Public service perks don't pass the pub test

Enterprise bargaining is a two-way street.  Public sector unions cannot continue to argue that well-paid public servants deserve additional entitlements without considering the trade-offs that could be made.  Public servants already enjoy generous conditions and entitlements that would not pass the pub test.

The Commonwealth public services' enterprise bargaining agreements notionally expired in 2014.  To date, 65 agreements have been finalised — despite union opposition to every single agreement — but many of the larger departments' agreements remain unresolved.

Whether in the private sector or the public sector, bargaining takes negotiation from both the employer and the employees.  The Turnbull government's workplace bargaining policy provides the flexibility for this to occur on the employer side.  It puts a cap on remuneration increases at 2 per cent a year, with scope to increase salary beyond this point through the packaging of other benefits or productivity increases.  The government's policy is currently subject to an inquiry by the Senate Education and Employment Committee, chaired by a Labor senator.

The idea that public servants are underpaid is completely unsubstantiated.  Over the past decade, federal public servants' pay has risen by 50.7 per cent, far more than the increase in CPI of 31.8 per cent.  According to the Australian Bureau of Statistics, in May 2016, public sector full-time adult average yearly earnings were $87,942.40, compared with the private sector average yearly earnings of $80,204.80.

If public sector unions want to continue with their campaign for pay increases beyond 2 per cent then they need to come to the bargaining table.  I have conducted research into the top 10 Australian Public Service enterprise agreements by agency size — covering 72.4 per cent of public servants — which identified three broad areas where trade-offs could be made.

The first area is the generous allowances that have the effect of increasing salaries by thousands of dollars each year.  For example, a Wellbeing Site Representative at the Australian Taxation Office comes with an allowance of $613 a year.  The Department of Health agreement provides staff with subsidised eyewear, at $165 for each prescription.  The Department of Agriculture agreement allows staff to claim $300 a year for health and fitness activities like gym memberships — whether or not they actually go to the gym is a different matter.  These examples are the tip of the iceberg.

The second area is the generous leave provisions that go well beyond the standard entitlements in the private sector.  The Department of Social Services Agreement has up to four days' paid leave a year to conduct volunteer work with a community organisation.  The Department of Foreign Affairs and Trade allows paid leave where employees are participating at an international sporting event.  Several agencies provide one day of paid leave a year for employees to move house.  Most private sector employees would be expected to take annual or unpaid leave for these activities.  The Department of Defence has what's called DECA day.  As I explained when I appeared before the Senate committee last week, "it's not part of your annual leave, it's not part of your sick leave, and it's not part of your personal leave.  You just take a day off when you feel like it."

The third area is the exclusive perks that are given to public sector unions.  The agreements provide unionists with access to workplace facilities, infrastructure, technology and resources — and paid time.  For example, union delegates have the right to paid time to represent the interests of members to the employer and in industrial tribunals, and also get paid leave to attend union training and events.  It is unacceptable that taxpayers are subsidising unions' industrial and political activities.

The current inquiry into the government's workplace bargaining policy is, of course, simply part of a wider political campaign.  Public sector unions are increasingly using the enterprise bargaining system to advance their own political agendas, rather than representing the best interests of their members.  There is a weight of evidence to show that potential trade-offs could be made to boost pay for public servants.  The government's policy is flexible;  whether the public sector unions' policy will become flexible remains to be seen.

Union bully busting: FU to the UFU

Voters in the ACT have a stark choice this weekend:  Jeremy Hanson and the Canberra Liberals, or four more years of a government notoriously beholden to trade unions (even by Labor standards).

Canberrans only have to look south to see what a union-dominated government looks like.

Victoria's situation is so dire that Metropolitan Fire Brigade chief Peter Rau resigned recently due to stress, attributed to bullying by the United Firefighters Union.  It is no wonder.

The reason for Rau's resignation came to light when Acting Emergency Services Minister Lisa Neville was caught out shamelessly spinning the sudden departure.  Rau, she wrongly said, was "gravely ill".

Rather, it is our fire services bodies that are "gravely ill", under siege from the United Firefighters Union.

Consider the symptoms.  The bullying of Rau and others.  Alleged threats by UFU boss Peter Marshall to put an axe through the head of a state government minister.  And the extraordinary attack on over 55,000 Country Fire Authority volunteers.

As spectacular and shocking as these symptoms are, the underlying disease is more complex and longstanding.

Australia's industrial relations regime — ushered in by the Rudd Government's Fair Work Act — has put unions in an unprecedented position of privilege and influence.  In a recently released report, I argued that one of the most insidious effects of Fair Work has been the creep of union influence beyond just pay and conditions via favourable enterprise bargaining agreements.

Through increasingly audacious negotiation with state governments, unions are building clauses into EBAs requiring that management "consult" with them on a wide range of operational matters, often completely unrelated to workers' pay and conditions.

These provisions not limited to fire services authorities.  The Ambulance Victoria EBA, for example, requires that management must consult with the relevant union in relation to any proposal to "restructure the workplace, introduce new technology or change existing work practices".  Management must also give "due consideration" to "alternative proposals".  Similar provisions exist in EBAs covering other emergency services bodies, like Victoria Police and the State Emergency Service.

Public sector EBAs also typically include time-consuming "dispute resolution" clauses, which can be invoked where management and the relevant union cannot reach "consensus" on proposed changes.

Evidence given to the Fair Work Commission by the MFB show that consultation has been required on matters as trivial as the migration of the MFB's operating system to Windows 7 and proposed changes to the model of pencils to be used by firefighters.

Unsurprisingly, management are throwing up their hands in frustration.  Prior to his resignation, Rau indicated that the UFU's "power of veto over my statutory responsibilities is unworkable and undermines community safety".

Similarly, Joe Buffone, then-CFA chief, indicated that consultation provisions "undermine my statutory authority as Chief Officer to have and maintain control, at all times, of resources."

The Turnbull Government's changes to the Fair Work Act this week are a positive step.  In effect, they would quarantine decisions about the deployment of volunteers from union veto powers.

But while protecting volunteers is important, the government must go further in limiting the matters that can be governed by EBAs.

Enterprise bargaining should be a mechanism to set pay and conditions, but it has become a proxy tool for joint union-management operational decision-making.  Until this changes, our emergency services bodies will continue to be hamstrung, and we the public will be "gravely ill" for it.

ABCC row a distraction from the main game

Prime Minister Malcolm Turnbull has shown courage and ambition by threatening a double dissolution election if the Senate fails to restore the Australian Building and Construction Commission.  But the debate over the ABCC should not be the substitute for advancing a positive industrial relations policy that promotes employment through the entire economy.  On this front, the government is sorely lacking the same courage and ambition.

The only task of this industrial relations system is to provide a security blanket for those already with a job.  It provides no warmth to over 700,000 Australians currently out of work.

The re-regulation of the labour market that occurred under the previous government saw unfair dismissal laws imposed on thousands of previously exempt small businesses.  Now an employee that is fired for swearing at their boss, stealing, consistently showing up late for work, performing poorly, or physically assaulting their colleagues, can take their employer to the Fair Work Commission — and win.  Even if the employee's claim is without merit the commission almost never awards costs.

The laws protect those already with a job, but it makes it riskier — and more expensive — for employers to take on new employees.  Simply put, unfair dismissal laws are unfair on those out of work.  The best protection against unfair dismissal is full employment and a competitive labour market.

Another example is the re-regulation of wages levels throughout the economy.  While there might be an argument about the desirability of a minimum wage for unskilled workers, there is absolutely no justification for the union-stacked Fair Work Commission setting a national minimum wage for professionals such as doctors, lawyers and pilots.  It's puzzling as to why wages for a job in Hobart must be the same as that in Sydney — especially taking into account cost of living differences.  Orders issued this month by the Road Safety Remuneration Tribunal (another wage-setting body) will force owner-drivers to charge inflated rates, rather than being allowed to compete on price against unionised employee-drivers.

