Media Centre

Thank you for that welcome.

Let me start by acknowledging the traditional owners of the land on which we meet, the Eora people.

It’s a pleasure to be here to address this important summit on workplace reform.

What we are discussing here today is a key part of the crucial productivity agenda we took to the last election and for which we received an overwhelming mandate for reform.

What that election and the more recent landmark 2020 Summit demonstrate is that Australians are willing to embrace change – even far-reaching change – if governments and opinion leaders take them into their confidence through an honest process of consultation.

This clearly didn’t happen when "Work Choices" was introduced. On that occasion:

• No mandate was sought;
• No genuine public consultation took place; and
• No consensus for change was created.

The result was a legislative disaster that no amount of taxpayer-funded advertising could convince the Australian people to accept.

I believe strongly that last November’s election result wasn’t a vote against reform but a vote against unbalanced, unfair and ill-directed change.

Australian workplaces still need reform.

But they don’t need conflict.

They need us to put the conflict model of workplace relations that led to "Work Choices" firmly behind them – and to replace it with one built on the principles of balance, fairness and simplicity with an over-riding objective of boosting national economic productivity and prosperity.

That’s what the proposed new Fair Work Australia system will do.

Our intention is to stop workplace relations being a political football. It’s to stop employers and employees having to constantly adapt to changes in legislation with every change of government.

Our intention is instead to embed a dynamic new system that can bring about modernisation without constant system-wide upheaval and conflict.

A thorough consultation process

To achieve these aims, the Government is determined that the workplace reforms we introduce will be lasting and able to generate enduring public support from employers and employees.

I want to emphasise that all public commitments made before the last election will be honoured and the reforms promised will be implemented in full.

We are determined to get the legislation right to deliver on the promises that we made last year in such detail to the Australian people.

Unlike the former government, it is not our intention to spend the years following the commencement of our new legislation tinkering with the law and fixing up mistakes that would have been obvious had the former government bothered to consult.

Such an approach smacks of arrogance. On the one hand, the former government believed that it was the sole repository of all wisdom on industrial relations.

On the other hand, it didn’t make the effort to get the law right because it took the view that employers and employees would just have to get used to it, no matter how hard it was for small businesses to find the time to understand just the first round of changes.

In contrast, we are prepared to:

• Meet with as many people as it takes;
• Talk for as long as it takes; and
• Iron out as many unintended consequences as it needs, in order to achieve our goal.

But we’re not going to use consultation as an excuse for delaying these important reforms. Consultation is useful but only if it’s acted upon.

That’s why consultation is taking place right now and has been taking place since February this year.

The Business Advisory Group, chaired by John Denton of Corrs Chambers Westgarth, and the Small Business Working Group, chaired by the Minister for Small Business, Craig Emerson, have both been in place since February. To date, the Business Advisory Group has met four times and the Small Business Working Group has met twice.

A formal consultation group with representatives of the Australian Council of Trade Unions has also met twice so far. Consultations will also be held with the Australian Council of Social Service particularly in relation to the minimum wage and the low-paid.

In addition, the National Workplace Relations Consultative Council, which represents the major workplace relations peak bodies, has met 3 times. 

And the Workplace Relations Ministers’ Council has also already met and endorsed the Government’s Forward with Fairness proposal as providing the basis for a modern, fair and flexible workplace relations system. Another major meeting is scheduled for 23 May.

All of these bodies are hard at work.

Discussion is both extensive and intense and progress is being made on the details of our proposals.

And of course, parts of the new arrangements – most particularly measures to abolish AWAs – have already been implemented through the Transition Act that commenced on 28 March.

But let me now outline the sort of workplace relations system that – with your input on important details – we aim to have fully operational by 1 January 2010.

In the very broadest terms it will be a simple, balanced system that allows employers to get on with business and employees to get on with their jobs.

The new system will have five key ingredients.

The first will be a fair and simple safety net.

When the Government’s new system is fully operational from 1 January 2010, all employees will have the benefit of a strong and enforceable safety net which can’t be stripped away. And employers will have the benefit of a safety-net that is simple and flexible – easy-to-understand and easy-to-apply.

10 National Employment Standards will protect important conditions like hours of work, public holidays and redundancy entitlements as well as annual, personal, parental and long service leave.

Employees earning $100,000 or less will be protected by modern simple awards that will contain ten minimum conditions such as minimum wages, overtime and penalty rates of pay and superannuation.

And when a collective agreement is made under the Government’s new workplace relations system, it will only be approved by the independent umpire, Fair Work Australia, if it meets or exceeds the National Employment Standards and leaves the employees under the agreement "better off overall" when compared with the modern award.

Common law contracts will also be available. Unlike individual statutory agreements, such agreements may only build on the safety-net instead of stripping it away.

