Unions under fire: The wheeling and dealing behind Porter's omnibus bill

As workers battled through the final days of a disastrous year, Australia’s federal government was celebrating in style, launching their Fair Work Act (Supporting Australia’s Jobs and Economic Recovery) Bill on 9 December. The proposed law is a grab bag of attacks on workers’ wages, conditions and legal protections – all of which, despite the bill’s title, have been on employers’ wish lists since well before the pandemic.

To have a full appreciation of what workers are up against, it’s important to understand the lines of debate in the ruling class – and the approach of the union movement’s leadership. This is in addition to being across the substance of the various attacks lined up by the government. There’s a more detailed explainer below, but in brief the attacks include:

  • attacks on the “better off overall test” or BOOT, which is meant to ensure enterprise agreements add to, rather than undercut, the legal minimums guaranteed to workers in awards
  • the winding back of newly won entitlements for casuals
  • further restriction on the right to strike on “greenfields” (newly established) worksites
  • a bunch of shouting about wage theft, while in practice undermining new state laws against this
  • removing overtime payments for part time workers

The unveiling of these attacks has been accompanied by a vigorous debate among the business elite and their political servants about exactly how far and how fast they should be moving to trash workers’ conditions. Obviously there are the practical constraints of what the government can steer through the collection of racists, loose cannons and political mercenaries on the Senate crossbench. More fundamentally though, the ruling class are torn between greed – for what they want to force through under cover of the COVID crisis, and fear – of a backlash similar to the one that unseated the Howard government in 2007 following their WorkChoices attacks.

Unfortunately, there is little sign of the similar debate we need in the union movement. At a top level, the “best friend forever” relationship between ACTU Secretary Sally McManus and Christian Porter, the government’s chief headkicker on industrial relations, should set off alarm bells. The ACTU has also maintained a close collaboration over the past year with the Shop, Distributive and Allied union (SDA), which for decades has had a business model based on trading off workers’ wages and conditions in return for a place at the negotiating table. This concessionary approach is one path to the ruling class achieving a whole lot of its agenda – and is a disastrous strategy for workers.

The battle of the BOOT: greed versus fear in the ruling class

“Team Australia fires a blank on workplace reform”, fumed the Australian Financial Review editorial the day after the government released its package of legal reforms, denouncing the government for “lowest-common denomination tinkering” with Australia’s “industrial relations rigidities”. The AFR argues that “Australia must use the pandemic…as a burning platform to force through hard decisions not taken during two decades of boom-era complacency”.

The paper’s editorial writers argue for “using the shock of this recession to drive for fundamental change”, pointing out that “the recession of the early 1980s paved the way for the Hawke government’s real wage cuts… The recession of the early 1990s was followed up with Keating’s…productivity-driven enterprise bargaining system”. These attacks by Labor governments dismembered the legal framework which allowed workers to win better wages and conditions with industry-wide industrial campaigns, and substituted a much more fragmented system of enterprise bargaining – where gains by industrially strong groups of workers didn’t flow through to those with less industrial power.

Much to the AFR’s disappointment, the union movement still maintains some institutional standing in Australia’s workplace laws, for instance through the Fair Work Commission – and this is not under significant threat in the government’s new attacks.

The centrepiece of the government’s announcement in December is an attack on the legal protections for minimum wages and conditions like penalty rates and breaks, enshrined in Australia’s 122 industrial awards. These minimum standards can be varied or built on through enterprise agreements, but EAs can only be approved by the Fair Work Commission if they pass the “Better Off Overall Test”, or BOOT: each worker covered by an EA must be better off than the legal minimum in the award. Scrapping this protection entirely was one of the central components of the Coalition’s 2005 WorkChoices laws.

One difficulty for the ruling class in wrecking these institutional supports and minimum conditions is the social democratic sensibilities that still shape Australia’s political landscape. In particular, the Liberals remain haunted by the backlash against WorkChoices, which sparked the biggest working-class demonstrations in Australian history and, despite the campaign being wound down prematurely, saw the Howard government being tipped from office and Howard himself losing his seat. As the AFR editorialises: “The Coalition knows that paring down work rights to five basic conditions under the long-dead WorkChoices of 2005 was an overreach. But everybody now lives in its shadow. The Coalition appears to have Stockholm syndrome…”

So how has the Coalition dealt with these constraints? When the Morrison government was returned in 2019, I noted in Red Flag:

Government and business will be tempted to use Morrison’s unexpected win, and the weak state of our unions, to go in hard. Yet political circumstances – a widely despised government, with a nearly record low primary vote, and no mandate for anything because they took no policies to the election – mean the government risks overstepping. Morrison no doubt recalls the fate of John Howard, losing his seat and government in the WorkChoices election of 2007, and Abbott and Hockey, whose 2014 budget provoked a backlash that wrecked much of the government’s agenda.