This price fixing would never be legal outside the labour market.  Perhaps the government should impose an effects test of substantial lessening of competition to its own regulations.

Add on top of this the minimum shift requirements that prevent students from working after school, and weekend penalty rates being so high that businesses prefer not to open.  Of course, double time means nothing without a shift in the first place.

These examples are systems of a framework that strips away the right to work.  It is a system that presumes that people are incapable of making good decisions for themselves and their families.  A job is about more than a pay cheque — there is dignity in work.  Yet, the current system prefers people remain unemployed.  This must change.

With youth unemployment continuing to track above 12 per cent, a novel solution is crossbench senator Bob Day's suggestion that young workers could "opt out" of the Fair Work Act.  The standard rebuff to this idea is "but they might get exploited".  Senator Day answers this by asking "where is the outrage when these same young people end up on drugs, get involved in crime, suffer poor health, become pregnant, get recruited into bikie gangs or even commit suicide?  No, there is only outrage when they want to take a job that suits them but does not suit the government."

There is no shortage of sensible reforms that could be taken to an election.  We all know what Labor's policies will look like, but it is genuinely unclear what the next term of a Liberal government would do on industrial relations apart from beating up the union movement.  With the recalling of Parliament we will hear a lot about the need for the ABCC, and other issues arising out of the royal commission into union corruption — but these are distractions from the main game of promoting employment for those currently without it.

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Road Safety Remuneration Tribunal costs more than it saves

Political promises to abolish the truck industry regulator responsible for pricing drivers out of work won't alleviate hardships felt today.

As horrendous as the road toll is for the families affected and the community at large, statistics show a trend decline in deaths from crashes involving heavy vehicles, including heavy rigid trucks, over the long term.

But these facts have been set aside with assertions the national truck industry pay regulator, the Road Safety Remuneration Tribunal (RSRT), needs to fix minimum pay rates for contract truck drivers to make our roads safer.

And factors unrelated to pay, such as better roads, enhanced vehicle safety technologies, and worker health, driver monitoring and other initiatives championed by industry itself, don't get their due recognition either.

The first ever RSRT pay ruling is now taking effect, after a federal court delay was recently lifted, with massive implications for a nation heavily reliant upon road transport to haul goods over long distances.

Industry analysts have said the RSRT pay ruling would lift contract rates for independent truck drivers by as much as 30 per cent, and some drivers have indicated payment rates could be even higher for return routes with light freight loads.

The risk is that such a significant cost increase could lead to some drivers being informed their mandatory rates are uncompetitive, and that work is no longer available.

Fewer contract drivers in the market could dilute competitive pressures, enabling large companies with their own truck fleets to more easily raise freight charges over time.

That means, in the end, higher prices for everyday goods that people buy, potentially exacerbating concerns about general cost of living increases as a political issue.

For owner-operators remaining in the transport sector managing the regulatory compliance costs of the RSRT order will be a constant struggle.

Certain transport industry associations are already telling their members to either adapt to the changing regulatory environment, or otherwise restructure their activities or operations to ensure they can attain viable work in future.

All of these effects are likely to add up to a significant burden upon the transport sector, subsequently flowing through to other industries.

An independent review commissioned by the government has indicated the net cost of regulatory orders made by the RSRT, including those relating to minimum payment times, dispute resolution procedures and other policies, would be in excess of $2 billion over a fifteen year period from 2012.

The review by PricewaterhouseCoopers not only found "abolition of the system would result in significant net benefit to the economy and community at large", but questioned the very need for a regulatory response forcing higher payment rates on safety grounds.

Another review that has been recently released, and it points to the archaic powers of price controls accorded to the RSRT which are incompatible with the general direction of economic reform in Australia and the OECD over the last three decades.

This study, by Jaguar Consulting, argues that improved safety performance by the trucking industry could be improved through far less prescriptive regulation which doesn't risk consigning independent owner-drivers onto the dole queues.

In any case it isn't a foregone conclusion that higher pay dictated by the RSRT will necessarily reduce crash rates and fatalities, because the prospect of earning more pay may induce remaining drivers to drive longer, not shorter, hours.

All in all this fiasco, threatening the livelihoods of trucking families, not to mention sparking transport cost-inflation for both state and national economies, could have been avoided if political inertia against reform hadn't stood in the way.

Indeed, the RSRT is a useful case study illustrating that governments hastily take action to instigate damaging regulations and bureaucracies, but are painfully slow to unwind them even in the face of mounting problems.

The Coalition parties when in opposition voted against the provisions of the bill to establish the RSRT, but with a wafer-thin majority the Gillard government managed to get parliamentary assent for its truck industry regulator.

At the 2013 election the Tony Abbott-led Coalition promised to urgently review the RSRT reflecting a concern, contained in its election policy statement, that "there is no evidence that a separate additional tribunal or a further level of regulation is necessary".

The Jaguar Consulting report was completed as early as April 2014, and the PwC study was finished in January this year, but it was only very recently that both reports were publicly released.

After all this time, and with the RSRT making its pay ruling in December last year, the Turnbull government only now announces a plan to delay the RSRT payments order until the beginning of next year, and to abolish the RSRT sooner.

But the success of this plan, of course, will crucially hinge upon whether the current Senate crossbench will agree with the plans, a very likely outcome but one which is not ordained.

Until a definitive political outcome is struck contract drivers in the trucking industry will lack the clarity they need to secure their economic future.

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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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Turnbull has golden opportunity

The question now facing Malcolm Turnbull is what to do with his 58 per cent satisfaction rating.  Being the preferred Prime Minister by 63 per cent of Australians is nice for the time being, but both Kevin Rudd and Julia Gillard were once pretty popular too.

Turnbull still has time to decide his agenda, but maybe not as much time as he thinks.  MPs get impatient with party leaders quicker than the public.  The reality is that a PM or opposition leader is more likely to be struck down by their colleagues than by the electorate.  Since 1983 the Liberal and Labor parties have each changed their federal parliamentary leader 10 times.  Only three of the changes each party made was the direct outcome of a federal election.  As traumatic as it was, the manner of Tony Abbott's removal as Liberal leader, albeit that he was the prime minister, is not unusual.

There's one thing Turnbull shouldn't spend his political capital on — and that's raising taxes.

For two reasons.  The first reason is that he shouldn't even be contemplating raising taxes.  Australia is already a high-tax country.  As the Productivity Commission pointed out a few weeks ago in its report Tax and Transfer Incidence in Australia if taxes across countries were compared on a like-for-like basis "taxation revenue as a share of GDP from all other sources would be higher in Australia than the OECD average".

The commission's finding, which confirmed my own research, received no media coverage.

The second reason Turnbull shouldn't spend his political capital on raising taxes is that raising taxes is easy.  One of the few budget measures Tony Abbott got through the Senate was increasing the top rate of income tax.  Political capital should be spent on hard stuff, not the easy pickings.

There's one thing that's even harder to do in Australia than cutting government spending, or restoring freedom of speech although it's not as hard as Turnbull seems to think it is.  Does anyone honestly believe that in a free country it should be against the law to insult someone?

What's harder than any of these things is changing the industrial relations system to make sure it is about one thing and one thing only — getting people into work.  Hopefully Turnbull will turn out to be not quite as "progressive" as his left-wing boosters in the media would like him to be.

But, if Turnbull as a Liberal prime minister is going to spend his time giving exclusive interviews to The Guardian the least he can do is use the left's own language to make the left understand industrial relations reform is a question of social justice.

Nothing could be fairer than ensuring an individual has a job.  There's nothing fair about an unemployment rate for 15 to 19 year-olds of 20 per cent.  It is unfair that an adult Australian is forbidden from choosing to work for a wage of $17.28 per hour, because a government committee has decided the minimum wage should be $17.29 per hour.

Turnbull could point out to Guardian readers that Denmark, the country they want Australia to be like, doesn't have a statutory minimum wage, and neither do Norway or Sweden.

