July 2006


No closed shops, no leg-ups, no favours

By Nicholas Way
No closed shops, no leg-ups, no favours
Greg Combet’s master plan for industrial relations

“I try to think of the Labor movement, not as putting an extra sixpence into somebody’s pocket, or making somebody prime minister or premier, but as a movement bringing something better to the people, better standards of living, greater happiness to the mass of the people. We have a great objective – the light on the hill – which we aim to reach by working for the betterment of mankind not only here but anywhere we may give a helping hand. If it were not for that, the Labor movement would not be worth fighting for.”

Remember these epic words? They’re from Labor prime minister Ben Chifley’s speech to the NSW Labor Party conference on 12 June 1949, in which he set out his vision for postwar Australia. Fifty-seven years later, they remain burned in the party’s memory – not least for the symbolism evoked by the phrase “the light on the hill”. It was the title of Ross McMullin’s history of the first hundred years of the party, and the inspiration for the television series True Believers, which lionised the Chifley government. In no small way, Chifley’s speech is the Australian Labor Party’s Gettysburg Address.

For Chifley, it was essential that Labor governments take an active role in the economy. This led to nation-building projects such as the Snowy Mountains Hydro-Electric Scheme and the establishment of the Australian National University, for which public sentiment remains strong. But in the public mind, one issue crystallised Labor’s approach to state planning: the ambition to nationalise Australia’s banks. In 1947, Chifley moved to make state and local governments use the Commonwealth Bank. In response, the Melbourne City Council appealed to the High Court, and won. Chifley, with the Depression years fresh in his memory, was unrepentant, and the legislation remained on the statute books.

Two years later, at the December 1949 election, that legislation was a potent example of the ideological split between Labor and the conservatives. In every election speech Robert Menzies hammered home his theme: voters had a choice between “undisputed socialist rule” and “the freedom of the individual in a market economy”. It was a debate that Chifley did not shy away from. On bank nationalisation, he said, “Labor was a party of reform and must fight for what it believes right, whether that brings electoral success or not.” This also included rent and price controls, which Labor saw as a necessary economic tool. No election before or since has offered voters such a stark contrast.

What Labor believed to be right did not bring it electoral success – not then, and not for a long time after. It took nine elections for Labor to return to office, in 1972, this time promising state intervention in services such as education and health, but not in the economy. For all but a small minority on the far Left, state planning was no longer a feasible economic option.

On 11 June, just a day shy of 57 years after Chifley’s “light on the hill” speech, Opposition leader Kim Beazley addressed the same forum, the NSW Labor Party conference. To the surprise of his audience, which greeted the announcement rapturously, he promised that if Labor were elected it would abolish individual contracts between employers and employees – formally known as Australian Workplace Agreements (AWAs).

In 1949, the choice was primarily about the role of the state in generating wealth; now, it is about how that wealth is distributed – and, in particular, the wages and conditions of the nation’s ten million workers. In 2007, voters will go to the polls faced with an equivalent ideological divide between the two parties. The election will differ in focus, but not in intensity.

WorkChoices, the Howard government’s package of radical industrial relations reform, became law in December 2005. At its core, WorkChoices aims to make the individual pre-eminent in the workplace. Although collective bargaining remains, the government’s preference is for employers and employees to negotiate one-to-one. The reforms assume there is such a strong commonality of interest between capital and labour that, in most instances, exploitation on either side simply won’t occur. And, because individuals are able to negotiate their terms of work, third parties – unions – are irrelevant in the modern workplace.

Never let it be said that conservative politicians lack vision: those advocating WorkChoices fervently believe that the new system delivers flexibility; that flexibility ensures that businesses will remain competitive; that as a result the unemployment rate will fall and employees’ wages rise. Here is workplace relations minister Kevin Andrews addressing the Australian Retailers Association (Victoria) in February this year:

The campaign against the government’s WorkChoices Act [is] based on a fiction: that more flexible employment arrangements are unfair to employees. The self-indulgent cant of the union movement and the Labor Party ignores the reality of the modern workplace, where employers and employees are not pitted against each other in any battle for supremacy but simply want to ensure their individual skills are fully and fairly utilised.

It’s a vision that Labor, industrial and political, can never share, and not simply because a minority of bosses will exploit WorkChoices. Labor believes that the best way to guarantee workers’ wages and conditions is through collective bargaining. For every highly skilled IT worker and financial analyst in strong demand, there are countless more factory workers, shop assistants and truck drivers who need the security and workplace muscle that collective action offers.

The growing viciousness of the debate between the conservatives and Labor has its basis in a deep philosophical difference. Maintaining and improving wages and conditions is only part of the story. For Labor, unions – indeed, any form of collective action in the workplace – play an essential democratic role. They allow workers to be involved in issues beyond their pay and conditions. It may be political (the Waterside Workers Federation’s bit-part in Indonesia’s independence movement in the late 1940s), social (opposing James Hardie’s treatment of asbestos victims), commercial (the Ansett collapse), or economic (the accord between the ACTU and the Hawke government in restructuring the economy).

