In 1993, Peter Reith wrote in his diaries and republished in his memoir, The Reith Papers, that even though the election was lost and Fightback rejected that:
‘If Australia goes on making peripheral change, as has happened under Labor; then our circumstances will continue to gradually erode even though that erosion may be masked by the ebb and flow of the economic cycle.
I do not believe that the party should jettison the principal elements of the economic policy presented at the last election. Australia needs to undertake major reform of the tax system and industrial relations, microeconomic reform, privatisation, and many other aspects of economic management.’
When the Howard government won the next election in 1996, those reforms elements were expanded upon and implemented. It was a whole of government approach.
For Reith, that meant a rewrite of the Industrial Relations Act to create a workplace system more suited to the late 20th Century.
These reforms ushered in a period of real wage growth based on productivity.
These changes were built on with the introduction of WorkChoices in 2005.
After the Liberal and National parties lost the 2007 election, the scapegoat for the defeat became WorkChoices.
Tony Abbott declared WorkChoices ‘dead, buried and cremated’ ushering in an era of reform shyness where workplace relations were relegated as an issue by the Liberal Party in opposition and government.
The Liberals vacated the IR reform debate in opposition, in government under Abbott, and also Malcolm Turnbull and his successor Scott Morrison.
Malcolm Turnbull as Prime Minister said, ‘You’ve got to be true to yourself, I am who I am, I’m a practical, pragmatic leader, I’m not an ideological leader.’
His successor, Scott Morrison, long positioned himself as a pragmatic centrist, arguing that governing should focus on the practical, everyday concerns of ordinary Australians rather than ideological agendas from the left or right.
How extraordinary to be an ideological free zone as leader of a political party.
But it explains a lot!
Not a wonder real reform under the Liberal Party stalled.
My real beef is that there was a substantial failure by the Liberals to engage the public and the business community in a continuing debate about the need for reform across the board, as had occurred during the Howard era and in the lead-up to the election win.
Change cannot be effected without support and the Coalition, in my opinion, just did not create the case for wholesale reform with any constituency.
This left the door ajar for Labor to introduce its Fair Work Act 2009 governed the Australia’s workplace and is now supplemented by the 2022 Secure Jobs, Better Pay Act without any substantial and ongoing debate.
Labor has reset the industrial clock to the past and the country is worse off for it.
Awards, which are meant to be a safety net now cover more people while enterprise bargaining is covering fewer leading to a productivity drought.
Labor has stripped virtually every flexibility from the workplace that a productive economy needs as demonstrated by the Reith reforms introduced 30 years ago.
Over the past years we have seen the gradual erosion of enterprise bargaining with consequent losses in productivity, the essential driver of the economy.
Interestingly the Minister for Employment and Workplace Relations recently issued a media release boasting that:
‘The Albanese government’s bargaining reforms continue to deliver strong outcomes for Australian workers, with the highest number of active enterprise agreements since June 2018.’
And:
‘Now, almost 2.6 million Australian workers are covered by current enterprise agreements.’
This is pretty empty as, in 2018, 40 per cent of the workforce or one in four million people were covered by an enterprise agreement while now only 2.6 million are covered.
Further, those on awards now account for about 23 per cent of the workforce or one in four people compared with 20 per cent of the workforce in 2018.
Awards were meant to be a safety net, but they seem to be increasingly becoming the norm.
Enterprise bargaining is faltering and has been for some considerable period of time.
Labor’s Better Off Overall Test has contributed to the reduction in enterprise agreements. Prior to the 2009 Fair Work Act there was more flexibility to foster agreement-making. The BOOT is a key factor in the decline and is in my view fostering an even greater reliance on the unproductive award system.
Labor’s changes like these mentioned above and among many others will potentially see an increase in disputation, conflict and strikes with consequential loss of productivity.
And how will Labor manage this?
Well, we have come full circle, and nothing demonstrates this more than Prime Minister Albanese recently announcing a new industrial court, something that was abolished by Reith and Howard in 1997.
His announcement of a new Fair Work Court is an indictment of Labor’s own workplace relations system.
The Prime Minister’s indictment is in his own media release, where he said:
‘The current court system for workers and employers can be costly, complex to navigate, and slow to respond to the needs of modern workplaces.
‘Currently, some workers and small businesses are spending more than two years fighting for a resolution that should be simple.
‘They also shouldn’t be in a situation where their case will cost more than their claim is worth.’
He is damn right businesses are being tied up in the courts for years ‘fighting for a resolution that should be simple’.
Even a cursory glance at the Fair Work Act reveals the extent of the sclerotic bureaucratic lunacy that cripples the industrial relations system.
Our productivity rate is cratering.
According to the Australian Bureau of Statistics in 2023-24, the 20-year average annual growth rate was 0.8 per cent, a slight fall from 0.9 per cent in 2022-23. But the real story is this: productivity fell from 1.8 per cent in 2003-04 to just 0.8 per cent.