The Prime Minister's current preferred formulation for his vision of Australia as "a high wage, generous social welfare net, first-world society" is the jargon of economists.  As Goethe said:  "Dream no small dreams for they have no power to move the hearts of men."

If Turnbull wanted to blow his political capital well and truly he could banish the terminology that dominates the "reform" debate.  He could not talk about "productivity" or "GDP per capita" and he could even abandon the three-word-Holy Grail of the Coalition — "industrial relations reform".  All of these things are merely abstract concepts.  They say nothing about human flourishing.

In their place Turnbull could say something more important and meaningful.  He could for example say something like his government will be judged on how many people who want a job have a job.  Or how fewer families live in poverty.

The Prime Minister has the chance to reset what passes for the national conversation.  He should take it.

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Should Labor cut ties with unions?

Union control of the Australian Labor Party is a significant obstacle to economic reform and will remain so as long as unions enjoy special legal privileges which reinforce their political power.

The royal commission has brought to light the many questionable deals made by union leaders.  But less examined is the main reason why these deals are made:  to expand influence within the ALP.

The right to join a union is a fundamental principle in a free society.  But it is unhealthy for an interest group representing a small and declining proportion of Australians to have such an unprecedented level of influence over policy.

Unions have always been an influential force in Australia.  In 1990, union membership was at 41 per cent of the workforce, making them an important stakeholder for governments of all persuasions.

But as union membership has fallen to 17 per cent of the total workforce, unions have sought other means to maintain their political influence.  The modern trade union ­leader is now often as much a factional powerbroker as an organiser for workers.

The most significant foundation of union control in the ALP is the requirement that 50 per cent of delegates to state conferences come from affiliated trade unions, which leads to a similar representation at national conferences.

This then extends throughout the organisational and parliamentary wings of the party.  As a result, 19 of the 26 National Executive members are current or former union officials and half of all ALP MPs have held a paid position in a trade union.  This includes 23 of 55 lower house MPs, and 17 of 25 senators.  More than half the ALP front bench, 22 of 43, are former union officials.

In effect, unions have been handed a veto over any policies which threaten their interests, such as the sale of electricity assets or labour market liberalisation.

Perhaps most importantly, Labor has also allowed unions to gain special legal privileges not available to other civil ­organisations, such as extraordinarily broad rights to enter workplaces.

These powers make it easier for unions to recruit and retain members and thus exercise more votes within the ALP.

The internal structure of the ALP is a matter for them.  However, the special privileges granted to unions which serve to entrench union power should be removed.

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Party time for unions under Queensland's Palaszczuk government

The use of taxpayer resources to increase union membership is a fundamental attack on freedom of association, but it shouldn't come as a surprise to the public.

According to news reports, the Queensland Labor government has granted unions extensive access to state government resources — including phones, computers, emails and office space — to "encourage" union membership in the state's public service.

This decision was part of a secret deal between the union movement and Annastacia Palaszczuk's newly elected government.

The agreement states that government agencies must take a "positive, supportive role" in recruitment by unions.

This is an outrageous breach of trust.

Rather than acting in the public's interest, Palaszczuk has chosen to use people's hard-earned money to empower a special interest group.

In doing so, the government arguably has violated international treaty obligations by pressuring employees to join a union, a clear violation of the human right of freedom of association.

Palaszczuk is deeply indebted to the unions, which provided most of the funding for her election campaign.  The unions are collecting on their investment.  No doubt they will be grateful for this taxpayer-funded patronage and will repay it at the next Queensland election.

The sense of ownership that the unions have over Palaszczuk's government was highlighted last month by TheCourier-Mail.

The newspaper reported the Queensland secretary of the left-wing union United Voice, Gary Bullock, was bragging about the union's role in the election of seven state MPs, two of whom are now in cabinet.  Bullock was quoted as having referred to politicians as "United Voice MPs" — which will surprise constituents who thought they were voting for Labor candidates.

This is a level of influence unimaginable for any other interest group.  The special treatment is the symptom of a much deeper, interconnected relationship between the unions and the ALP.  This relationship is enshrined in the structure of the Labor Party, and exists throughout the organisational and parliamentary wings.

The ALP's structure is set out in its national platform, which outlines the party's principles, organisational structure and constitutional framework.  The national platform contains a staggering 169 references to unions.

These references range from mere statements of support to measures granting the unions constitutional power — such as the requirement that 50 per cent of all delegates to state conferences have to come from affiliated unions.

This level of influence is replicated throughout the party structure.

In the national executive — the party's chief administrative organisation — 73 per cent of the 26 members are current or former trade union officials.

At a parliamentary level, this influence can be seen in the fact 42 per cent of lower house MPs and a staggering 71 per cent of ALP senators previously have held a paid position in a trade union.

This means that, despite the fact only 12 per cent of Australia's voting-age population consists of trade union members, 51 per cent of federal ALP parliamentarians are former union officials.

The Queensland government's actions are merely the result of this union influence.

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Labor Party reluctant to ditch union ties in Victoria

On Friday, Labor's planning spokesman, Brian Tee, insisted he would not resign his membership of the Construction, Forestry, Mining and Energy Union if he became planning minister.

This is rather incredible.

Federally, the Labor Party is slowly, emotionally, wrenching itself through reform to separate the party from the unions.  It's long overdue.  The relationship hurts both sides.

Yet Daniel Andrews, the man who might be Victorian premier, is against this reform program.  Not only that, but he wants to install a CFMEU member in the very portfolio where they could be most damaging — planning.

Nowhere in the country is the relationship between the Labor Party and the union movement as clearly dysfunctional as in Victoria.

Much more than Steve Bracks or John Brumby, Andrews is a creature of the Labor-union nexus;  a party man close to the union interests that financially back Labor.

Last week submissions to the Royal Commission into Trade Union Governance and Corruption alleged the Victorian CFMEU has committed criminal blackmail, breached Supreme Court injunctions and violated the Fair Work Act, Commonwealth Competition and Consumer Act and the Victorian Competition Policy Reform Act.

John Setka, the Victorian CFMEU boss, has a long history of criminal charges, including for assaulting police.

It's all very salacious.  Yet Andrews' Socialist Left faction invited the CFMEU back into its power-sharing agreement.  He relies on their support.  Now the CFMEU gets a say in preselections and what the party's polices will be.

The Coalition has been trying to put the CFMEU-Andrews connection at the front of voters' minds.  Oppositions are usually risk-averse.  You can imagine how much Andrews would like to distance himself from union militancy.  It's revealing that he can't.

Sure, the Labor-CFMEU friendship is fodder for that most off-putting sort of politics — the politics of talking points and condemnations and press releases.  But it does raise serious issues.

So much state government policy has been taken over by Canberra.  This gives what is left a disproportionate significance.  When we vote for state politicians we're really only voting on a few issues.

Spring Street can't set the corporate tax rate.  It has almost no control over industrial relations and a minor influence on the level of economic regulation.  The quality of our health and education — the centre of Labor's message this week — is heavily dependent on how much federal funding Victoria receives.

But Spring Street does decide how open the state is to new building projects.  So giving militant CFMEU interests a lever over development could have long-lasting effects on the shape of Melbourne, and even the Victorian economy.

Earlier this week it was revealed that two Liberal candidates have been interviewed by the Victorian Ombudsman's office relating to corrupt donations and planning decisions.  Labor is understandably excited.  It all sounds very New South Wales.

But Victoria has its own native problems.  What will it mean for business when this old union state gets an old union government?

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Bully law a case of IR overload

It took less than a week for the first anti-bullying application to be lodged.  A Melbourne-based law firm is already advertising for anti-bullying clients.  These are sure signs that Australia's litigious industrial relations system is about to get worse.

