Modern Awards: A Fabian Fantasy?

There is a sleeper in the Rudd/Gillard Fair Work Reforms, the modern award system. Why is there no political conversation about this? Our political masters on both sides of politics have neutered themselves on this and other workplace reform.

State-based awards allowed for very substantial regional differences reflective of cost of living differences across the states and regions. Modern awards over the next four years of transition will mandate one standard only. What will this do to the labour market in Launceston and Whyalla? Who, apart from those initiated into the industrial relations club, is debating this? What did we do to deserve political leadership which has to allow disaster to occur before it can lead?

How is it that reform of our peculiar century old institution, the industrial award, now with very substantial and singular reach, goes unremarked when there is so much to say? 

The Federal Parliament legislated, shortly after federation, to create Australia's peculiar system of mandated conciliation and arbitration. 

Technically industrial disputes were resolved in each of the State and Federal systems by Industrial Tribunals making of an "award". It did not take trade unions long to agitate for and to achieve industrial awards of general application which also typically mandated a minimum standard across the broadest reach possible. 

Constitutional restrictions worked to limit Federal awards to cover something in the order of only 15% of the Australian workforce (including the Federal public sector) at the time of the Workchoices reforms introduced by the Howard Government in 2006.

Viewed historically the compulsory arbitration framework resulted in Australia having one of the highest rates of unionisation in the private sector in the world, 60% by 1951 increasing to 61% in 1954 but slowly falling away since that time.

The award system provided a variable and basal level of mandated and prescribed minima with which employers had to comply at risk of being prosecuted for something more than a breach of a common law contract of an employment. That is, awards operated as having quasi legislative effect. 

By the 1980's Prime Minister Hawke was presented with the opportunity of facilitating reform which brought the collective bargaining focus more to the welfare of individual enterprises. There began a series of industrial accords involving the Trade Union movement and the institutionalisation of enterprise bargaining. This overlaid an award system which, by then, had become cumbersome if not atrophied. Collective bargaining across a trade, or collective bargaining across an industry, was not only unwieldy it made insufficient allowances for the variabilities across Australian workplaces. 

The highest productivity gains in the Australian economy were achieved during the period of the accords, a matter not much debated in the lead up to Workchoices. 

Then came Workchoices, a constitutional game changer. In one swoop the Howard Coalition Government overturned almost 90 years of jurisprudence which had constrained the application of Federal awards. It might be said of Workchoices that the adage be careful what you wish for applied. 

The Howard Coalition in its Workchoices reforms, which amongst other things attempted to remove much of the infrastructural support for the trade union movement, paved the way for the other side of politics to introduce laws, virtually without constitutional restriction, in support of the industrial wing of the labor movement.

More recently, with all States (except Western Australia) being persuaded to cede to the Commonwealth their constitutional mandates to make industrial laws, Federal coverage was further broadened to include all employees outside of the State public sector, certain State owned corporations and municipal government.

Under Workchoices the stated intention was to modernise awards. As a practical matter awards were left to wither on the vine. The Rudd Government on introducing the Fair Work Bill declared that it would mandate that the Australian Industrial Relations Commission should, on a truncated timetable, modernise the hotch potch of thousands of awards by a process of streamlining those awards into what became the first 122, so called, modern awards.

When one considers the political directive the Australian public owe the Australian Industrial Relations Commission (now rebadged as Fair Work Australia) a very substantial debt of gratitude indeed. The Commission, following a four stage consultative process in 2009, created the first 122 modern awards each effective from 1 January 2010. The Commission also mandated transitional arrangements for a four year period commencing 1 July 2010 and ending 1 July 2014. Modern Awards are now intended to sit somewhere between, in effect, 10 legislatively mandated National Employment Standards and workplace based enterprise agreements. 

In the case of each and every award the transition is to be to a single standard within four years by 1 July 2014, across the whole of Australia without countenancing State or regional differences. So stated, the difficulty of the task confronting the Commission following the directive from the Minister can be appreciated in all its profundity. Employing a clerk under historical prescription in Sydney and Melbourne is more expensive than employing a clerk in Hobart or Launceston. After the end of the transitional period the minimum prescription applicable to clerks, Australia wide, will be the same. The Commission, sensitive to not creating minimum prescription which might constrict the labour market had to make awards without costs to the boss or loss to the worker and without constricting a considerably divergent labour market which award further resulted in a basal level of acceptable standards across the nation as a whole. Easy that!

The extent to which there will be future shock in transiting various and quite variable award minima into a single standard remains to be seen. Modern awards return awards to the pre-eminent historical role of the past. Modern awards however, now apply across the whole nation and operate with legislative like effect. Ironing out regional difference is very likely to have, as an inevitable consequence, a restrictive effect to entry into the labour market in those states and regions where labour cost is relatively cheap. 

Further, the mechanisms by which modern awards may be adjusted look strangely familiar, enfranchising as they do, a role for the union movement. The first 122 modern awards impose minimum prescription on a variable basis, which is to say a basis that is intended to be sensitive to the particular needs of an industry or vocation or category of work. Whilst the expression modern awards is not therefore oxymoronic, the idea of modern awards gives vent to the expression, in the words of the song, Everything Old is New Again. Except this time around sung Australia wide. 

About the author

Bryan Belling is a partner of Middletons in Sydney. He appeared in the modern award proceedings before the Commission

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