The second major ingredient will be collective bargaining to drive productivity in our workplaces.

Numerous studies – including by the OECD – have pointed to the value of collective bargaining in redesigning workplace arrangements to make employees more productive. In contrast, research finds that by cutting wages and reducing trust within workplaces, AWAs can actually kerb productivity growth.

And all of this would help explain how, despite AWAs, productivity growth has remained cruelly disappointing.

Because of our emphasis on enterprise bargaining – and because our reforms specifically rule out a return to any form of centralised wage fixation – they will allow for sustainable and responsible increases in real wages and employment without putting upward pressure on inflation.

It’s for these reasons – productivity and fairness – that one-sided individual statutory agreements will not be a part of the Government’s new workplace relations system. In their place employees will be free to bargain collectively with their employer, in good faith, without excessive government rules and regulations to tilt the balance against one or the other side.

Good faith bargaining obligations will be simple and effective and designed to enhance the process of bargaining. They will ensure that the parties focus on the matters that need to be addressed in order to reach agreement about what’s best for the workplace, rather than on extraneous and irrelevant disputes.

Employees can be represented in bargaining, if they choose to be, but can also represent themselves and reach agreement directly with their employer, if that’s what they choose.

The third ingredient is about ensuring that everyone in the workplace is treated fairly and decently and that, when things go wrong, matters can be dealt with simply, quickly and effectively.

On unfair dismissal, we are taking a pragmatic approach that takes into account the particular needs of small business. Employees of businesses with fewer than 15 employees will have a qualifying period of 12 months and other employees will have a six-month qualifying period.

Compliance by a small business with a specially-designed Code will mean that the dismissal will be deemed to be fair. And all unfair dismissal matters will be dealt with initially in conferences that are designed to eliminate the legalism and complexity of the current system.

Unlawful dismissal on grounds such as family responsibilities, pregnancy or disability will remain just that – unlawful.

There will also be strong protections for freedom of association. It will be unlawful to discriminate against a person for belonging to a union or for participating in collective bargaining, just as it will be unlawful to discriminate against them for not belonging to a union.

The fourth ingredient will be an independent umpire – Fair Work Australia.

This will be a ‘one stop shop’ to provide practical information, advice and assistance to deal with workplace issues and to ensure compliance with workplace laws.

Fair Work Australia will also have particular responsibility for encouraging the adoption of family-friendly work practices.

Fair Work Australia will be accessible to everyone. There will no longer be a need to contact different helplines and deal with a range of separate agencies about workplace matters. If desired by the parties, workplace visits will also be available.

Crucially, this new industrial umpire will be independent of unions, business and government.

Appointments will not favour one side over the other, but will be made through a transparent selection process.

The fifth ingredient will be strong compliance measures to ensure all participants comply with their obligations under the law.

Employers, employees and organisations will all be required to comply with the law and will face penalties if they do not do so.

Industrial action will only be protected when taken during good faith bargaining for a collective agreement and only once it has been approved by a mandatory secret ballot.

Unprotected industrial action will be dealt with swiftly. Secondary boycotts will continue to be regulated by the Trade Practices Act and the current rules in relation to right of entry will remain. With the right to enter another’s workplace comes the responsibility to ensure that it is done only in accordance with the law.

Unions and employers alike who listen to their employees’ and members’ wishes have nothing to fear from such arrangements.

They combine democratic rights for all with the need for certainty and economic common sense.

And it is, of course, our intention that this system be uniform throughout our nation’s private sector.

One of the major outcomes of the 2020 Summit was a desire to create a seamless national marketplace.

Workplace relations laws must be part of this and uniform laws will assist in promoting labour mobility.

Too many businesses that compete across state borders are finding themselves caught up in a complex web of existing state-based industrial relations laws, leading to unnecessary legal bills and time-wasting uncertainty.

The new laws will be achieved either by this Government working with State Governments for a referral of powers for private sector industrial relations or other forms of cooperation and harmonisation and work on this is continuing to ensure that we end the costs and confusion for business of dealing with separate industrial relations systems.

This is a reform that, with its conflict-driven approach, the former government could never have achieved.

One of the key goals of the new workplace relations system is simpler legislation.

We want to replace the legislative phone book that constitutes Work Choices with something that is simple and workable for both employers and employees.

The exposure draft of the National Employment Standards, which was released on 14 February and open for submissions until 4 April, is evidence of our commitment to simplicity.

We are currently considering the range of comments and submissions made by stakeholders for the purpose of further improving the workability of our National Employment Standards.

But we appreciate that both employer and employee stakeholders have commented approvingly on what they have identified as a new simpler approach to the drafting of workplace relations legislation.

We also know that, in workplace relations, simplicity of legislation is not enough. We need the award safety-net to be flexible and simple as well.