This is the ideological battle that confronts the electorate in 2007: the individual versus the collective; a free labour market versus one stipulating minimum wages and conditions; John Howard’s aspiring worker versus the unions’ united-we-stand ethos – and whether unions are relevant in the twenty-first century or merely a relic. The contrast is as stark as the argument about bank nationalisation was in 1949.The unions see this as a life-and-death struggle. So now, perhaps, does Labor.

When he made his 11 June announcement, Beazley knew the federal government and employer groups would go straight for the jugular – that he would be portrayed as an industrial dinosaur, out of touch with the demands of the modern workplace and, most tellingly, captive to “faceless” union bosses – but he would not betray his party’s history. Even the initial disappointing poll results for Labor, published soon after the announcement to scrap AWAs, will not deter Beazley. He might have been typically equivocal on workplace reform since assuming the leadership again in 2004, but he is too steeped in Labor history to want this to be his epitaph.

At the same time, he cannot allow himself to appear a captive of that history. Many Labor politicians turned their back on the legacy of economic reform from the Hawke and Keating governments. It’s a decision that has alienated business over the past decade and allowed the Howard government to claim superiority in economic management. Business will always want a deregulated labour market, but the ferocity with which employers turned on Beazley after his 11 June speech suggests it wasn’t just about his proposal to abolish AWAs. Business Council of Australia president Michael Chaney sent him a strongly worded letter:

Your speech … placed significant weight on abolishing AWAs … you have sought to play down the significance of the announcement by arguing that AWAs represent a small proportion of workplace agreements. That misses the fundamental point that AWAs have played a significant part in improving productivity … Their existence has created a more innovative environment to progress agreements.

Every employer lobbyist echoed Chaney’s views. So, too, the Murdoch press. But if Labor can never expect open endorsement from these quarters, it can partly neutralise it. The Labor governments of the 1980s and ’90s worked closely with unions – think of the close relationship between former ACTU secretary Bill Kelty and Paul Keating – and still kept the respect of business. Critics argued that Labor’s industrial relations reforms were slow and piecemeal, but the far-reaching economic change brought about by Labor overall appeased more pragmatic employers.

Yet Beazley cannot lead this campaign alone – at least, not until the formal election campaign begins. And the Opposition’s industrial relations spokesman, Stephen Smith, has been conspicuous only by his absence. In part, Labor is not to blame: for many people, the industrial relations issue is not the Howard government versus Labor; it is the Howard government versus the unions. It is the unions that are fighting WorkChoices – in the workplace, on television, in the streets. And at the centre of this is the secretary of the Australian Council of Trade Unions, Greg Combet.

Combet, a lanky, bespectacled man who has a penchant for breeding Gouldian finches, has already succeeded in inflicting considerable political damage on the Howard government for its industrial relations reforms. The unions were first out of the blocks with a clever advertising campaign (in stark contrast to the government’s ham-fisted $50 million pitch), and they are quick to seize on any instance of an employee being victimised under WorkChoices. TV tabloid journalism – A Current Affair and Today Tonight – and regional newspapers have lapped up stories of middle-aged mums being unceremoniously sacked.

Yet this is a victory of the Dunkirk variety, a morale-boosting retreat. Combet knows better than most the limitations of a negative campaign; he knows that the unions and Labor must offer a positive alternative. This means acknowledging the benefits of an open economy while, at the same time, saying that workers are entitled to guaranteed minimum wages and conditions, the right to collectively bargain, access to unfair dismissal laws, and an independent tribunal with statutory powers to determine annual increases in the minimum wage.

Combet believes these broad policies meet the test of delivering economic efficiency, while maintaining a work environment that upholds workers’ rights. “I recognise that markets distribute resources fairly efficiently. And you need to harness that,” he says. “That’s an extremely important recognition, because you can’t hold that and believe in a command economy. But what I’ve also recognised is that the distributional effects of a market economy on working men and women can be devastating, and therefore you need a range of protections and rights for people.

“This is what drives the fundamentals of my work now: acknowledging that markets generate wealth, but in doing so create inequalities. It’s those inequalities which governments must address. That’s the defining political difference between the conservatives and Labor.

“What the Howard government has done is remove anything that fetters the labour market: minimum wages, awards, unions, the Industrial Relations Commission. They believe if you get it all out of the way then it will be hunky-dory. Well, of course, it’s going to shit on people; we’re already seeing that. And to address this people need rights: bargaining rights, rights to union representation, access to minimum standards to ensure you get socially equitable outcomes.”

Combet’s policy of accepting an open economy with guaranteed minimum wages and conditions places him in the economic reform tradition of former prime ministers Bob Hawke and Paul Keating. To reinvigorate a sclerotic economy, they took iconoclastic Labor policies, such as protectionism and government ownership of certain corporations, and turned them on their head. Along the way, they encountered enormous opposition from the “true believers”. Greg Combet can expect the same treatment.

