It’s not as if the problems caused by the Fair Work Act are new and unknown. I have been doing six-monthly surveys on labour relations in the mining industry and the results have shown a continuing and unmistakeable deterioration in our industrial relations environment. On the release of the second of these surveys, The Australian in February this year published both an article of mine and an accompanying editorial dealing with the potential for the Fair Work Act to cause us immense harm. As I wrote in that article back in February:
THE preoccupation with deficits and monetary policy has drawn attention away from yet another problem area of economic management, this one almost entirely brought on by the federal government’s decisions.
The Fair Work Act was the government’s response to Work Choices and was built on the premise that the economy had nothing to fear from an activist trade union movement. Giving unions more power in the workplace, it was argued, would not be followed by greater militancy or by an inflationary push for higher wages and better conditions.
We may be about to find out just how wrong these assumptions have been.
The editorial was just as clear. Here is that editorial in full:
EMPLOYERS have a strong case against the Fair Work Act.
Barely a year after Labor’s so-called Fair Work Act became fully operational its shortcomings are becoming more apparent. The serious fall-off in confidence in the system among employers in the resources sector in the six months to October last year, recorded in a survey by the Australian Mines and Metals Association in conjunction with RMIT University School of Economics, Finance and Marketing, is no surprise. After decades of prosperity boosted by labour market deregulation, initiated under Bob Hawke, continued by Paul Keating and improved significantly by John Howard, the present, centralised system is an unfortunate throwback to the 1970s and is inimical to productivity. The fact more than half of the businesses surveyed have experienced more workplace visits from union officials is to be expected because such visits are sanctioned by the system. Potentially more damaging are the prospects of a wages breakout, increased strikes and the impact of a 35 per cent rise in unfair dismissal claims during the first year of the system. The government went too far in winding the IR clock back to an era years before Work Choices. Employers know it and need to consider whether to invest time and resources arguing the case for reform as effectively as the ACTU campaigned against Work Choices.
We really do have the potential to relive the worst period in Australia’s economic history. With debt and deficits an already entrenched problem, we have added industrial relations as a running sore to go with the rest. The Fair Work Act is in need of a complete overhaul as the Qantas dispute has all too clearly shown.
The Fair Work Act is not only a disaster in the short to middle terms, but I would bet any employer, who must think in ten/twenty year blocks for a factory to be viable, would look ahead and say “OK, these drongos have shot their bolt, but in ten years time the next generation of uneducated voters will put them back in. So why set up in Australia?”
Winston Smith
31 Oct 11 at 7:21 pm
Surely oz isnt the only country with IR causing sovereign risk?
David Elson
31 Oct 11 at 7:34 pm
We voted for this shit. Well, the Australian public did.
ar
31 Oct 11 at 8:17 pm
I have been asked elsewhere why I am critical of the government for not intervening earlier in the Qantas dispute when I normally advocate free markets and claim that governments should not intervene in the market. This is in my view a vitally important question and one that free marketeers need to take seriously and answer clearly.
“Protected industrial action” is basically a legal right to breach your employment contract without the other party to that contract having legal recourse. In so far as the government has used legislation to create this unnatural right and disarm employers it has a high duty of care to ensure alternate remedies exist or to reinstate the means to self defense when the situation is being abused. It has effectively done this now however not before considerable harm was done. Removing “protected industrial action” status is in my view not so much a market intervention as a restoration of normal contract law. Not in a pure sense but sufficiently to make the case. The government was not late in intervening in the market, it was late in withdrawing from the market. Again not in a pure sense but sufficiently to make the case.
TerjeP
1 Nov 11 at 7:58 am
At least Juliar has not undone all of Hawke’s good work. The dollar is still floating, tariffs haven’t gone up (yet) and she has only re-nationalised telecommunications (so far). It might not get as bad as the 70s, but I don’t underestimate her determination to succede.
johno
1 Nov 11 at 9:04 am