On January 1, a new anti-bullying jurisdiction came into operation that will see applications to the Fair Work Commission increase exponentially.  Among other changes, the new Part 6-4B of the Fair Work Act empowers the commission to deal with complaints about workplace bullying and issue anti-bullying orders.

Last year, Bernadette O'Neill, the commission's general manager, estimated that the body would receive 3500 bullying complaints each year, increasing the commission's workload by almost 10 per cent.

There are three main problems with the anti-bullying changes.  First, the new laws are vague on what conduct will constitute bullying and how far the provisions will extend.

The act provides that ''bullying at work'' occurs where an ''individual'', or a ''group of individuals'', ''repeatedly behave unreasonably'' towards a worker and the ''behaviour creates a risk to health and safety''.

It is unclear what ''behave unreasonably'' means.

This ambiguity invites litigation.  Parties will invariably disagree about whether the behaviour was unreasonable, and it will fall on the commission to decide on a case-by-case basis.

This is particularly so when courts have held bullying to include things such as spreading rumours and playing practical jokes.

It is also unclear how far the term ''individual'' will extend.  The term is so broad that it appears to include anyone that a worker encounters on the job.

In this case, the commission could order a customer of a business to stop bullying a worker, and it could order the employer to monitor that customer's behaviour.

The number of expected applications is likely to be a conservative estimate given that the changes expand the number of people who are able to apply to the commission.

Applications are not simply limited to employees.  The inclusion of trainees, contractors, work experience students and even volunteers under the definition of ''worker'' will no doubt add to the surge of new claims.

The second major problem is that the absence of cost incentives presents a further risk of a blowout in the number of estimated applications.

The costs of the new system will fall on employers and the taxpayer.

Application fees to the commission are low and parties generally pay their own legal costs.  The new anti-bullying jurisdiction is no different.  While this combination arguably increases access to justice, it also fosters a ''litigate first'' mentality and removes parties' incentives to only advance meritorious claims and defences.

The saving grace of the anti-bullying jurisdiction is that there is no ''pot of gold'' for applicants to chase, as the commission cannot award monetary damages.

However, applicants may be able to seek compensation by bringing multiple claims.  For instance, a worker who alleges racially motivated bullying may decide to bring an application for an anti-bullying order in conjunction with a general protections claim.

There is a genuine concern that disgruntled and underperforming employees may exploit the new provisions to subvert legitimate performance management and disciplinary action.

Under this scenario, countless employers and managers will be forced along to the commission to justify that their management actions were reasonable.

Every application will cost employers countless hours and thousands of dollars to defend — time and money that employers could use actually employing people to produce goods and services.

Taxpayers will also bear the cost of the new anti-bullying jurisdiction.  In the 2013-14 budget, the commission was allocated $24.4 million over four years to deal with workplace bullying matters.

The third major problem is that the anti-bullying changes are unnecessary because they will duplicate efforts of state governments that are introducing tough anti-bullying laws.

Take Victoria for example.  Under Brodie's Law, bullies can face a 10-year prison term.  In serious cases, and where bullying is likely to continue, the courts can issue intervention orders as a preventative measure.

Additionally, individuals who bully fellow employees can be liable for fines up to $253,512 under workplace health and safety laws, while corporate employers risk fines up to $1,267,560.

What we can be certain about is that the new anti-bullying jurisdiction will make an already litigious industrial relations system worse.

Unfair and unlawful dismissal and general protections applications have skyrocketed in the past four years following the introduction of the Fair Work Act.

Annual reports show that in 2008-09, the Australian Industrial Relations Commission (the Fair Work Commission's predecessor) heard 7994 applications for termination matters.

By 2012-13, applications to the Fair Work Commission for termination matters had exploded to 17,375.  These figures do not include applications for non-termination matters, applications made to the Federal Court or appeals.

Although alarming, the figures are not surprising.  The Fair Work Act extended unfair dismissal laws to an estimated 100,000 previously exempt businesses.  General protections expanded so that workplace rights now affect all aspects of the employment relationship.

In termination matters, the reversal of the onus of proof means that employers are presumed to be at fault.

Of course, there is no doubt that bullying can be a serious problem in workplaces and the physical and mental effects of bullying cannot be overlooked.

However, dignity in the workplace will only flourish when the industrial relations system empowers individuals to work collaboratively to resolve workplace issues.  The present system ingrains hostility by relying on the commission every time a dispute arises.

The new anti-bullying jurisdiction is yet another example of the increasing over-reach of the industrial relations system.

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A nanny state on IR policy is the Liberal choice

In politics, sometimes it's best not to go into detail.  This is the lesson Eric Abetz learned after he explained part of the Coalition's industrial relations policy last Thursday.

Abetz told the Australian that, under an Abbott government, the Fair Work Commission would not approve workplace agreements that raised real wages unless there had been ''appropriate discussion and consideration of productivity'' (paywall).

Why?  So ''lazy companies don't just give wage increases because it's the easiest thing to do.''

It is one of the founding assumptions of Australia's system of industrial relations that workers are unable to negotiate with bosses in their own best interest.

Around this paternalistic assumption we have built a superstructure of industrial relations law, tribunals, and controlled wages unique in the developed world.

Now the Coalition seems to think some bosses are just as incapable of looking after their interests.  And that a government regulator knows how to run a business better than the business itself.

If true, one wonders how the labour market functions at all.

The Coalition's policy is patronising, illiberal, and fundamentally anti-market.

Now we know the true legacy of WorkChoices.

The fight over WorkChoices represents the moment the Coalition turned its mind from liberalising industrial relations to regulating it.

More on that in a moment.  On Friday poor old Senator Abetz was accused by his colleagues of ''freelancing'' — that is, speaking only for himself — and advised to avoid interviews for the next few weeks.

But the Coalition's official workplace policy document does, in fact, say ''before an enterprise agreement is approved, the Fair Work Commission will have to be satisfied that the parties have at least discussed productivity as part of their negotiation process.''

If anything, Abetz softened the policy, suggesting Fair Work will only second-guess agreements if they give pay increases above inflation.

That's how sensitive the Coalition is to the WorkChoices tag — even talking about its own policy is off-message.

Industrial relations has a special place in the Australian political compact.  It is Labor's raison d'etre;  the world's oldest party was born as the political wing of the union movement.  Obviously they have a deep interest in wages policy.

In the Liberal Party there have always been free traders and protectionists, conservatives and liberals, fans of both big government and small.  But one thing has bound the party together since conception — an antipathy to union power and prominence.

So Labor supporters recount our political history as a contest between employees (labour) and employers (capital).  For Liberal supporters our history is a contest between sectional interests (union thugs) and the mainstream (Forgotten People).

Yet eight decades of the Australian Settlement concealed a few subtleties in the Liberal view.

For all that time, being opposed to union power and supporting greater market control over wage price setting was, effectively, synonymous.

When, during the Hawke, Keating, and Howard eras, labour law was slowly liberalised, this equivalence was superficially reinforced.  As labour markets became freer, unions declined.

But then Kevin Rudd repealed WorkChoices.  Rudd's move was the first time since the reform era began that a liberalisation — in any sector of the economy — had been reversed.  In 2007 Australia hit the market reform wall.  This was very disorientating.

(I've described WorkChoices here as ''liberalisation'' because that's what all sides of politics imagine John Howard's policy was.  In fact it was a complex regulatory takeover of workplace relations by the federal government.  Still, perception is what matters.)

Now the Liberal Party has to figure out what its industrial relations priority is:  to pursue a free market in labour, or to battle the unions.

Put another way, is Australia's industrial relations dilemma that it is too highly regulated?  Or is the dilemma that unions are too prominent?

After the 2007 defeat, there are many on the Liberal side who say the latter;  many who imagine they are fighting a guerrilla war against the union movement.  There are hints of this attitude in the Australian article.  Abetz says the Coalition's policy was developed ''in response to unions 'bragging' that they had secured productivity-free pay increases.''

