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PRIME MINISTER
ADDRESS BY THE PRIME MINISTER, THE HON PJ. KEATING MI', TO
THlE INTERNATIONAL INDUSTRIAL RELATIONS ASSOCIATION
NINTH WORLD CONGRESS, SYDNEY, 31 AUGUST 1992
A NEW CHARTER FOR INDUSTRIAL RELATIONS IN AUSTRALIA
It's appropriate indeed that Australia is ablc to host this ninth congress of industrial
relations experts, because we have quite an intcresting story to tell you about where
we have come from in our industrial relations, where we are now, and where wc are
going.. As you know, the way a country runs its industrial relations, the way the interests of
employees and employers are reconciled, the way in which a country handles
change in the workplace, tell you a great deal about that country.
The industrial relalionship is the key one in the working lives of most people. t can
be a great strength or a great weakness.
For well over a century Australia has attracted the interest and curiosity of
practitioners and theorists of industrial relations. In the great constitutional debates
of the 1890' s our founding fathers gave the proposed Commonwvealth a power to
settle interstate industrial disputes by conciliation and arbitration. When we
became a nation in 1901 one of the first things we did was to set up a
Commonwealth tribunal which could exercise this powver to settle disputes a
power which rapidly became one of setting wa~ ges and conditions directly or by
example for most Australian employees.
It was a system which served Australia quite well I think, but the news I have to
deliver today to those of our visitors who still think Australian industrial relations is
run this way, is that it is finished. Not only is the old system finished, but we are
rapidly phasing out its replacement, and have now begun to do things in a new way.
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When we arrived in office in 1983 the old system was clearly on its last legs.
Inflation was running at 11.5 pcr cent. We were exhausted by industrial warfare.
The profit sharc had been squeezed down. Manufacturing was being obliterated.
Unemployment was still rising, and of course thc economy was in thc trough of a
recession. All this was happening behind high tariff barriers and a fixed exchange rate, with a
current account deficit in the early eighties nearly twice the size as a proportion of
GDP it is today, and the starting point deficit we inhcrited for our first budget
heading towards 5 per cent of GDP.
So it was a rough time.
The Arbitration Commission was doing its best but it had just about run out of
possibilities. Every principle had got a run at one time or another basic wage,
total wage, relativitics, work valuc, absorption, non absorptions, flow ons, no flow
ons, indexation, no indexation, minimums and maximums, industry decisions and
national decisions.
Every principle, except the simplc and straightforward principle of working
together to find outcomes which left us all better off.
Every procedure, except the procedure of finding a national consensus, arrived at
with the full participation, the full authority and prestige of the national government
as well as the industrial parties.
The only thing we had going for us was that the trade unions and employers had
reluctantly come to see that it couldn't go on the way it had.
We also had a very enlightened central leadership in the union movement, and a
Prime Minister whose entire suite of talents developed during a long and eventful
career were ideally fittcd to the task of conducting a national summit to reconcile
the waring industrial parties.
So we entered an Accord with the national federation of trade unions, which in this
country is called the ACTU.
In one way or another the Accord has been essential to the favourable outcomes we
were able to make over then'ext dfecade.
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Over the eighties the Accord agreements were frequently changed and renegotiated,
because the world changed rapidly around us, and there was good will on both sides
that allowed us to keep the agreement flexible.
By the end of the eightics we had agrccd on a principle of keeping wage
movements competitive with our trading partners. We had also agreed on the
principle of what we called a " social wage".
By this we mean that where the government puts in health care, family assistance,
quality education, income support for the disadvantaged and so forth, these too
should be considered part of the Accord compact part of the deal between the
Australian government and Australian cmployees.
This idea of the " social wage" is the key to understanding the way our Accord
works. While we focused wage movements on a central determination of the full bench of
the Australian Industrial Relations Commission, all the industrial parties the
unions, the government, the employers and thc Commission rapidly went about
the job of preparing the ground for far bigger changes to come.