Even worse, we all know, except apparently for the current Labor government, that productivity crashing means workers are going backwards in terms of real pay.
Frighteningly, the Prime Minister seems oblivious to this economic disaster with his dull belief that government regulations, bureaucracy, spending, debt, and taxes will lift Australia out of its productivity hole, when in fact all he is doing is digging it deeper.
We don’t need more legal bureaucracy; we need wholesale reform of the workplace relations system.
And we need it quickly because rapid change is upon our economy and workplaces even if we don’t want it.
And that change is Artificial Intelligence juggernaut and it is going to impact on the way we manage workplace relations, and I do not believe the current system can cope with this change and is in fact in part driving its adoption.
Let me give you an example related to me last week by a friend of the impact of this.
He and his family own a motel in provincial city. It is successful, but like most small businesses of this kind margins can be tight and business can fluctuate and he needs casual staff to run it. He has no scope for adjusting his employment arrangements as all flexibility has been driven from the workplace relations system.
On a public holiday he has a casual employee in the office simply to take bookings etc. The cost for that employee, he told me, is $70 per hour. It is not a sustainable position in the long term, particularly as the economy tightens.
His response has been simple. He is buying AI software (or agent if you like) to replace the employee. The AI will answer the phone, talk to the client, explain the rates, take the booking, issue a receipt and leave a coded key and so on. He will not doubt expand this system to cover nearly all operations.
I can see huge disputations with unions and the government with these types of developments in the workplace and using an outdated workplace system designed to protect the interests of union instead of fostering innovation.
The current workplace relations system will not be able to cope, and I can see the Prime Minister’s new industrial court and the FWC being swamped.
Businesses trying to adjust to a new reality are going to be burdened beyond belief as unions try to hang on to the past and their power.
Because it is not going to be just people who run motels that move quickly to manage costs, but every other business too, both small and large, private and public.
Sally McManus boasted when she announced her resignation that union membership has increased to 13.1 per cent … this has mainly been via public sector and public service where the government continues to boost employee numbers.
Yet even these public servants will not be immune to the AI juggernaut.
It will become increasingly impossible to maintain the cost of maintaining redundant employees to appease union movement that sees the public sector as key to their relevance and power.
And I might as well add that even with private sector union membership at just 8 per cent employees will not be immune.
The union push to have people work from home be it in the public sector or the private sector is likely to drive up the unemployment rate as AI take their jobs.
As one AI boss noted some time ago. If you can work from home on the internet you are a prime candidate to be replaced.
And it is not just job losses that have to be considered, but also the number of people graduating, but not having jobs to go to as AI can fill their roles.
Another friend who works for a large multinational and is in the process of merging it with a recent acquisition said her team has been halved because of AI. Her team is now an analogue of human and AI.
Labor’s rigid workplace relations system will not be able to cope with these changes, but the unions and the Labor party I am sure will try and fit an antiquated into a new paradigm.
The AI/IR challenge now is how to manage change at a rapid and massive scale.
A workplace relations system built on faulty foundations over 100 years ago that is not fit for purpose and groans beneath its very antiquated regulatory structures is not the answer for the future.
I believe the future holds a real opportunity for the party that is prepared to grab it.
The workplace relation system, the economy, society, and our culture is facing an upheaval, not in the future, but now.
For the coalition, who for so long have not really entered into an overarching reformist debate, the opportunity for renewal must be seized.
Industrial relations, workplace relations, employee relations or whatever you care to call it – and perhaps a new nomenclature is necessary – is going to be key to the future along with a raft of other reforms.
This opportunity must be seized and not squandered.
Don’t let the future be dead, buried, and cremated.
Have the courage to think and act boldly and do not let Labor and unions set the parameters to which you must respond.
This is going to require significant intellectual grunt … to think about a new future rather than simply trying to shoehorn old thinking and policies into a new future.
Maybe the coalition needs a Minister for Workplace Relations, AI, Employment and Small Business wrapped into the same ministry.
And act comprehensively across all portfolios.
What Reith and the Howard government did upon winning government in 1996, 30 years ago, was the right thing for the times.
They were policies that needed to be introduced to develop a better future.
The Coalition faces new and different challenges that were not even on the radar back in the day.
Labor and the unions are so institutionally hidebound that I doubt they can rise to the occasion.
So, I urge the Coalition to regain its reform courage.
Be brave and intelligent and forge policies for the future that are not based on the past.
Demonstrate once again the reform courage that permeated the Howard, Reith, and Costello era.
And for the HR Nicholls Society and for all those reading, I urge you all to advocate new policies for the future and keep the Coalition up to the mark.
Because responsibility for the country’s future well-being lies in your hands as much as it does in the politicians.
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