Unreformed IR system is more standover than sit down

This opinion article by Business Council chief executive Jennifer Westacott was published in the Financial Review on Thursday 5 December 2019.

Ask any working Australian, wherever they live, what they want, and the near universal answer will be higher wages, better conditions and a safe workplace free from intimidation and bullying.

It is, therefore, bewildering that some senators last week voted against amendments that would have delivered just that.

They voted to let down the very people they represent by turning a blind eye to harassment, thuggery, corruption and bullying that is, unfortunately, endemic in certain sections of the union movement.

The Business Council of Australia acutely understands and shares the community’s legitimate anger at the recent behaviour of some of Australia’s biggest companies.

There is no doubt that these problems must be fixed quickly, but it would be wrong to use them as an excuse to punish all Australians by failing to repair a faltering workplace relations system.

The centrepiece of the workplace relations system, enterprise agreements, have historically driven higher wages growth because they deliver the foundations for higher productivity.

But right now, the enterprise bargaining system is slowly crumbling just when Australians most need it to work.

With the economy continuing to battle sub-par growth, weak productivity growth, and sluggish wages growth, one of the best levers the country has to help deliver wage increases is a properly functioning workplace relations system.

They already feel free to defy regulators, courts and the police. Now they know that the Parliament isn’t about to stop them either.

We need to be confident that our workplace laws require everyone to act with integrity.

Among the various misleading claims that have been made, it is important to reiterate exactly what the Ensuring Integrity Bill, which was voted down in the Senate, would have done.

A second integrity-related bill, which ensures worker benefits funds can only be used for the interests of workers, is yet to go to a vote.

The defeated bill would have made modest and incremental amendments to four existing provisions of the Registered Organisations Act.

First, it would have expanded the existing grounds on which the Federal Court can disqualify office holders of registered organisations, namely serious breaches of workplace laws, or if they are convicted of certain serious criminal offences.

Second, it would have amended the existing power of the court to appoint an administrator to an organisation if it has "ceased to function effectively".

This would apply where an organisation or its officials had, for example, repeatedly broken the law, breached its rules, stolen members’ funds, or failed to act in the interests of members.

Third, it would have clarified the existing powers of the court to deregister an organisation, if its officials repeatedly break the law, commit criminal offences or act corruptly.

Importantly, it would have provided that the court could limit orders for deregistration or administration to a particular division or branch of an organisation. This would mean that other branches that are functioning lawfully (and their members) were not disadvantaged by the actions of a few "rotten apples".

Finally, the bill would have restored a public interest test for union mergers, which had applied for many years until it was removed in 2009.

In relation to administration and deregistration, these measures could have only been used by a court as a "last resort", when other remedies had failed to prevent wrongdoing or dysfunction.

The amendments agreed by the government, Centre Alliance and One Nation senators would have ensured beyond doubt that this was the case.

The bill would have ensured that all parties negotiating an enterprise agreement were acting with integrity, and there were appropriate consequences for those who failed to do so by persistently breaking the law.

The decision by some senators to abandon the government’s amendments begs the question whether they are acting in the long-term interests of all Australians or in the interests of a few.

No change means bullying, thuggery, corruption and intimidation will continue. Worse still, those who engage in such conduct will no doubt feel even more free to do so. They already feel free to defy regulators, courts and the police. Now they know that the Parliament isn’t about to stop them either.

No change impacts on workers who simply want to be represented by union officials acting with integrity arguing in their best interests.

And no change means the enterprise bargaining system will continue to fall apart because there is not sufficient integrity underpinning it.

It would have required everyone – not just the union movement – to operate to higher standards. Why shouldn’t unions be subjected to something approaching the same transparency and standards that businesses already are?

Various provisions of Corporations, Competition and Banking Law already carry higher penalties and give courts and regulators far broader powers against corporate directors than those proposed in the integrity measures for registered organisations.

In fact, over the past few years Parliament has passed more than 40 laws and regulations strengthening laws targeting business conduct.

These include measures to increase jail time and fines for directors, powers to disqualify directors, greatly expanded reporting obligations, regulate the wage of bank executives, ensure the banks pay a special levy, and powers to intervene in energy prices and financial products.

While the Senate doesn’t hesitate to take action against corporate Australia, it blinks when it comes to applying more modest standards to the union movement.

Employers, employees and their union representatives must be able to bargain with integrity and in good faith. They need an environment free from intimidation and bullying so they can work out how to make an enterprise stronger and deliver the best outcome for everyone at the table, including improved productivity and wages growth.

Senators need to ask themselves – if the system is more standover than sit down at the negotiating table, how is this helping working Australians?