We pressed for the amalgamation of unions. In the last six years we have halved
the number of federally registered unions. We pressed for the simplification and
renovation of awards, so that today there are fewer categories, fewer demarcation
disputes, fewer gradations. We urged unions to use a single bargaining unit in
negotiations, so that even where there was more than one union, all unions would
consent to one agreemcent. We encouraged a review of minimum rates, so that the
relationships between the minimum wages of different skills levels and so forth
were looked at again and brought up to date.
While that was going on in the industrial system, we were also changing the
structure of our economy.
Remember in 1983 we had a fixed exchange rate, high tariffs, high inflation, low
profits and a recent history of warfare in industry. But by the late eighties and early
nineties things were very different.
We had had years of experience with a floating dollar. We had deregulated finance.
We had put the government business enterprises on a commercial footing, so they
had to make commercial decisions about pay increases. We had begun to reduce
industry protection, and we had announced that protection would be reduced
through the nineties, so the pressure would remain on for increasing efficiency and
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competitiveness. We had seen that we had to internationalise our economy to
preserve and enhance our living standards, and we could only successfully
internationalise if we became more competitive.
You might say that the whole climate and culture changed.
We began to see results.
By thc latcecighties we had restored the profit share. We had increased
emplomentby one fifth the fastest cmployment growth in the OECD. We had
began to change the industrial composition, so that manufacturing output was more
than a third greater at the beginning of the nineties than it had been when we came
to office.
Wc also had evidence that we were beginning to successfully internationalise.
Because of very moderate wage growth our competitiveness against other countries
had increased by one tenth._ Exports had doubled, and manufacturing and service
exports had tripled. More and more of our exports were going to Asian markets,
locking us in to the fastest growing region of the world.
And while all that was going on, industrial disputes for which this country was
once notorious dwindled away. Last year we had the lowest number of disputes
for thirty years.
We did all this while also extending universal health care, child care, and funding a
great explosion in education opportunities. And we did it while bringing both
government spending and taxes down, so that we ended up with one of the lowest
ratio of both spending and taxcs to GDP in the whole OECD.
These were all very big changes, so big that we are only now beginning to realise
what has happened. As even one of our critics conceded on the weekend it has
actually happened. He wrote that it sounds like a lot of political puff, but the funny
thing is that it has actually happened. It's actually there. Exports really are at 23
per cent of GDP. Just shy of a quarter of everything we produce in this country is
now sold abroad. We really have tripled manufacturing and service exports. We
really havc had our greatest exporting successes in recent years with elaborately
transformed manufactures like motor vehicles, boats, electrical equipment and
industrial machinery. It's all there, it's all real, and if we don't throw it way it will
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These were the successful results, but more importantly for the way Australia
works was the fact that we had by the beginning of' thc nineties accumulated nearly
a decade's experience with the Accord. We trusted each other. The ACThJ has
always delivered on its commitments. We found that the Accord stood up not only
in hard times, but also in good times. In the early eighties boom money wages
increased 20 per cent. When we went through a boom in the late eighties money
wages increased by less than a third of that. We came out of the recession of
1982/ 83 with inflation at 11.5 per cent. We are coming out of recession this time
with inflation under 2 per cent.
All this meant we were ready for another change.
We had always recognised that we could not indefinitely focus all wage movements
in a uniform movement. We had always recognised that the price of bringing
inflation down and employment up through adjusting wages mainly in a single
national decision would be some loss of flexibility which we would later wish to
recover. So a few years ago we began putting in place a transition to a much more
flexible system, under which the vast majority of decisions over wages and working
practices would bc made at the workplace level, often within an industry
framework. Four years ago we amended the law under which the AJRC operates to
allow thc certification of agreements. In a speech in Melbourne in 1989, 1
foreshadowed the switch, and in our submissions to the national wage case in 1990
and 1991 we argued for the introduction of workplace bargaining based on
productivity increases. The AIRC queried us at first but late last year it cleared the
obstacle, and this year we have amended the act to encourage the making of
workplace bargains throughout the country.
So now we arc quite firmly entering a new era.
