Friday, March 04, 2016

Now Michael Lawler's gone, abolish the Fair Work Commission too

Yesterday's resignation of Fair Work Commission Vice President Michael Lawler should be the first in a two-step reform process.

The second step should be the resignation of his forty three colleagues and the dissolution of the Commission itself.

The Fair Work Commission, which has been around in different forms since 1904, is the last surviving relic of a bygone era of centrally mandated wages, high tariffs, a fixed exchange rate, restricted immigration and preferential trade within the British Empire.

But while the rest of the Australian economy has modernised over the last hundred years, the Commission lives on, with its age starting to show.

Fair Work has a ridiculously top-heavy structure including a President, two Vice Presidents, one (now) Vice President styled as a Deputy President, six Senior Deputy Presidents, eleven Deputy Presidents, and twenty two ordinary Commissioners.

Commissioners enjoy "the same protection and immunity as a Justice of the High Court," are appointed until they turn 65, and can only be dismissed by both houses of the federal parliament.

Its wide responsibilities include deciding minimum wages and the contents of awards, resolving workplace disputes, approving enterprise agreements, allowing strikes, granting right of entry permits and regulating trade unions and employer organisations.

Yet despite last year's Productivity Commission's report into Australia's workplace relations framework describing it as the "largest price setting entity in the Australian economy" its inconsistent and out of touch decisions are legendary.

Just last year it decided that CFMEU-affiliated miners were entitled to a productivity bonus while on strike, unfriending a workplace colleague on Facebook constituted bullying, and a worker who drank too much at an office Christmas Party then abused and harassed colleagues was unfairly dismissed partly because he was "never refused a drink".

My report in mid-2015 found that half of its Commissioners were former trade union officials or had a past involvement with the ALP.

The typical union response that the current Coalition Government has appointed a handful of "employer-organisation friendly" members since 2013 misses the point.

Arguments about how many union or employer organisation officials are appointed to the Fair Work Commission, and persistent assertions of Commissioner bias when making decisions, have no equivalent in similar bodies, whether they be the High or Federal Courts, State Supreme Courts or other judicial tribunals.

When two teams fight about who "owns" the umpire, you know you have a problem.

Fair Work has only survived because of its symbiotic relationship with the trade union movement and the ALP, as well as the inability of the Coalition to mount a consistent case for change.

While the Productivity Commission recommended excising its minimum wage and award determination powers, tightening unfair dismissal procedures, limiting member appointments to ten years, and increasing external scrutiny, it should have gone further.

All functions to do with the regulation of employer organisations and unions should be transferred to a new Registered Organisations Commission.

Its dispute resolution functions could be handled either by a new, small, professional arbitration panel, or by independent private sector arbitrators free of stakeholder entanglements.

The various workplace safety nets could be managed by a new, economically-focused body or better still, consolidated into a single set of National Employment Standards.

A truly modern vision for a 21st century workplace relations system would actively seek to break down the old big boss, big union, big government relationship.

The effective exemption of unions and employer organisations from competition law, prescription of uniform wages and conditions regardless of the ability of a business to pay, and blurred lines between participant, regulator, and legislator are all policy areas worthy of fresh scrutiny.

A workplace relations system that reinforces union privilege despite union membership dropping from 46 per cent of the workforce in 1986 to 15 per cent today does not accurately reflect employee choices.

In fact, with union membership in the private sector down to 11 per cent, there are now more Australians who are members of an Australian Rules football club than there are private sector full-time employees who are trade union members.

Wages aren't paid by industries, states or countries.  They are paid by individual businesses, and the workplace relations system should reflect this.

The Turnbull Government's self-professed enthusiasm for innovation will count for little if its new start-ups are too afraid to hire people.  The Government should bite the bullet and take a significant reform package to the Federal Election that includes the Fair Work Commission's dissolution.


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