Sunday, 4 August 2013

Balance of Federalism: Industrial Relations in Australia

A background on industrial relations

Australia has a long history of trade unionism[1]. In the far past it has been called increasingly ‘militant’, culminating in the Clarrie O’Shea strikes of the late 70s. By the 80s, under strong union-backed wage growth, economic analysis revealed real incomes were ‘overhanging’ productivity (Cowgill, 2013), unemployment increased to 10%, and inflation was high[2]. By 1984 the Labor government needed to respond to these socioeconomic pressures but under the constraints of union power. The result was the Price and Incomes Accord, an agreement with the Australian Council of Trade Unions (ACTU). Unions agreed to restrain wage increase claims, in exchange the government would seek public policy that guarantees workers' standard of living (Harcourt, 1997). The number of industrial disputes fell (Ryan & Bramston, 1996), employment increased, and eventually, productivity had improved by the 1990s (Cowgill, 2013).
However, the still strong influence of unions was not without concern, as was demonstrated in several successful cases against unions, such as Mudginberri Station Pty Ltd v The Australasian Meat Industry Employees Union & Ors[3] and Dollar Sweets Pty. Ltd. v. Federated Confectioners' Association of Australia & Ors[4]. Furthermore, policy and legislation coincides not only with economic pressures, but also political ideologies. For example, conservative state governments also acted to restrict union power; the National party of the Queensland government and Liberal party of the Victorian government both introduced laws restricting union power in 1985 and 1993, respectively[5]. By the late 1990s productivity gains were slowing, and the world economy was changing (Cowgill, 2013). When the Liberal government that came to power in 1996, it held the belief that the free market should determine wages (Harcourt, 1996). As such it removed the Accord and sought ‘deregulation’ of the labour market via the introduction of the Workplace Relations Act (1996).  
Thus, legislation appears to be motivated by economic, social and political factors rather than a single, universal drive. Increasing legislation appears to be a balancing act between economic factors such as inflation, social factors such as ensuring minimum working standards and political factors such as union power and a party's ideology.

The federalisation of industrial relations

Originally, concurrent federal and state industrial relations systems existed. Traditionally, federal government’s ability to control industrial relations is limited and the states enjoyed relative autonomy in the area of industrial relations. The shift towards a unified federal law was done using powers as per s51 of the Constitution. Under this, the State law will not be rendered inoperative by the Commonwealth law unless there is direct inconsistency; R v The Credit Tribunal; Ex parte General Motors Acceptance Corporation Australia[6], Compass Group (Australia) Pty Ltd v Bartram[7].
With the implementation of the Work Choices act, the states did not agree to refer power (with the exception of Victoria which had already referred power in the 1980s), so the government instead relied on s 51 of the Constitution to expand its power to a limited degree; covering businesses in the trade and financial sectors.
When the Labor government enacted the Fair Work Act 2009, this time the states agreed to refer power, except Western Australia.
One such criticism of the traditional concurrent powers system was that it caused unnecessary complexity for businesses and duplicated regulatory systems (Roth 2010). For example, organisations operating nationally would need to contend with six separate systems. When the Work Choices Act was introduced in 1996, it was explained as creating a “unified national system for most employers”[8]. The following Fair Work Act 2009 was aimed to provide “a simpler and, it was argued, fairer industrial relations system” (Roth 2010). Other motivations behind national statue were to address unequal bargaining power and in response to economic pressures created by globalisation (Sappideen, O’Grady, Riley & Warburton, 2011).
Some in the business community favoured the move saying it “provides an opportunity for positive reform at the State level and for the adoption of a ‘national’ approach in several key areas of social and economic life” (Roth and Griffith, 2006).
However, it was argued that the federal system could not adequately provide a comprehensive national workplace regulation system[9] (Owens, 2009). Subsequently, the move was met with objections, such as Combet v Commonwealth[10] and The Workplace Relations Case[11]. The dissenting raised concern regarding the reduced separations of powers whereby Justices Kirby and Callinhan saying it had “the potential to greatly distort the nation’s federal balance”. Professor Greg Craven sated that changes law “from being determined by the constitution to the political will of the Commonwealth”. Furthermore Professor Greg Craven sated that changes law “from being determined by the constitution to the political will of the Commonwealth”. On the other hand, referrals can be revoked.
There are reasons for and against nationalisation of labour law. As mentioned above, a unified law reduces the negative costs of the old system. The trade-off is a stronger reliance of the government, and a unified system is also unified in being a reflection of political will. Legal benefits include efficiency, administrability and predictability. Another point to consider is that even though federals laws are created by the central government, this does not mean state governments have no input. Documents such as the Inquiry into the Workplace Relations (Restoring Family Work Balance) Amendment Bill 2007 are examples. One drawback of a unified system is that it now must try to please a greater number of people, while state laws can be tailored to the needs of a (relatively) smaller demographic. Although it may be argued that Australian states are somewhat homogeneous  states may still have reasonably disparate various geographic climates and economic conditions.







 References

Cowgill, Matt, 2013, “A Shrinking Slice of the Pie”, ACTU Working Australia Papers No. 1 of 2013.
Harcourt, Tim, 1996. Enterprise Bargaining, The Living Wage Claim, & Safety Net Adjustments”. Australian Council of Trade Unions.
Harcourt, Tim, 1997, ‘The Economics of the Living Wage’, Australian Economic Review, vol. 30, no. 2, pp.194-203.
Roth, Lee, 2009, “Industrial relations update: The referral of powers and the Fair Work Act”. NSW Parliamentary Library Research Service January 2010. E-Brief 2/10.
Roth, L., Griffith, G., 2006, The Workplace Relations Case - Implications for the States. Briefing Paper No 18/06. NSW PARLIAMENTARY LIBRARY RESEARCH SERVICE
Sappideen, O’Grady, Riley & Warburton, Macken’s Law of Employment, 7th edition, Lawbook Co, 2011







[3] [1986] ATPR 40-708
[4] [1986] V.R 383, 390
[6] (1977) 137 CLR 545
[7] (2007) 239 ALR 262
[8] Explanatory Memorandum, Workplace Relations Amendment (Work Choices) Bill 2005
[9] See Owens, “Unfinished Constitutional Business: Building a National System to Regulate Work” 2009) 2.2. Australian joumal ofLabour Law 258.
[10] (2005) 80 ALJR 247)
[11] NSW v Commonwealth; Western Australia v Commonwealth [2006] HCA 52
[12] [2007] FCAFC 50
[15] (1984) 8 IR 34
[16] [2006] 226 CLR 1
[17] See Fenwick, “How Low Can You Go? Minimum Working Conditions Under Australia’s New Labour Law” (2006).
[18] See Owens, “Unfinished Constitutional Business: Building a National System to Regulate Work” 2009) 2.2. Australian joumal ofLabour Law 258.

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