“Pragmatism” remains the key. Most employers are driven by the bottom line, not by ideology. So long as Labor’s policy on industrial relations gives employers, and employees who want it, some flexibility, business will live with it. It is Combet’s task – made easier by the respect business has for him – to convince them of Labor’s position.

To achieve this, he must also get the union movement to accept that a return to a protected economy and centralised wage-fixing is no longer an option. That debate is over, he says. “It’s an open economy. There are no closed shops; no leg-ups; no walk-up starts; no favours.”

Combet claims that most unions don’t want a return to Fortress Australia. He may be right, though the arguments of officials such as Australian Manufacturing Workers Union national secretary Doug Cameron give cause to wonder. But getting unions to surrender their state jurisdictions will be much more difficult.

WorkChoices has irrevocably changed the industrial landscape. The federal government has used a broad interpretation of the corporations power in Section 51 of the constitution to underpin its reforms. Although this section specifically relates to the trading activities of companies, the government is arguing in the High Court that the law includes “non-trading activities”, such as industrial relations, that have an impact on how companies operate. If the state governments’ High Court challenge to the legislation fails, which is likely, the Howard government’s national industrial system, covering about 85% of workers, cannot be stopped.

However, for Combet, this is an opportunity, rather than a disaster. He wants the unions to accept a national system, and then work to get Labor elected to ensure a new legislative framework that protects workers: in effect, a national social contract.

Some state labour councils and their affiliates want to cling to the state industrial systems. With sympathetic Labor governments dominating state politics, this is understandable. (Significantly, Unions NSW and the powerful Queensland branch of the Australian Workers Union are party to the High Court challenge.) In Combet’s opinion, such an approach is short-sighted. “If the High Court upholds the [Howard government’s] use of the corporations power, then clearly the issue of a national system is squarely on the table. And the union movement has largely been organised at a state level; there’s a lot of support among the unions, and rightly so, for state systems.

“But we’re going to be confronted by a new world. There’s no going back, in my opinion. That’s not a popular point of view in the union movement, necessarily, but we need to debate it. This is an issue that can’t be ducked by the Labor Party or the union movement. It will be a defining and pivotal discussion for both wings of the labour movement.

“Most union members are employed in big business, and they’re employed nationally. Is a union movement organised on a state basis really in the best position to deal with those companies? I don’t think so. We have to be nationally focused. I think unions have to be thinking seriously about how they structure and resource their industrial activity at a national level.”

Ronald McCallum, a professor in industrial law at the University of Sydney, agrees with Combet that the government’s use of the corporations power is an opportunity for Labor. “Win the debate in the labour movement for a national system, and then win the debate in the broader community for a system that balances the needs of employers for a flexible labour market with employees having a guaranteed minimum.”

The first crucial debate will be at the next ACTU congress in October. In typical style, Combet’s statement about the significance of the congress contains no rhetorical flourishes, but the message is clear. “It will focus on the industrial relations legislation. There won’t be much, if anything else, dealt with. There are some important decisions to be made: recognition of the economic circumstances we’re in, because there’s no point formulating policy based on some fantasy about the economy. We have to be open about all of that. It will be a difficult and interesting issue to talk through with our colleagues. And then you frame a policy position accordingly.”

Shadow minister Martin Ferguson, a former ACTU president, says, “This Congress could be as important as 1982, when Kelty and Labor’s shadow industrial relations minister, Ralph Willis, hammered out the framework for the accord between a Labor government and the unions.” Other prominent Labor shadow ministers concur – off the record. Says one: “There’s still an element of bone-headedness in the union movement. What they’ve got to understand is that we need a credible policy position to take to the next election. There’s no point harking back to the good old days; they weren’t that good anyway … I believe Combet will deliver a rational policy position. His standing is such that he will carry the sectional interests.”

Meanwhile, there is mounting speculation in the press that Combet is headed for Canberra. Victorian Trades Hall Council secretary Brian Boyd says bluntly, “He’s pulled the campaign together. No one else. If there were any move by him to leave the movement at this critical junction in our history, I would beg him to stay.” Combet won’t rule out a political career, but nor will he leave the union in the midst of its biggest fight – and certainly not until after the 2007 election.

In June 2005, treasurer Peter Costello made a shrewd observation: “It would be possible to seek to promote open markets, low tariffs, enterprise bargaining and privatisation by joining the Labor Party, but it is not the most immediate, obvious way to support these objectives. When Labor claims that this is what it believes in, there is a hollow ring to its declaration.”

Costello was right. Labor has never come to terms with its economic reforms of the ’80s and early ’90s. Somehow, it believes it betrayed Chifley’s light on the hill. But Combet’s vision of a powerful open economy, with workers’ rights enshrined in a national framework: for the Labor party, that’s something to believe in, something to fight for. A veritable light on the hill.

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