The Coalition's solution to such hubris?  Increase workplace regulation.  If the government has to nanny lazy companies to reduce union power, then so be it.

Never mind that both sides of a mutually beneficial exchange should be ''bragging'' about the great deal they got.

It's worth pointing out that unions would exist in a free society.  They would have no privileged position in the law, and no coercive power, but, as Friedrich Hayek once wrote, everybody ''ought to have the right to join a trade union.''

The dust from WorkChoices has settled.  Now that Coalition is preparing to form government again, what does it really want for industrial relations?  Labour market freedom, or just defeat of the union movement?

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A solid stance for all on building code

The Victorian government is to be commended for enforcing its building industry code of conduct.  The decision to ban Lend Lease from tendering for government projects shows it is serious about reining in construction costs.  The consequences for Lend Lease are significant as government work is a reliable underpinning for a construction contractor.

The code's implementation guidelines clearly state contractors' obligations.  The building and construction industry is littered with many code and contract requirements, which participants typically expect clients and regulators to show flexibility in administering.

Flexibility means recognising ''the reality'' of workplace relations and accepting that unions dictate the terms of pattern enterprise agreements and working arrangements on site.

The Victorian government has decided to reject this way of doing business.  The appalling desalination plant project steeled its resolve — extravagant entitlements and work practices won on the desal plant have emerged as a feature of other agreements, and the cost of building infrastructure in Victoria was becoming unsustainable for a government with a tight budget.

At the same time, the federal government took a retrograde decision to emasculate its regulation of the industry.

This was strenuously opposed by clients and contractors but payback to the building unions prevailed and changes were made.

The Office of the Australian Building and Construction Commissioner was abolished and penalties reduced by one third.  The new regulator has less power and less capacity, or will, to fight unlawful conduct.

The result, predicted by many, is that workplace relations have deteriorated quickly — intimidation, stand-over tactics and brutal industrial activity have returned with a vengeance as evidenced by headline disputes involving Grocon and a West Australian contractor at a boutique Geelong brewery.

In addition, there are reports that stand-over tactics are sometimes attended by threats of violence.  Many in the industry have concluded that the bad old days have returned, especially in Victoria.

The federal government appears ignorant of the industry's history.  Appeals to respect for the law, reason and tolerance have not worked.  Industry players require strong regulators with strong powers backed by a determination to enforce the law with rigour.

This is the only approach that has succeeded in bringing a semblance of lawful conduct and productivity to the industry.

The Victorian government has a daunting task.  Entrenched interests that benefit from lax regulation will attempt to undermine the code and its guidelines.  Managers of government projects and the Code Compliance Unit will need to be vigilant — Victorian government projects were heavily targeted for unlawful conduct in the past.  Once a code is in place, non-adherence cannot be tolerated.

The reasons for a tough approach are compelling.  It is not about beating unions into submission;  it is about having a productive, competitive and law-abiding industry.  The requirement for more government infrastructure is insatiable as our population grows.  The benefits of projects completed on time and within budget are clear.

Also, honest contractors and workers have a right to pursue their business activity or employment in a lawful environment.  It is intolerable in 2012 that they should be concerned about being confronted daily with unlawful conduct and intimidation as they go about their affairs.

The Victorian government is to be admired for its stand.  It has no option but to follow through against other contractors that do not comply with the guidelines.  It is simply making a statement, that as a client of the industry, proper standards will apply on its projects.

It is to be hoped that other state governments adopt the Victorian approach and fill the void created by the capitulation of the federal government to the unions.

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Fair Work Act has unleashed mob rule and it's spreading

A clear failing of the Gillard government's fair work system is increased industrial action and union militancy.

Australian Bureau of Statistics data released yesterday shows an alarming jump in industrial action to an eight-year high.  A staggering 101,700 working days were lost because of industrial action in the June quarter.

The system encourages unions to take strike action.  Australian workplace culture is being transformed as we experience protracted bargaining attended by strikes and unruly blockades.  A range of industries are affected in the latest figures, including mining, the public sector and construction.

It is fanciful for Bill Shorten to blame Coalition premiers.  The system confers on union leaders an increasing arrogant confidence that they can beat employers into submission.

Melbourne is now accustomed to daily pictures of the union mob battling a contractor, its workers and police.  The Grocon dispute is critical because it involves blatant unlawful conduct including the defiance of Supreme Court orders.  A win for the mob would do untold damage to Australia's reputation for managing workplace relations.

Sadly, such workplace relations thuggery is not limited to Victoria.

The Queensland building industry is experiencing a similar standoff.  Abigroup, a national contractor, is building the Brisbane Children's Hospital.  It is a $900 million project due for completion in 2014.

The site has been shut down for more than four weeks because of a strike by workers.  The unions involved are the Construction Forestry Mining and Energy Union and the Builders Labourers Federation.  They are demanding Abigroup engage all subcontractors and their employees on the same rates as workers employed by Abigroup.

The company is being pressured to abandon its legally registered enterprise agreement in favour of a union pattern agreement.  Protesters have assembled at the site to discourage workers entering.  The taunts and abuse hurled at those who wanted to work were so vicious that entry was not attempted for weeks.  Employees were photographed and told they would be remembered.

Orders by Fair Work Australia and the Federal Magistrates Court have failed to secure access to the site.  A blockade remains in place that the union disavows having any involvement in organising.  At the same time Abigroup was told that a phone call accepting the demands will have the matter fixed.

Restrictive clauses of the type claimed by the CFMEU have already been adopted by other national building companies operating in Queensland:  Laing O'Rourke, Grocon, Theiss and Baulderstone.  All endured protracted disputes of two weeks or more.

It is an established right for employers and workers to access their place of work.  Industrial action affecting the workplace does not detract from that right.  Workers have a lawful right to choose not to engage in industrial action.

Union militancy by building and construction unions is escalating across the country.

The militancy is the result of capitulation by the Gillard government.  The strong regulator, the Office of the Australian Building and Construction Commissioner, has been abolished.  Its replacement, the Fair Work Building and Construction Inspectorate, has superficial powers and adopts a cautious approach to securing lawful conduct on building sites.  The government also diluted the application of the national code of practice across the industry.

The rise in protracted disputes is clearly a failure of the Gillard policy.  If added to this is an inability to contain or punish unlawful conduct then the future is grim.

Some are indifferent to these disturbing trends on the grounds that they reflect the rugged culture of building and construction.  Such indifference is misplaced.  Queensland has a substantial construction program.  Population growth, mining development and infrastructure upgrades mean that building and construction play a vital role.

The real reason for the industrial campaigns is to consolidate union influence over commercial construction.  The emergence of an unchecked, militant culture inevitably will involve higher costs and delays in project completion.

More important, the lawful rights of employers and workers are threatened.  Victoria and Queensland appear to be the current focus.  If mob rule is allowed to prevail then the conduct will likely spread.  Australian workers and industry will suffer.

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Unions will get just desserts

If the unions aren't careful Tony Abbott will be forced to do something about them.  It will only take a few more violent protests on building sites in Melbourne and one or two more lurid tales of union corruption out of Sydney for a future Abbott government to get to be brave enough to have a fundamental review of how trade unions operate in Australia.

The difference between what Tony Abbott might do to the unions as PM and what John Howard tried with Work Choices is that union thuggery and corruption is clear, obvious, and easily understood.  Not all unions use violence as a negotiating strategy and not all union officials are corrupt.  But that's not an excuse to turn a blind eye to instances where there is violence and corruption.

There are good reasons why the Coalition is reluctant to talk about industrial relations and wary of even uttering words like ''labour productivity''.  The Coalition's fear is that anything the Coalition says about industrial relations will be likened to an attempt to bring back Work Choices.  The ACTU's $30 million campaign against Work Choices and the Howard government did much more than help Kevin Rudd become prime minister in 2007.  The campaign was so successful it scared off the Coalition leadership from touching industrial relations for at least a decade.