Since then, the Coalition gave the trade union movement something akin to a near-death experience at the end of 2019, when the vote to approve the “Ensuring Integrity Bill” tied in the Senate. “Ensuring Integrity” would have allowed administrators to be appointed by government to exercise any power of a union, a disaster for any idea of the unions as an independent fighting force for workers.

With the next election now on the horizon, however, the federal government has trimmed its sails. Early in the pandemic, it looked like the government was going for the jugular. In April 2020, Attorney-General and Workplace Relations Minister Christian Porter announced that he had changed a regulation so employers would now have to give only one day’s notice of an employee ballot to ram through any changes to enterprise agreements. Wages, penalty rates and any other rights above the legal minimums in the award could now be gutted, by a ballot called by the employer on one day’s notice. I reported in Red Flag:

The legal terrain of workers’ rights in Australia has been transformed, literally at the stroke of a pen… In board rooms all over Australia this week, war rooms will be hard at work drawing up wish lists, drafting clauses and planning the fear campaign and legal backup.

I was wrong. In fact, only a few dozen companies in the whole country used this new provision – none of them major employers. There was doubt about whether changes rushed through on a day’s notice would have met the threshold in the Fair Work Act, that any changes to an EA must be “genuinely agreed” by the workers. The day before a federal court challenge by the CFMMEU, the government reversed course, changing the notice period for any ballot back to seven days. The obvious conclusion is that this serious attack was a kind of ambit claim, a “big stick” in the government’s “carrot and stick” approach to extracting concessions from Australia’s union movement.

The stick was duly followed by the carrot: five months of “round table” discussions involving unions and business groups, from June to October. Though there was no consensus, the government claims that these discussions informed the attacks now contained in the government’s new bill.

One question hanging over the government’s package is how much of it is ambit claim? The most significant attack in the government’s December package is a two-year exemption from the BOOT for employers who claim to be suffering from the effects of the COVID crisis. This measure was apparently added at the last minute, not being part of the “round table” discussions.

Within a day of the package being launched, after a bit of huffing and puffing from Labor and the unions, Porter and much of the Coalition back bench had signalled that they were prepared to back down on this attack, with the AFR reporting that “the government does not consider it as important as the many other measures in the package that seek to unclog the industrial relations system”. A year or so out from the next election, it seems that the government has little appetite for a major stoush on this issue.

So if the two-year BOOT holiday is an ambit claim, what is the government actually trying to achieve? It’s not like we have the inside scoop here, but there are indicators that the government is angling to reopen a tried and tested path to getting around the BOOT: cutting a deal with a friendly union leadership which is prepared to sell out members’ conditions for a seat at the table.

This concessionary approach was the business model of the SDA for decades. A slightly higher base rate for wages was supposed to compensate for the scrapping of penalty rates, and for overtime rates being scrapped for part-time workers working outside their agreed, predictable hours.

This model was seriously undermined from 2016, following a successful legal challenge by Duncan Hart, a trolley collector at Coles and member of Socialist Alternative, and a legal team organised by Josh Cullinan, at that time an industrial officer with the National Tertiary Education Union and now the secretary of the Retail and Fast Food Workers Union. Hart vs Coles and continued legal activism from RAFFWU has prompted the Fair Work Commission to actually apply the BOOT as it was legislated, in other words to ensure that each worker is better off.

The result has been hundreds of thousands of workers, in retail and beyond, getting penalty rates for the first time – and serious problems for the business model of major employers and the SDA. Business has been pushing hard to scale back the implementation of the BOOT ever since. In this they have been vigorously supported by the SDA and, it seems, by the ACTU.

The only significant breach in the confidentiality that was meant to surround the five months of “round table” discussions over IR reforms came in mid-September, when there was a spectacular public blow-up over an attempt to revive the SDA’s favoured model of getting around the BOOT. The ACTU and the Business Council of Australia had reportedly cooked up a deal which would allow the Fair Work Commission to approve an EA even if it didn’t pass the better off overall test – so long as a union agreed to this undercutting of the supposed legal minimums.

This would have been a straight-out revival of the SDA’s concessionary business model: wage cuts for workers in return for the union hierarchy securing a place at the table. The Master Builders’ Association and several other employer groups publicly denounced the deal, because only companies which dealt with a union would be able to undercut the BOOT – whereas the MBA wanted these concessions without reference to any union.

