IR REFORM: BUSINESS PUSHES PM

EWIN HANNAN

AUGUST 9, 2019

The Australian 

Big business has called on the Morrison government to prevent the enterprise bargaining system dying “the death of a thousand cuts” by urgently backing the ­introduction of a new test for the approval of workplace agreements.

Business Council of Australia chief executive Jennifer Westacott said the Fair Work Act’s ­“better off overall” test was a “productivity killer” that should be replaced by a test that requires groups of employees only to be better off than the award minimum rather than every individual employee.

The Business Council will join employer groups in pressing ­Industrial Relations Minister Christian Porter to back the politically sensitive change as he conducts his review of the workplace relations system.

Since Work Choices helped defeat John Howard and his ­government in 2007, the ­Coalition has minimised overt measures to directly cut workers’ pay and conditions, instead focusing on unions. Changing the test risks leaving the government politically vulnerable.

The ACTU will aggressively oppose the employer push, saying a rewriting of the test will allow companies to pay workers less at a time of record low wages growth.

Ms Westacott said the government should back a Productivity Commission recommendation in 2015 to replace the better off overall test — applied by the Fair Work Commission when approving enterprise agreements — with a new no-disadvantage test.

Under the proposal, the commission would ensure each class of employee, not each individual worker, would “not be placed at a net disadvantage overall” by an agreement when compared to the relevant award.

Citing research that showed the number of active federal ­enterprise bargaining agreements had fallen to a 20-year low, Ms Westacott said: “We need to unscramble the complexity of EBAs (which) have become Downton Abbey-sized laundry lists, containing way too many items.

“We need to act on the ‘better off overall’ test,’’ she said. “The BOOT is a productivity killer.

“Say you are working in a 24-7 environment and your permanent workers want to work on weekends. They trade off their penalty rates for a higher salary overall. But then, how do you balance this out for casuals who don’t work 35 hours a week? The problem with the way the BOOT is ­operating now is that it prevents trade-offs.”

Ms Westacott said implementing the Productivity Commission’s recommendation for a no-disadvantage test would ensure that, overall, workers didn’t end up disadvantaged compared to the award.

“It also means that if workers place a higher premium on, say, flexible working conditions than weekend rates, that they could trade them off against each other, as long as their cumulative wages and conditions meant they weren’t disadvantaged,’’ she said.

Mr Porter said in June that ­employer calls for the test to be applied to groups of workers ­rather than each individual ­employee was “clearly a rational option to be considered”.

But he said that in considering any policy change, the government would ask: “Is there cogent evidence that a change of that type will benefit employees across the board in terms of wage growth, benefit employment growth across the board, and does it make the Australian economy stronger? And is there cogent evidence that suggests that it meets all those three criteria?”

Mr Porter said the government would listen to “people from all sectors of the industrial relations system about how they see the BOOT test working”.

“What I’m absolutely committed to is inside the parameters of the existing law, making the system simple: easier to understand, easier to navigate, and quicker and less costly,’’ Mr Porter said.

ACTU secretary Sally Mc­Manus has previously signalled unions will vigorously oppose the employer push and urged Mr Porter to resist changing the test.

Ms McManus has argued that changing the test would allow ­employers to pay people lower than the current legal minimum standards and open the way for them to undercut employers who pay fairly.

Ms Westacott said the proportion of people working under a federal EBA that has lapsed but is still operational has climbed in the past four years to almost 40 per cent. “We can’t allow the EBA system to die the death of a thousand cuts,’’ she said.

“We all want a nation where all Australians can get ahead, sharing in the dividends of prosperity. That’s ultimately about lifting our productivity performance to put more in everyone’s pockets and drive higher living standards.”

Ms Westacott said the current workplace relations system was too rigid and it was too hard to ­employ people. “It cannot go on like this,’’ she said.