The beauty for the Coalition of talking about ''union governance'' instead of ''industrial relations'' is that the capacity of the ACTU to campaign against plans to reform ''union governance'' and reduce corruption is limited.  There's little doubt what an inquiry into union behaviour and governance would find.  The scandals in the Health Services Union and Australian Workers Union are the result of lax governance and minimal oversight, while the abolition of the Australian Building and Construction Commission removed effective enforcement against illegal behaviour.

In the wake of the HSU saga Eric Abetz, the opposition workplace relations spokesman, said union officials should face the same penalties as company directors for breaches of the law, including fines and jail.  From this it's just one small step to having trade unions regulated by ASIC — a step the Coalition has so far resisted, but it's the logical conclusion of their position.

The disparity between the treatment of companies and unions can only be explained by the fact that few Labor Party ministers have been company directors, but many have been union bosses.  The Gillard government wanted to impose a penalty on company directors of up to one-year imprisonment if they'd changed their address and hadn't informed ASIC within 28 days.  Meanwhile, Fair Work Australia spends three years investigating Craig Thomson.

Having unions regulated by ASIC won't immediately stop violence on picket lines, but it would send the message that the era of one rule of unionists and one rule for every other member of the public is over.  Unfortunately, it's a message that needs to be sent to those authorities meant to be upholding the law.  In Victoria, the state government runs television advertisements gleefully telling motorists of how the police will relentlessly fine any driver travelling even just a little over the 40km per hour speed limit.  Yet last month when protesters illegally picketed a Coles warehouse in Melbourne preventing employees from going to work the police stood by and did nothing.

The other area of trade union privilege a Coalition government is itching to overhaul is superannuation.  Industry super funds connected to trade unions are granted special treatment under industrial relations legislation and they get benefits not available to for-profit funds.

The Coalition should never have agreed to support Labor's promise to increase the compulsory superannuation contribution to 12 per cent, but given that they did, the Coalition should have at least made their support conditional on having a level playing field for all superannuation funds.  The Coalition didn't insist on this but they'll have the chance to fix their mistake if they get to form government.

Storm Financial, the financial planning company that went broke and lost millions in investors' funds was hardly representative of the financial advice industry.  But that didn't stop the Labor government in the wake of the Storm collapse unleashing waves of new regulation on financial planners.

There's every chance a Coalition government will do to the unions what an ALP government did to the financial planning industry.

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WorkChoices demon used to fire up the Labor base

Nothing scares the pigeons more than WorkChoices.

Anyway, that's the theory.  Just a hint of industrial relations reform (no matter how vague) by anybody remotely associated with the Coalition (no matter how obscure) brings out the WorkChoices demon.  Ministers pound out tweets.  Hawker Britton squawks.  WorkChoices is back!

It's like a verbal tic — it's what you say when you're not sure what to say.  WorkChoices is for Labor Party strategy what ''umms'' and ''errs'' are for impromptu speeches.

One day in February 2010 the ACTU said it would campaign against Kevin Rudd's industrial changes — they did not believe Fair Work was fair enough for workers.  The next day Julia Gillard put out a press release:  ''Abbott must come clean on WorkChoices''.

''Australians can't trust Tony Abbott on WorkChoices'', the ALP told Australia citizens during the 2010 election.  The next day Abbott promised that WorkChoices is dead, buried, and cremated.  Undeterred, two days later Simon Crean sent out a press release:  WorkChoices ''has been dug up, dusted off, and is ready to be rolled out should the Coalition be elected.''  Labor's divining rod finds WorkChoices everywhere.

So no wonder the Labor Party went into convulsions when this week the Australian Financial Review reported that John Howard wants revive the industrial relations debate.  It's the perfect storm.  The guy they defeated, calling for the policy they campaigned to destroy.  Wayne Swan rushed out a press conference.  Abbott-to-bring-back-WorkChoices was again the message of the day.

But Howard wasn't even talking about WorkChoices.  The former prime minister wanted Abbott to adopt the Peter Reith model, which predated WorkChoices by nearly a decade.  As he said, ''There is no reason why this country should not go back to the workplace system we had between 1996 and 2005 where you had individual contracts.''  This line was widely cited in articles which nonetheless claimed Howard was calling for the return his post-2005 policy.

At most — at most — Howard suggested the Fair Work Act's loose unfair dismissal provisions be tightened.  His words:  ''you have got to do something about unfair dismissals.''

This is a reasonable view, even if you don't agree with it.  Under WorkChoices, one exception to an unfair dismissal finding was if an employee was made redundant for ''genuine operational reasons''.  That exception has been replaced by a vaguer ''genuine redundancy'' standard, which (for instance) only allows dismissals if workers cannot be given another job elsewhere.  This new standard turns industrial judges into human resource managers.  Questioning the new standard isn't revolutionary.  Howard's view is modest;  almost shy.

Anyway, Howard's views are moot.  He's no longer prime minister.  There is no reason to believe Abbott is thinking about touching this hot potato.  Dead, buried, and cremated, remember?  Given his campaign against the carbon tax, there's nothing a first term Abbott government will be more sensitive to than charges that the Coalition has broken an election promise, or didn't tell the voters about its plans.  The firmest guarantee an Abbott government will do what it says is how brutally they've attacked Labor for doing the opposite.

WorkChoices is an apparition.  When it is mentioned, it rarely has anything to do with the specifics of what the 2005 reforms actually were.  Four years after it was abolished, WorkChoices is now less a policy than a freelance stand-in for anything that might fire up the Labor base.  That is, anything that might bring back the old magic of the 2007 election campaign.  In those happy days, Labor campaigned as if WorkChoices was the culmination of a century of Tory attacks on the Australian settlement.

But for the right, WorkChoices is an emblem as well:  emblematic of an aging government willing to trample Australia's institutions to get what it wanted.  The right wasn't much more sympathetic to Howard's last industrial relations reform than the left.

WorkChoices took industrial relations forever out of state hands, eliminating any principle of federalism in workplace policy.  And it was an extraordinarily complicated piece of law.  It increased, rather than decreased, government involvement over labour markets.

It is mostly forgotten that the great workplace bogeyman, the HR Nicholls Society — the fortress of managers' rights, the unions' bête noire — was opposed to WorkChoices.  In 2006 ACTU boss Greg Combet described WorkChoices as ''Kremlin-like''.  The president of the HR Nicholls Society, Ray Evans, agreed.  ''It's rather like going back to the old Soviet system of command and control, where every economic decision has to go to some central authority and get ticked off.''  He went on:  ''I don't believe the Howard Government is that keen on freedom.''

This makes recent claims that the rebirth of the HR Nicholls Society is a harbinger of WorkChoices comically ludicrous.

But then, what does it matter?  The point of talking about WorkChoices isn't to warn Australian workers.  It is to find anything that might restore Labor's support.  WorkChoices is a scare campaign, sure.  It's also very tired and probably futile.

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Nasser tells it like it is

It's not quite going from the sublime to the ridiculous — but it's close.  Two speeches have captured the national headlines over the past week.

First there was Jac Nasser, the chairman of Australia's biggest taxpayer, BHP Billiton, outlining his plan for a more productive and prosperous nation.

Then came Craig Thomson, claiming he did not use his trade union credit card to pay for prostitutes.  As a result, parents around the country are now having a difficult time explaining to their children what's being talked about in the nation's Parliament.

Nasser got the front page for a day.  Thomson has had the front page week after week after week.  The different media treatment of the speeches says something about our priorities.

And it reveals what the public finds more interesting.

From the important to the incredible is a better description of the news cycle last week.  The sorry saga of Thomson will ultimately end up as a political footnote.  But what Nasser said could prove to be something of a turning point in the debate about the shape of Australia's future.

Nasser said two things of particular significance.  The first had to do with industrial relations and tax.

He declared Labor's industrial relations laws were hurting productivity and he basically said trade unions had too much power.

''It is important to have a co-operative framework within which to engage employees who choose union representation.

