.
We have long agreed that the system is not working for many of these workers, and these sectors are over-represented by women.
The Jobs and Skills Summit correctly identified this as an issue and the need to ensure their work is valued.
We maintain that changes to multi-employer bargaining should have been pursued in the low-paid worker stream – rather than opening up the whole economy to the risks of multi-employer bargaining.
Where we disagree
Now I want to turn to areas where we disagree with the changes.
We disagree with the abolition of the Australian Building and Construction Commission.
We are on the record.
This is a critical part of the economy – ultimately this sector determines whether:
- the infrastructure the community needs is constructed, and
- whether people’s houses get built.
But the sector is riven with a union culture of lawlessness and militancy.
To not have a top cop on the beat is a mistake.
Our concerns with the Bill
I now want to turn to our concerns with the Bill.
But before I do that, I want to say that we welcome the fact the Minister in his second reading speech identified areas where he was willing to make amendments.
We welcome the way that the government has engaged with us in the examination of those amendments – and we are engaging in good faith.
And let me reiterate our President's comments:
- we want people to have higher wages
- we want those higher wages to be sustained, and
- we want those higher wages not to come at the expense of higher unemployment or wage volatility.
We want to see the economy diversify and be more dynamic, which will drive productivity.
This is absolutely the key to sustained higher wages as it has been for the last 40 years, with productivity accounting for 80 per cent of all income growth.
We do not believe the Bill in its current form will achieve that goal.
Single enterprise agreements
The first area of concern is around single enterprise agreements, which are a core object of the Act.
It is clear that these agreements drive:
- productivity, and
- innovation at the firm level.
As the Minister said in his second reading speech, “bargaining at the enterprise level delivers strong productivity benefits and is intended to remain the primary and preferred type of agreement making’’.
However, the Bill as drafted is contrary to this goal.
We want to make that stream simple and easy.
We want people to get their wage increases on time.
Not have to spend months squabbling over who can be at the table under a “single interest multi-employer authorisation” – before they even get to the long process of bargaining for pay and conditions.
And the legislation doesn’t protect those with a history of enterprise bargaining to allow them to continue to do so.
Because as I’ll explain – the way the multi-employer stream has been drafted opens the door to businesses being dragged into it and out of single enterprise bargaining
This opens to the door for endless disputes over whether particular businesses should be dragged in and who should even be at the bargaining table, before any bargaining can even take place
Therefore we are proposing amendments to protect businesses who have single enterprise bargaining or want to enter into them.
- They should be allowed to bargain for a new agreement without the risk of being dragged into multi-employer bargaining.
- This should include time to conclude a new agreement after their current one expires because sometimes negotiations can drag on beyond this time
- And where the parties agree - they should be allowed to continue to bargain under the single enterprise arrangements.
The second area is around multi-employer bargaining in the single interest stream.
We do not believe that the case has been made for these changes.
During the course of this hearing you will be presented with evidence that multi-employer agreements are common in some jurisdictions overseas.
But let me make this very clear, most of those countries do not have an awards system.
We still believe these changes won’t produce higher wages, and in fact could lead to a series of unintended and serious consequences for workers and business, particularly small business.
Let’s remember that stemming from the Jobs and Skills Summit – the purpose of multi-employer bargaining was fundamentally a discussion about low paid workers and female dominated sectors of the economy.
We were very supportive of fixing the low paid worker stream.
But the legislation – as it is currently drafted –opens up multi-employer bargaining to all sectors of the economy.
The Minister has indicated in the second reading speech that he is willing to exclude certain industries from multi-employer bargaining “in which it is neither appropriate or necessary”.
We are yet to see details.
We would say that those sectors that are already higher paid or have a history of single enterprise bargaining do not need multi-employer bargaining imposed on them.
- Mining and construction are the top priorities here
All the problems with multi-employer bargaining
I’m now going to run you through the problems when it comes to multi-employer bargaining.
It was agreed at the time of the Jobs and Skills Summit that expansion of multi-employer bargaining outside the “low paid” stream would be opt in – but in the expanded “single interest” stream they will be compulsory.
It won’t be opt in because of the way the legislation is worded around majority support determinations – allowing an overall majority across all workplaces to make key decisions.
Small business roped in
Small businesses can be roped into a bargaining process with much larger businesses – losing control over their own circumstances.
Because as drafted, in practice a majority of employees in a large workforce will determine:
- the sectors that are covered, and which sectors are in
- the decision to enter into a multi-employer agreement
- the scope of that agreement
- the conditions of that agreement, and
- the decision to take protected industrial action, that is strikes.