In the last couple of years we have had more change in the workplace than in
decades before. We have a couple of hundred agreements registered already, and
there are many more coming forward. We have now got some very good examples
of where we want the whole system to go agreements made by Sheraton, Toyota,
GMH Holden, Email, Concrete Constructions and Southern Aluminium, to mention
a few. All told we have many more people here working under registered
enterprise agreements than under registered employment contracts in the New
Zealand. We will about double that number when we bring the Australian Public
Service into workplace bargains, and the Minister for Industrial Relations Peter
Cook has already opened negotiations to do just that.
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By this timc next year wc will have half the workforce under workplace bargains,
and within a few years it will be the characteristic, the usual, the normal way in
which our industrial relations arc conducted.
Bargaining is the way, but arching over it we have an agreement with the ACTIJ
that wage increases will be consistent with keeping our inflation rate comparable
with our trading partners. This is a very important commitment, which entrenches
our very low inflation rate, and our competitiveness. It's an agreement we can rely
on one with teeth. The union movement has the ability to control the timing and
extcnt of claims. And we as a government have already said that our commitment
to superannuation increases over the decade, and to general minimum wage
inceases from time to time, would bc reconsidered if wages growth started to
outrun the level compatible with low inflation.
Frankly, I think we could run into big trouble if we press ahead with workplace
bargaining without an agreement on inflation.
Those who think workplace bargaining can be carried out without an agreement on
restraining inflation are, I think, naive.
Not only would we lose our very low inflation, but in the attempt to get it back
government then has to depend on high interest rates to counter inflationary wage
increases. This inevitably leads to higher unemployment.
In this new system there remains an important role for the Australian Industrial
Relations Commission in setting minimum rates in awards, and in so doing
providing a safety net below which employees cannot fall. It will also have an
important role in helping the parties to reach enterprise or industry agreements, in
vetting single cnterprise agreements to make sure the employees have not been
disadvantaged, and in vetting agreements which go beyond a single enterprise to
make sure they are based on genuine productivity enhancements and relate to an
industry rather than an to a craft or occupation.
As the Commission reviews its guiding principles this year, we will be putting to it
that it should adopt this role.
So we are entering a whole new chapter in the long story of industrial relations in
Australia. But sometime before May next year we will also have to make a choice.
A choice of great consequence for our future.
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1 have to get a little trenchant here, a little partisan, but I know you people in the
industrial relations world are quite comfortable with a spirited debate.
You have enough cxperience to know that industrial relations goes right to the heart
of what a country is about.
This decision will rnot be about whether we switch to a system where employers
and employees and their unions reach bargains in their workplace or industry.
That is something we are already doing.
It is not a dccision about whether wage changes should bc based on productivity
movements, and on the mutual exploitation of productivity gains arising from
changes in work practices.
Again, that is something we are already doing.
The real choice we must make in this country is between continuing a cooperative
approach which has brought important, tangible and unquestionable benefits, or
forcing employers and their employees into an industrial war from which neither
would gain.
The choice is whether we keep low inflation or throw it away.
Whether we have an Accord or not.
Whether we have a safety net for the poorly paid or not.
Whcther people are forced off current awards without having a say or not.
Whether they can count on their leave entitlements and their pay packet or not.
Whether we have a quick and casy means of enforcing agreements or not.
Whether we have ati umpire to make sure workplace agreements are fair and that
people are not coerccd into bad deals or not.
Whether employees are guaranteed rising superannuation contributions made by
employers on their behalf through this decade or not.
Whether we should accept a government responsibility to train the young and
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Whether peoplc genuinely secking work should have incomne sport if they need it
for as long as they need it or not.
Whether we should press ahead with first order reforms like increasing productivity
at the workplace and enhancing the quality of our workforce, or whether we should
instead go the way of tenth order bogus reforms, like a consumption tax.
These are the choices, and today I want to state quite unequivocally where my
government stands.
I want to offer a charter for the new era in industrial relations.
