Event: Annual Ron McCallum debate
Speaker: Denita Wawn, CEO Master Builders Australia
Delivery: Monday 24 October 2022, 6pm AEDT
Topic: Industrial relations
If the last three years has taught us anything, it is the importance of remaining flexible and productive during times of crisis and change.
The Australian economy and broader society have the ability to respond to a complex, ever changing economic landscape if it’s supported by flexible policy settings.
As we emerge from the pandemic, we must resist the temptation of using rushed ‘one size fits all’ policies to try and address some of the weaknesses in the system, and instead pause and reflect on the principles that have underpinned our productivity successes not only over the last three years but the last three decades.
A strong and flexible industrial relations system underpins a competitive, modern and productive economy.
Central to this is enterprise bargaining – a system that leverages the competitive nature of business while protecting workplaces with appropriate safety nets like employment standards and high minimum wages.
However, there has been a steady decline in enterprise bargaining due to the complexity of the regulatory framework around it which has undermined the intention of employers and employees to achieve agreements.
Rather than tackling these issues head on, there’s talk of regressing and moving away from the enterprise-based approach to a more pre-Hawke/Keating era industrial relations system as a Band-Aid solution to lower wages growth at the expense of productivity.
Something that I would argue goes against the very principles Labor governments of the past have championed.
For example, by increasing flexibility and moving away from centralised wage fixing, Hawke and Keating unleashed a wave of prosperity.
In 1995 Paul Keating noted if you get the structure right like competition policy and a much more flexible labour market, “…all of these things produce a natural contestability which gives you natural increments to productivity and low inflation.”
So it follows that if we revert to an inflexible IR system, is to risk the productivity of the Australian economy and the real wages of all Australians.
Because we would argue productivity gains are the only way to sustainably increase real wages for the long term.
As Kevin Rudd and Julia Gillard said when introducing IR reforms during the GFC:
“Labor has a proud history of industrial relations reform in Australia’s national interest… An old centralised wage fixing system is not relevant to Australia’s modern workplaces and modern economy.”
And as the Productivity Commission said only a few weeks ago, better wages will only be driven by bargaining which is enterprise-based and squarely aimed at achieving genuine improvements in productivity to the benefit of everyone at the workplace.
So in closing, we would argue that the new government should exercise caution when undertaking reform by looking at the short, medium and long-term impacts on productivity and real wages of everyday Australians if there is a move towards greater centralisation and increasing the Fair Work Commission in the activities of every business in Australia.
Because simply put, you can’t fix a complicated system by making it even more complex; and inflexibility is going to be certainly more destructive in terms of a complicated economic environment.
National Director, Media & Public Affairs
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