Productivity Commission chairman calls for 'institutional reform' on industrial relations

David Marin-Guzman
Nov 3 2016
AFR
The head of the Productivity Commission has issued a broadside to the Coalition over not pursing more extensive industrial relations reform, saying he “expected more” and warned of the consequences of not addressing “institutional reform”.
Chairman Peter Harris has also renewed the commission’s call to break up the Fair Work Commission so that a separate “independent” body determines the minimum wage and award standards.
The comments, to be made by Mr Harris at a Melbourne labour law conference on Friday, come as the Coalition has failed to provide its promised response to the Productivity Commission’s 2015 recommendations on workplace relations.
In his speech, Mr Harris took aim at the lowering of reform expectations following the mythologising of the 1980s and 1990s as the “Camelot” of reform.
“Commentators say that this is just politics today, and are apparently happy to leave it at that.
“Thus, in workplace relations, while we have all heard that consultation on the Productivity Commission report continues, it comes with a nudge and wink that suggests not a lot should be expected.
“I’d like to say today that I expect more than that.”
He said blaming minor parties in the Senate for such low expectations had the “damaging consequence” that “so little is asked of the major parties, who could between them generate worthy change”.
He noted his warning in 2013 that declining terms of trade and an ageing population would see national income halved, even if labour productivity recovered its long-term average, was now looking “pretty optimistic”.
Three years later labour productivity had returned to average but national income was still declining.
“We could have aspired to much more. We didn’t.”
Mr Harris said parties must accept the need for “continuous reform” and “move forward on a broad front, at a time when the rest of the world is certainly not offering to do the Australian economy any favours”.
“Institutional reform in workplace relations – not the alteration of laws to favour one ideological perspective or another, but the alteration of the institution itself – is often for long periods a no go area.
“But when institutions are not adapted to the environment in which they have to work, the perversity of decision-making can have major consequences.”
He went on to criticise the Fair Work Commission’s limitations in considering expert opinion and its tendency to adopt precedent rather than evidence in decisions of an economic nature.
A separate Workplace Standards Commission for wage setting, as recommended by the commission, would “allow a shift from the legal culture of not overturning precedent to a whole-of-economy view – a view of the kind that has prevailed for some decades in this economy and given us this 25 years of uninterrupted growth”.
A spokesperson for Employment Minister Michaelia Cash said the government was unlikely to provide a response to the PC report this year and would do so “in due course”.
It has previously said it would not support the proposed restructuring of the Fair Work Commission.
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