''But we do not believe that the influence of unions should be disproportionate to the level of union membership which today accounts for around 15 per cent of employees in Australia's private sector ...''

That's strong stuff.  And it's from the chairman of a company that's traditionally been more sympathetic than its competitor, Rio Tinto, to unions.  Such criticisms of the so-called Fair Work Act are not new.  What's special about Nasser's remarks are that now even BHP is critical of the country's labour laws.

Nasser's comments about tax were along the same lines.

''It is the right of governments to set the tax regime but I cannot overstate how the level of uncertainty about Australia's tax system is generating negative investor feedback.  People don't know where it's going.''

This was just days after Wayne Swan reneged on his commitment to cut the corporate tax rate and instead spent the money on handouts to families to compensate them for the carbon tax.

Again, there was nothing original about Nasser's statement.

It's impact rests on the delicious irony that it's the carbon tax that forced the government to break its promise on the corporate tax, and it was BHP's chief executive, Marius Kloppers, who urged Julia Gillard to introduce a carbon tax in the first place.  In September 2010, when the PM started to justify the carbon tax, she named Kloppers as someone who supported the tax.

The second thing of significance in Nasser's speech was his defence of Gina Rinehart, Andrew Forrest and Clive Palmer.  Not too many business leaders have had the courage to come out and back those such as Rinehart, Forrest and Palmer who have been successful, as Nasser put it, ''by their own toil''.

It's one thing to jump on the industrial relations and tax bandwagon, as many corporate bosses have done recently, but it takes some fortitude to confront a government and a treasurer and tell them they're wrong.

The government can be remarkably vindictive.  Look no further than the government inquiry into the media that was aimed fairly and squarely at Rupert Murdoch.

Nasser's statement that ''attacking individuals and specific industries doesn't build confidence in our country — nothing good comes from this'' was merely a declaration of the obvious.  However, it's a statement too few people in Australia have been willing to make.

It's unlikely the Gillard government will pay too much attention to Nasser.

The Prime Minister won't be quoting him in support of industrial relations reform, as she quoted Kloppers on the need for a carbon tax.  But in any case it's unlikely that Nasser made his speech with the purpose of influencing Labor government policy.

The purpose of Nasser's speech was to tell the Australian public what he thought it needs to hear.  He won't be too concerned about the government.

He knows that given the government's predicament, ministers will spend more time worrying about what Thomson said than anything the chairman of BHP Billiton said.

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Qantas proved right in resisting unions

Qantas announced changes to its aircraft maintenance arrangements yesterday.  The result is 500 staff in Victoria will lose their jobs.  The unions will blame the airline and governments for job losses.  Chief executive Alan Joyce will probably cop more vilification.

Already, Qantas unions have condemned the move and claim the company has a broader social responsibility to retain jobs and train more people on aircraft maintenance.

However, the announcement is another reminder of the challenges facing Qantas.  It highlights the difficulties companies encounter in staying internationally competitive while managing a confrontational workplace relations system.

It is more than six months since the Qantas dispute ended in spectacular fashion.  The airline grounded its fleet and Fair Work Australia terminated bargaining between the company and three unions.  Industrial action ceased because, with the termination, it became unlawful.

In the meantime Qantas has negotiated a settlement with the union covering its 1600 aircraft maintenance engineers, the Australian Licensed Aircraft Engineers Association.

The settlement, approved as a workplace determination by Fair Work Australia, was a clear win for Qantas.

To set the scene.  Qantas aircraft engineers were and remain the highest paid in the world.  More than 90 per cent of Qantas aircraft maintenance is undertaken in Australia.  The engineers average long service and low employee turnover;  they appear to be satisfied with their careers

The ALAEA was regarded as the most militant of the three unions during the dispute.  It vigorously pursued its claims by taking strike action, imposing work bans and cancelling planned strikes at short notice.  Aggressive statements emanated from its federal secretary.  He notoriously advised passengers not to fly with Qantas.

The ALAEA claim sought control of the Qantas maintenance program, pay increases of 5 per cent per annum and a doubling of redundancy entitlements.  None of these claims were won.

The ALAEA wanted the heavy maintenance of new A380 and B787 aircraft performed in Australia.  The union proposed a new hangar be constructed at a cost of $95 million for this purpose.  Present work practices were sacrosanct;  change would not be entertained.  The modernisation of the fleet with different maintenance requirements apparently was irrelevant to the ALAEA.

The settlement allows heavy maintenance of the new aircraft to be undertaken overseas.  A new hangar will not be built.  Work practice changes to improve productivity will be entertained.  The intensely competitive and volatile nature of the international airline business is recognised.  The impending loss of 500 jobs demonstrates that Qantas has to adapt to remain competitive.

The pay of aircraft engineers is increased by 3 per cent a year.  Fewer restrictions apply to working extended hours when circumstances dictate.  Redundancy pay at the present standard of four and three weeks per year of service is retained in the settlement.

The comprehensive win for Qantas raises the question of why the company and its customers had to incur extensive losses and inconvenience during the protracted dispute in 2011.

The Gillard fair work system has transformed workplace bargaining.  The rules favour unions and place them in a privileged role.  Union leaders have been emboldened to expand their bargaining agendas and push for greater control over decisions about running the business.

Qantas had the capacity and foresight to resist the union strategy.  Many employers lack both and concede to their detriment.

For Qantas the settlement of two claims involving international pilots and ground staff remains.  These will be arbitrated by Fair Work Australia, which does not have an enviable record of recognising the competitive realities of modern business.

If uncompetitive settlements result then further Qantas jobs will be in jeopardy.  Also, the viability of the Gillard fair work system will be open to more doubt.

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Get used to a different way of working

Fluid work practices give people control over their destiny, not job insecurity.

We expect economic and labour market policies to foster job security.  But many factors impinge on job security.

Every generation experiences change in how work is performed.  Today, ubiquitous information technology is transforming how we work.  Socially, the characteristics of an integrated 24/7 lifestyle are becoming more common.

Business has to be flexible and capable of adapting to new circumstances.  Failure to adapt will likely spell the demise of the business.  Workers should recognise that work practices need to be flexible to ensure the firm is productive and competitive.

It is a fact that in 2012 Australian workers cannot be guaranteed job security.  At the same time, most can look forward to regular employment throughout their working lives.

The pace of change affecting businesses impacts on how we work.  Independent contracting and labour hire have become more widespread.  Casual and fixed-term employment are entrenched modes of work.  It is estimated that more than 4 million people, about 40 per cent of Australian workers, are engaged in these employment categories.  Some lament the spread of these work categories.  The ACTU, for example, yearns for a return to the 9am to 5pm, Monday to Friday, permanent employment model.  It has instigated a campaign to rein in what it labels ''insecure employment''.

Opponents of more flexible work options presume they are basically exploitative.  This is far from the reality and is a view not shared by many workers.  Workers in most industries embrace different modes of work.  It has underpinned our strong jobs and incomes growth.

Many Australians embrace the freedom offered by contracting and labour hire.  It affords them independence and control over their own destiny.  It allows them the opportunity to grow a business and directly benefit from their skills and knowledge.  They place a premium on a satisfactory balance between work and private life.  Careers are often pursued jointly with partners to maximise family and job potential.

Many workers also choose casual employment.  It is often a pathway to permanent employment for young workers.  An ACTU survey shows that 50 per cent of casual workers do not want to change to permanent employment.

Businesses in a variety of industries have to deal with peaks, troughs and seasonal variations in operating conditions.  The managing of such demands through a permanent workforce is untenable.

Flexible work arrangements will become increasingly relevant in keeping older workers in gainful employment.  This is an important labour market policy issue as we start to deal with the consequences of our ageing population profile.

So most workers understand the changes taking place in the workplace and appreciate the opportunities offered by technology.  They comprehend the need for businesses to be adaptable and competitive.  The firms with the best prospects are those where the management and workers have a shared understanding of the challenges facing the business and the aspirations of its employees.

