Friday, April 14, 2006

IR balancing act relies on lots of fine tuning

Any confusion over Work Choices comes not just from the legislation's massive size but also from a misunderstanding of its political framework.

Work Choices, in fact, exists on two key levels, in an interplay of conservatism and liberalism that is the hallmark of the Howard coalition.

On one level Work Choices de-collectivises the process of workplace control that has long underpinned the industrial relations structure in Australia.  On another level it attempts to balance the workplace individualism it introduces with a government-imposed protection of workers.

The worker protection being created, however, is not that delivered by unions, but rather protection provided through government authorities.

This is a historic shift.  It's witnessed by the huge increase in funding for workplace inspectorates and the extensive regulation power delivered to the Workplace Relations Minister.

This emphasis on individual choice between employees and employers, balanced by a new system of delivery of worker protection, is consistent with the history of the Howard government.

The Prime Minister has frequently stated that the coalition is a complex combination of conservatism and liberalism, reflecting the vast middle ground of the Australian population.  On one hand, Australians want to be entrepreneurial and economically creative, but on the other, want government to look after them.

This duality in the Australian mind-set is what the Howard government has always sought to appeal to and manage, but it creates political tension.  It frequently causes heavy reaction against the government during the implementation of reform agendas.  This is why it only attempts one big reform in each electoral cycle.

Political capital was lost in trying to turn around endemic government deficit spending.  It happened again with the introduction of the GST and PAYG tax.  On each occasion the government fell into a hole when the community was staggered by the scale of the complex changes.

But on each occasion, persistence in fine tuning pulled the government back into line for the next election.

Work Choices is in its most difficult phase.  Its recent introduction and the scope of its changes mean the community is only slowly gaining an understanding of it.

The government is facing attack from both ends of the political spectrum.  Unions say workers are being dealt out because unions are being dealt out.  Deregulation-minded free-marketers can't believe the scale of the re-regulation involved.

Community confusion is unaddressed because the government has not yet begun its detailed community education program.  The greatly expanded workplace inspectorate is only being established and will take some months to be properly operational.

And there is still a new piece of legislation to come:  the Independent Contractors Act.

It should not be misunderstood as part of a secret agenda to introduce an unregulated labour environment.  In fact the Independent Contractors Act will ensure that independent contractors are regulated through commercial and trade practices law.  And everyone in business knows that regulation of commercial activity in Australia is heavy indeed.

It can't be denied that Work Choices takes away unions' traditional role in the legal system as the pre-eminent protector of employees.

But employers have not been given a free hand.  In some respects the restraint on them is heavier than in the past (for example, the prohibition on cashing out an employee's full four weeks of holidays).

The volume and complexity of Work Choices is partly the product of using a limited and untested constitutional hook to create a national system.  In transition, it has to retain aspects of the old system.  And it has to keep unincorporated businesses within its reach.

But underneath the confusion are some basic principles.  These include the liberal desire to allow individuals to explore their own workplace arrangements, balanced with the conservative inclination to impose basic protections.

For a reformist Howard government this is a political risk, one it has run in the past (the GST, slashing the budget deficit).

But there is an additional, broader context within which Work Choices must be understood.

Work Choices is only one part of a dramatic reshaping of the national working environment by the Howard government.

This reshaping is partly driven by the government's view of how Australia should operate, but more importantly by a need to respond to changing demographics and the challenge of sustaining economic growth.

The first element in the reform package is the imposing of law in the, at times, criminally corrupt construction sector.  Construction unions have been viewed by the government as operating like organised gangs, sanctified by the old industrial relations system.

The activity of the sector's new policeman, the Australian Building and Construction Commission, is already having an impact.

Collapsing unemployment and (soon to be felt) postwar baby boomer retirements are expanding the labour shortage problem.  The booming mining industry is sucking in skilled, semi-skilled and unskilled workers from across Australia to highly paid mining and construction work.

The expanding shortage is so acute it's threatening new business investment across the country.  The sustained economic growth miracle to which Australia has recently become accustomed is at risk of being undermined.

Rapid reform to the education system is accepted as necessary to address the skills shortage, but Australia does not have enough young people to fill the gap.

The government instead has been forced to turn to a fast expansion of the "skilled" immigration program (included in this category are truck drivers).

In addition, the government has to address the welfare-to-work conundrum.  Unemployed people frequently lose more in benefits by starting work than they do by staying unemployed.

Finally, the promised Independent Contractors Act is a response to, rather than a cause of, the rapid rise of the independent worker movement, now constituting 28 per cent of the private-sector workforce.

Within this mix the ALP has a longer-term problem.  Its core institutional and funding constituency, the unions, are brilliant political marketing machines but that is the limit of their current influence.

Labor leader Kim Beazley's industrial relations policy -- fleshed out this week -- responds to an immediate political and union agenda but has difficulty creating the visionary Blair-like revolution some within the ALP may crave.

Instead, Beazley's policy has focused on reinstating former prime minister Paul Keating's industrial relations system, with modified unfair-dismissal laws.

It's being sold within set themes of hating Howard, fearing Americanisation, demonising individuality as dog-eat-dog, distrusting big corporations and assuming that bosses, their managers and supervisors will always be inclined to screw the worker.

Labor's pitch against Work Choices is having some effect.  Consequently, the legislation is a challenge for the Howard government, but it's reasonably familiar territory within its liberal/ conservative beliefs.

From the government's perspective the major question is:  does it have the skills and time to pull Work Choices into line for the next election?


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