In this charter I will make these undertakings on behalf of the Australian
govcrnment. We undertake to maintain the inflation agreement with the ACTU, so that inflation
in this country never again gets out of line with inflation in our trading partners, and
the products of Australian industry remain competitive in world markets.
We undertake to keep a safety net under the low paid and the poorly organised.
We undertake to make sure workplace agreements are fair.
We undertake to enforce agreements with simple procedures.
We undertake not to force employees off awards.
We undertake to allow employees to be covered by their unions.
We undertake to train the young and retrain adults, to enhance our skills and the
quality of our workforce.
We undertake to build secure and comfortable retirements for Australian
employees, and to build Australian saving, by increasing the superannuation
guarantee throughout this decade.
We undertake to provide an unquestioned right to income support to people who
are genuinely seeking work, and to provide training and restraining programs for all
who can benefit from them.
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We undertake to not introduce a consumption tax, and wc undertake to fulfill our
commitment to dramatically reduce the marginal tax rate on the income of most
employees. And we undertake to take care of people to help working families with good child
care, goad education and quality health care.
What this charter comes down to is this.
We will not belittle Australians in their working lives.
We will not take away their rights in the factories shops and offices where they
spend at least a third and often well over half of their waking hours.
We will not cancel their say about how their work is organised and how it is
rewarded. We will not prcpare for the 2 1st century by reinvoking thc rules and relationships
of the 19th century.
In our pursuit of economic efficiency, of greater output, we will not lose sight of
the fact that we want greater output, greater efficiency, only as a means of
improving the quality of our lives not at the expense of the quality of our lives,
No doubt many of you who arrived over the weekend have had a chance to look
around our lovely harbour here, and see some of the splcndours of waterfront
Sydney. In a little while you'll be seeing a video of Sydney, which will show you more of
the glamorous bits.
But if you really want to see what this country is about, how we really live and
what we really aspire to if you want to understand why the choice we are going to
make will so important to this country I suggest you get on a train to a suburb like
Bankstown. Bankstown is where my family comes from, where I grew up, where I've spent
most of my adult ycars. I represent Bankstown in Parliament.
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If you go therc you'll see it is very big suburb of simple family homcs, most with a
garden. You'll see people of Anglo and Trish descent like my family, but these days
you'll also see people from Italy and Greece, China and Vietnam, Turkey and
Lebanon, all getting on reasonably well. You wont see spectacular sights like the
harbour, but you will see churches and community centres, hospitals and clinics,
public swimming pools and playing fields.
This is suburban Australia, which is where most Australians live, but it is not
wealthy or privileged or clitist.
It's a good life out there for most peoplc, with good houses, good schools and good
medical care and access to good colleges for kids who want to go on. Thcre is child
care for working families, and quality treatment for everyone in public hospitals.
Thcre is more unemployment there now than we arc prepared to accept, but we are
rapidly expanding training schemes for unemployed youngsters, and retraining
schemes for unemployed adults, and we are funding projects in the local
community which can employ people quickly, while the economic expansion now
underway comes through to provide long term jobs.
It's safe by the standards most cities, and it's a neighbourhood where people still
look out for one another.
It's a world which has changed a lot over the last decade new factories being
built, old ones being closed.
Children moving off into new occupations in the -service industries, which their
parents would not have dreamed of. Much more pressure to compete and be
successful at school and at college or university. Much more pressure to match the
best the world can produce.
It's been a tough decade in many respects, one in which the economy has imposed
many new demands.
But part of the deal has always been that working people in places like Bankstown
have some control in their working lives, some predictability, some assurance that
their pay packets and conditions will be protected.
Some assurance that they and their families can rely on good health care, good
education and safe neighbourhoods.
These things are all part of what I said earlier was our " social wage".
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They are all part of the compact the Australian government has made with
Australian employees.
As I say Bankstown is not a place for spectacular scenery, but what we have out
there are things we value very highly, things we are prcparcd to work hard for and
keep for our children.
Things we will not lightly throw away.
Things Australians have worked hard for, and which this government will fight to
protect. They are things the charter I have announced today is designed to safeguard.
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