The opponents of flexible work options massively overstate their unpalatable features.  Exploitation occurs under every labour market model.  The regulatory system should ensure exploitation is deterred and penalised.

The opponents of flexible employment call for controls to limit its attraction.  The ACTU supports this position to justify even more workplace regulation.  Its proposals to limit flexible employment would involve punitive taxes, additional obligations on employers, union consent before engaging contractors, new agreement clauses facilitating transfer to permanent employment and secure employment orders by Fair Work Australia.

It is a difficult balancing act for governments to devise workplace regulations that facilitate job security.  The Gillard government's fair work system has reimposed a regulatory burden akin to the 1980s.  Employer decisions to recruit staff are now influenced by the risks associated with unfair dismissal, adverse action claims and termination payment exposures.  Firms have been placed into administration because of unsustainable liabilities arising from termination payment obligations.

The Gillard regime is unsuited to the workplaces of 2012.  To impose more regulation as the ACTU proposes would be to destroy jobs, productivity and investment.  Our labour market experience would mirror the persistent high unemployment of the failing European economies.

Permanent employment would become the privilege of a few.  Unemployment and underemployment would rise.  Young job seekers would be hard hit.  More jobs would move offshore to flexible labour markets.

Australians value choice, freedom, independence, individuality and having a go.  They accept the risks of relying on reward directly linked to effort.

Flexible work arrangements reflect a dynamic modern labour market.  They are crucial to investment and future job security.

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Liberal Labour reform

One of the first acts of an Abbott government should be to repeal the Labor Party's Fair Work Act.  Industrial relations reform has a strong political rationale and serious policy merit.

Following the 2007 federal election it became conventional political wisdom that industrial relations policy was a no-go zone for the Liberal Party.  After all, the much-loathed WorkChoices legislation had contributed in a significant way to the party's loss of office after 11 years in power.

While it is certainly true that WorkChoices hastened the Liberal Party's demise in 2007, it is far from clear that the political response in 2011 should be to abandon the field of workplace relations reform.

In the 2010 federal election, opposition leader Tony Abbott was forced into an awkward promise to do precisely nothing in the field of labour market reform under pressure from Labor Party scare tactics and grilling from journalists.  From this came his now infamous pledge that WorkChoices was ''dead, buried and cremated''.

But surrendering the battle before the industrial relations war even began in the last election had two serious consequences that Abbott must avoid before the next election, due in 2013.  Firstly, by declining to prosecute the obvious failings of the Fair Work regime, the Liberal Party allowed the ALP to escape reasonable criticism of their workplace policies, and gave voters the impression that they were not causing major headaches for business and impacting on economic efficiency.

Secondly, in the minds of many voters, the Liberal Party has a deep-seated commitment to labour market liberalisation, so a promise to do nothing in this area has little credibility.  Voters who doubted the opposition leader's sincerity had only Labor Party talking points about a return to WorkChoices as a guide to what the Liberal Party would do if it won office.  By contrast, had Abbott outlined a sensible and moderate reform package, he would have been able to more credibly deny charges of a resurrection of John Howard's laws.

The economic case for industrial relations reform is strong.  Productivity is the single most reliable measure for predicting increases in living standards.  If productivity is rising, incomes soon follow.  In fact, there's no other sustainable way of increasing national wealth.  But after strong growth in the 1990s, productivity growth has been lagging for the best part of 10 years, and has slowed to a crawl in last few years.  It would be fanciful to attribute all of this slowdown to stagnant industrial relations laws, as productivity is affected by many economic factors.  But it would be equally foolish to argue that substantially re-regulating the labour market has absolutely no impact on productivity.

After all, the Fair Work Act not only overturned the 2005 WorkChoices laws, but also features of much earlier — and less controversial reforms.  For example, Fair Work eliminated statutory individual agreements, a policy introduced by industrial relations minister Peter Reith in 1997, which were obviously not egregious enough to prevent the Liberal Party winning elections in 1998, 2001 and 2004.  In effect, Labor has returned Australia to an industrial relations era of the early 1990s.

The signs of strain from this system are now becoming apparent.  High profile disputes such as the battle between unions and management at Qantas highlight the way in which the union movement has been emboldened by laws which tilt the system substantially in their favour.  Appalling stories of over the top salaries and ridiculously generous conditions at worksites like Victoria's Wonthaggi desalination plant demonstrate that taxpayers are bearing the cost of a system that pays little heed to economic reality.  We know from cases like that of students employed at a hardware store in rural Victoria — who were denied the chance to work two hour shifts under the laws — that the system is costing jobs.

And the business community is becoming more vocal every day of the increased compliance costs, the embedded disincentives to hire and the inflexibility that characterises the Fair Work Act.

Let's not lose sight of the moral component here either.  Why shouldn't employees and their employers be able to negotiate agreements that they believe are mutually beneficial?  Why should a third party like a union, or a tribunal of Fair Work Australia, be able to tell a small business how they should spend their money and who they should employ?

Australians should be grateful that we don't suffer under the perennially high unemployment that besets Europe.  Even in good economic times, countries like France and Germany have belaboured under the strain of unemployment rates of almost 10%.  This isn't just economically inefficient and expensive for taxpayers, but has a very real personal cost.  We know that unemployment is associated with a whole range of social ills and that the dignity of work is an extremely effective tool for combating them.  One of the reasons Australia has traditionally enjoyed lower unemployment and less of its associated costs is because of our relatively liberal labour markets.  But the current rigid system puts that at risk, particularly if we see the second global economic slump that many predict.

Ultimately, you can't shackle a 21st century economy with a 20th century industrial relations system without negative economic consequences.  If Labor won't reform Fair Work, it falls for Tony Abbott to do so.  The only question is, is he up to the task?

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A challenge for Shorten, IR insider

Bill Shorten is presented with an excellent opportunity to prove himself to be a minister who is not dictated to by the unions.  The Australian workplace relations system requires substantial reform and he may be the man to do it.

It is sometimes said that a minister with inside experience can bring unexpected and lasting change to a portfolio.  A good ''insider'' minister will use knowledge and credibility to push change beyond expected boundaries.

Shorten is now presented with such an opportunity.  He has been a prominent union official rising in 2001 to the job of national secretary of Australia's oldest union, The Australian Workers Union.  He also developed a reputation of being accessible to business.

It is clear that the Australian workplace relations system is plagued by problems.  Reform in a number of areas is required.  A failure by Shorten to introduce changes will damage Australian workers and the economy.  He should take five key reform steps as a matter of urgency.  All require an ability to stand up to the unions.

First, allow individual flexibility arrangements (IFAs) to operate as intended by removing the capacity of unions to constrain their use.  A common stipulation found in agreements is that the union has a right to be consulted about or even approve an IFA.

IFAs bind individuals;  unions do not have a role.

Second, transfer the regulation of independent contracting from workplace relations laws to commercial law.  Many Australians prefer to work this way because of the freedom it affords them.  The ACTU is running a campaign to load more workplace relations regulation into the oversight of contracting.

Third, withdraw the bill to abolish the Australian Building and Construction Commissioner.  As a former AWU secretary, Shorten will be aware that the main winner from the bill is the militant Construction, Forestry, Mining and Energy Union.

Fourth, restore right of entry for union officials to workplaces to the 2007 election policy position.  The right to enter should be based on members of a union working at a workplace.  At present, entry can be achieved on the pretext of people in the workplace being eligible to join a union.

Fifth, revise bargaining rules to avoid protracted negotiations and industrial action.  Australia's reputation is suffering through a re-emergence of union militancy combined with a complex and inflexible workplace relations system.  Shorten portrays himself as someone who understands business challenges as well as union factions.

He now has a chance to deliver a system suited to a multifaceted economy operating in a competitive world.  A system reflecting union dogma based in the 1970s will not grow jobs and investment.

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