At least as much of a worry as this proposal to undercut the BOOT was the silence on this controversy from Australia’s unions. While a string of employer groups backed the MBA’s strident anti-union stance, there were crickets from the unions, with only RAFFWU and the CFMMEU’s construction division publicly denouncing this proposed SDA/ACTU sell-out of workers’ conditions.

There hasn’t been any further public discussion on this disgraceful deal, but it seems pretty likely that some version of it will be on the table in the lobbying and wheeling and dealing which will be the main union response to the government’s current attacks. After all the SDA has never backed away from their concessionary bargaining approach, and the ACTU has been happy enough to back them up: in May the ACTU, the SDA and the Australian Industry Group (an employer group) backed an application at Fair Work to allow McDonalds to cut minimum hours and overtime rates for the duration of the pandemic.

The problem here is not just one rogue union: the SDA is the confident, brazen front of a much deeper malaise in Australia’s union movement. The class collaborationist attitude of our union leaders was best summed up by Sally McManus’ comment in her national press club speech on 2 December that “the union movement has had its national role returned to where it should always have been – as a widely accepted part of Australia’s civil society, and a trusted social partner for Governments and businesses”.

Being a “trusted social partner” of a government intent on winding back union power – at either a faster or slower pace – has to mean giving concessions. That’s why the ACTU has partnered with the SDA in pushing concessions, has given a “qualified yes” to the government’s regressive changes around “greenfields” which further erode the right to strike, and why they agreed in October to the idea of dropping civil penalties on employers who “inadvertently” underpay workers.

So, when the ACTU says it is gearing up for the fight of the century against “WorkChoices 2.0”, we should take these claims with a massive shovel full of salt. After all, their campaign against WorkChoices 1.0 was ended well short of a victory despite mass rallies in the hundreds of thousands. Rather than an industrial response that could have rebuilt union power in the workplace and put the ruling class in fear for their precious profits, the massive protests were wound up into an electoral campaign, which gave a blank cheque to the incoming Labor government in 2007. Some of the most draconian aspects of WorkChoices were eventually scaled back, but the basic architecture was left in place, and the union movement has continued its decline.

A repeat of this dismal scenario is the very best that the top leaders of our movement are aiming at. Basically we can expect their effort to consist overwhelmingly of sending emails, alongside a continuation of the months-long backroom dealing, with our entitlements as bargaining chips.

On the part of the ruling class, in the main they seem to be quite happy – for now – to ignore the strident campaign of the Australian Financial Review and to settle for the significant though incremental “reforms” being pursued by the federal government. Even the Australian Mines and Metals Association, traditionally one of the more aggressive employer bodies, has praised the “measured, balanced industrial relations changes” proposed by Morrison and Porter. They don’t bother to mention the two-year BOOT holiday, another indicator that this is an ambit claim designed to shape the field of battle in an effort to push less dramatic, but still significant, attacks through. The Business Council of Australia’s chief executive Jennifer Westacott supports the government’s package as a “sensible, middle-ground package” that minimises the risk of falling back “into the old language of fear, confusion and ‘us versus them’” – in other words, a package that will further erode union power and workers’ conditions, without reviving the ghost of WorkChoices.

Unionists should keep a careful eye not just on the headline attack of trashing the BOOT for two years, thus reinstating one of the most important planks of WorkChoices, but also on the detail of the claims – and on the deal-making which will go on despite the occasional fighting talk from the ACTU.

If the Australian union movement is to be turned around, it’s not going to come from the ACTU, or from following the dominant approach of passivity or concessions which has prevailed in our movement for decades. It’ll come from significantly building on the glimmers of industrial action seen from warehouse workers and some other groups of workers in recent months. It’ll come from the sort of rank-and-file activism that defeated the most high-profile concessionary deal promoted by an Australian union leadership in the pandemic, in the National Tertiary Education Union. And it will come from rebuilding a current based on the politics of class struggle, rather than class compromise, in Australia’s beleaguered union movement.

Explaining the attacks

1. Better Off Overall Test

The most dramatic of the federal government’s attacks is a new, wide exemption for two years allowing the Fair Work Commission (FWC) to approve enterprise agreements that do not pass the Better Off Overall Test (BOOT). This would mean that enterprise agreements (EAs) can undercut the supposed minimum standards on penalty rates, breaks and other conditions in industry awards. Once approved, these agreements would remain enforceable until replaced or terminated. Agreements can stretch out for many years, particularly in industries and workplaces where workers are not organised to fight back. This could allow the development of a rash of substandard deals in particular sectors – with pay and conditions worse than the already bare minimum requirements in the awards.

The two-year BOOT holiday was introduced into the package at the last minute and there are doubts about how serious the government is about pushing this measure through (see article above).