Effectively, it will be unions determining that.
It would mean a small firm with 100 employees could have its terms and conditions dictated to it by a highly unionised company with more than 5,000 workers.
Therefore, it's open to the Commission in section 249, to form the view that the majority of employees overall want to be roped in.
The same problem exists in relation to majority employee votes for protected industrial action and the approval of the agreement.
Why should the employees of a smaller business be forced to accept terms imposed on them by those in larger business, when maybe no employees in the smaller business voted for them?
This is fundamentally anti-democratic.
Protected industrial action
What we are really concerned about is – that by definition, the way this is designed has opened the door for widespread industrial action across multiple parts of the economy.
You’ll be told this morning that that is not going to happen.
But listen to the unions themselves:
Tim Kennedy at the United Workers Union said:
“the legal capacity to take industrial action should be simple and straightforward and “not have a whole lot of red tape”.
ETU acting secretary Michael Wright said:
“There’s an artificial distinction to draw between a major employer with hundreds of thousands of workers, those workers have access to industrial action, but a few hundred or a few thousand under a sectoral approach are denied it.’’
Fixes for multi-employer bargaining
So, now I want to go through the fixes we are proposing for multi-employer bargaining.
Firstly, this should be confined to low paid sectors and it should be done through the low paid bargaining stream.
We should fix that stream.
Secondly, democracy needs to be restored.
We are proposing that a majority of employees in each workplace need to vote in favour of:
- entering into a multi-employer agreement
- the terms and conditions of an agreement, and
- taking protected industrial action.
Third, small businesses with less than 100 employees should be excluded – they don’t have huge HR departments or the time and money to be embroiled in additional red tape.
Finally, we strongly recommend that high paid industries with a history of bargaining such as construction and mining should be taken out.
Including mining would represent a major risk to the sector that is underpinning so much of our economic growth.
It is trade exposed and is essential for our clean energy transition.
The construction industry determines:
- the cost of your house
- the cost of your freeway, and
- the cost of public infrastructure.
It is essential to whether we can address congestion and house prices.
Now I want to go to the issue of how the Bill erodes competition.
There has been a provision for a multi-employer approach and it was done on a cooperative approach, and it was done for things like franchises.
The Bill removes the common interest test and has effectively opened the door for large competitors to be forced to bargain together on matters such as wages.
This has the following effects:
- It runs the risk of suppressing wages because people agree to bargain across a whole sector and they have strong market power.
- It runs the risk of damaging small businesses in supply chains who are not part of that bargain
- It stifles innovation because we want people competing on wages and conditions
- Businesses are in a war for talent and they want to offer the best pay and conditions to attract people, and
- It runs the risk of working against competition policy.
We understand the issue for low paid workers but surely that is dealt with in the low paid work stream.
Senators, we are told that this won’t happen.
But the Financial Services Union by the way of example wants the banks to bargain together.
Here’s our fixes.
The legislation needs to restore the requirement that “employers operate collaboratively rather than competitively’’.
And fix the “public interest” test so it makes it clear that the “public interest” includes maintaining fair competition and not forcing companies together to fix wages.
To reinforce the object of the Act, to give primacy to single enterprise bargaining.
Moving to arbitration.
We are also concerned that arbitration can be triggered by a unilateral application by one party to the Commission – when an agreement cannot be reached and an intractable bargaining declaration is made.
The definition of intractable is not clear and the threshold is clearly too low.
Here’s our fixes.
To prevent arbitration being gamed by either party, we suggest that a party cannot apply for arbitration unless they have complied with good faith bargaining obligations and have genuinely tried to reach agreement.
The Commission must be satisfied that the position of a party who applies for arbitration is fair and reasonable in the context of the employer’s business.
So, as you can see – it's the cumulative effect of all these things working together that make us very anxious.
We are unintentionally walking into a pattern bargaining system and centralised wage fixing system by default.
So, we support the BOOT.
We have to find a pathway for employers to bargain easily without being swept up into multi-employer bargaining.
Multi-employer bargaining should be confined to low paid sectors and needs dramatic change as I’ve outlined today.
This stream needs dramatic change.
The government should also focus on fixing the awards system.
We want low paid people to be paid better.
The awards system is the place to do it.
We stand ready to work in good faith with the government to make this bill workable.
Unless the changes I have outlined today occur – the Bill runs the risk of serious damage to workers, increasing unemployment and causing serious damage to the community through increased industrial action.