This was something that the Howard Government simply failed to do. In fact, they didn’t even succeed in starting the process.

Frustratingly, despite all the money spent and all the advertising campaigns, plastic folders, mousepads and pens it generated, "Work Choices" did nothing to modernise the awards that set out the terms and conditions of employment for almost 1 in 5 employees and provided a safety-net for thousands more until the Howard Government’s "Work Choices" legislation stripped it away.

The modernisation of awards to provide a fair and relevant safety-net is a key objective of the Rudd Government’s Forward with Fairness policy. And it’s a process that has already started with an award modernisation request signed by me on the day that the Transition Act commenced operation and delivered to the President of the Australian Industrial Relations Commission.

Awards have been a key part of the safety net for Australian employees for more than a century. However, despite attempts at simplification, they have remained lengthy, prescriptive and unwieldy documents that have been amended and reviewed over and over again.

For awards to be an effective safety-net, they need to be relevant to today’s workplace needs and able to accommodate the flexibility that businesses and their employees expect.

Our award modernisation process is not about trying to drag old awards kicking and screaming into the 21st century.

Our goal will be to create new up-to-date awards, not simplify old awards around the edges.

It won’t be about one clause out, one clause in.

And it won’t be about preserving existing rules and structures for the sake of preserving them.

It will be about starting from scratch and rethinking a new, modern, relevant and decent minimum safety net for the industries or occupations covered by the award.

My request to the President of the Australian Industrial Relations Commission makes clear that one of the objectives of award modernisation is to ensure that awards are simple to understand, easy to apply and reduce the regulatory burden on business.

Another objective is that modern awards be economically sustainable and promote flexible modern work practices. And in creating modern awards, the AIRC must have regard to the need to assist employees to balance their work and family responsibilities effectively and to improve retention and participation of employees in the workforce.

The Commission will also be required to develop a model individual flexibility clause for insertion into each modern award with appropriate adaptation as necessary. The purpose of such a clause is to enable an employer and an individual employee to agree on individual arrangements to meet the genuine individual needs of the employer and the employee. The Commission is to ensure that the flexibility clause cannot be used to disadvantage the individual employee.

Such a clause needs to be simple and practical. An employer and employee need to be able to make an arrangement under the clause without seeking legal advice or sitting down to read 40 pages of "ifs" and "but fors". It needs to allow an employer and employee to make a genuine arrangement that suits them both but ensures that the employee retains the protection of the safety-net.

Modern awards are, together with the National Employment Standards, absolutely fundamental to ensuring we have a fair, simple and enduring safety net.

The Commission will develop these modern new awards in consultation with key stakeholders including unions and employer groups and will prepare exposure drafts of modern awards so that all stakeholders and interested parties have a reasonable opportunity to comment on those drafts.

There is no doubt that this process is complex and involves challenges for all.

Those who seek to preserve their niche in the system via a monopoly of knowledge about unnecessary complexity will have to reconsider and get used to a new way of thinking about awards.

It is appropriate that the Australian Industrial Relations Commission, with all its expertise in the area of awards, conducts the award modernisation process and, while my request to the President contains a number of parameters, it also contains substantial flexibility for the Australian Industrial Relations Commission to make the decisions it needs to.

For example, the Government has not set the Australian Industrial Relations Commission the task of reducing the number of awards to a specified number or the task of ensuring a single award for a single industry.

While the request makes clear that the Commission is to have regard to the desirability of reducing the number of awards operating in the workplace relations system, it also has to have regard to a number of other factors and objectives.

And we are certainly not asking the Commission to create a single transport industry award when that industry covers sectors as diverse as aviation, shipping, road and rail.

Such details will properly be left to the AIRC.

And in this process, the Government has made it clear that old demarcation disputes are not to be re-opened.

Our intention is for the AIRC, along with you, the stakeholders, to complete award modernisation for priority industries by the end of 2008 and for all remaining industries by 31 December 2009 when our new workplace relations system will be fully operational.

The Government understands that modernising and simplifying our award system is a huge job but it is a job that needs doing to ensure this nation moves forward with fairness.

By way of conclusion, let me encourage you to use the remainder of this summit to explore how we can get our workplace relations system working better and how awards can be modernised to promote national productivity.

As I’ve said, the new Government’s pre-election promises will be implemented in full.

Balance, simplicity and modernisation are what we promised and they are what we will deliver. They’re the key to making the new system work.

But we’re not so arrogant as to believe that all the good ideas around workplace relations have been exhausted.

We’re an open, listening government that values consultation.

And just as we’ve listened to the constructive ideas put forward by the 2020 Summit, we will listen to those from this and other industrial relations forums.

Thank you and I wish you well in your deliberations.