A separate proposal is to make permanent changes proposed to the BOOT which would give increased weight to the results of enterprise bargaining, and whether workers have voted for a new EA – even if the agreement undercuts the normal legal protections in the BOOT. The wording in the draft law, requiring the FWC to operate “in a manner that recognises the outcome of bargaining at the enterprise level” is very ambiguous, leaving wide latitude for FWC interpretation. This provision could also potentially reopen the door for SDA-type agreements, where bosses team up with a right-wing union to push a shoddy deal through.

Many of the bill’s provisions on enterprise bargaining echo the complaints of major companies (and the SDA) wanting to water down the application of the BOOT. For instance, the Fair Work Commission would be pushed to approve every agreement within 21 days, creating a strong incentive to wave through EAs which undercut basic minimums.

2. Wage theft

In a weak attempt to make the bill palatable, it includes increased civil penalties as well as a criminal offence for underpayment of wages. Courts dealing with stolen wages can refer cases to the Fair Work Commission for conciliation, but this does very little to address the long-standing problem that recovery of stolen wages involves court action rather than a simple, worker-friendly process. Overall, the bill does little or nothing to deter criminal bosses who rely on wage theft as a business model. The inferior clauses in the federal government’s bill would override recent state laws on this question.

The legislation is deliberately written to make it almost impossible to have employers convicted of a criminal offence: the conduct must not only be “dishonest according to the standards of ordinary people” (which is the standard applied in the Victorian legislation), but also must be “known by the defendant to be dishonest” – a very high bar to hit in court. The bill’s explanatory memorandum states: “A defendant is not dishonest if they genuinely believed they paid relevant amounts in full (or that there was no underpayment), even if this belief is unreasonable or unfounded.” While the ACTU is now rightly pointing out that this won’t provide protections for workers, it was Sally McManus who opened the door for this move with her capitulation on the question of penalties for bosses “inadvertently” underpaying workers, during Porter’s “round table” discussions.

3. Casuals

In recent years, unions have had a couple of rare victories in the federal court, establishing that workers who are given a regular roster (for instance, spanning an entire year in Skene vs Workpac) are not legally “casuals”, regardless of what their employer thinks. The workers are therefore entitled to annual leave and sick pay. This bill will reverse these legal gains: a regular pattern of hours will no longer be sufficient to show that the worker is not actually a casual. Instead there is a list of factors, including whether the work is described as casual by the boss.

There is a requirement to offer conversion to permanent work after a casual worker has been in a job for 12 months, with six months being work in a regular pattern. However the business can opt out on “reasonable grounds” – and to make matters worse, disputes about this can’t be decided by Fair Work unless the employer agrees, cutting off one of the few legal avenues for workers to pursue their rights.

This should serve as a timely reminder of the limitations of an industrial strategy that puts too much stock in pursuing legal victories. Of course we should use the very few tools we have to our advantage where we can, but we also have to understand the nature of capitalism. Any law that appears to benefit us is under threat, the game is rigged – so what good is playing by the rules?

4. Attacks on penalty rates and other workplace conditions

Part-time workers on a number of awards are currently entitled to overtime rates for hours worked beyond their regular, agreed hours. This is an award condition which is often ignored, or traded away by concessionary deals involving the SDA or United Voice (now merged into the UWU). The government’s proposed bill would strip this entitlement entirely.

Not only would this be a cut in pay for part-timers currently receiving overtime penalties: it would also remove an incentive for offering genuine full-time jobs. Bosses can have part-time staff essentially treated as casuals, but without having to pay them the loading.

The bill would also continue JobKeeper directions in these awards, giving employers greater freedom to assign workers to any job regardless of their classification or work location. Those “temporary” measures to reduce workers’ entitlements, endorsed by much of the union movement earlier in the pandemic, get less temporary by the day.

5. Attacks on the right to organise

The government’s bill would remove mandatory requirements designed to ensure workers have access to the information they need to be able to consider and vote on a proposed agreement. Most of these are replaced by a vague requirement for the employer to take “reasonable steps” (not even “all reasonable steps”!) to inform workers about the contents of the enterprise agreement. The removal of these requirements would strengthen the ability of employers to rush through dodgy agreements, especially with a weakened BOOT.

Casual workers could be disenfranchised, with only casuals who perform work for the company during the access period, the time in which workers have to consider an agreement prior to the vote, having the right to vote.

Unions who are not party to the negotiations would be barred in most cases from making submissions to the FWC in relation to an agreement. Depending on the actual clauses, this could be used to exclude small unions such as RAFFWU. It could also exclude much stronger unions – for instance, the CFMMEU’s ability to challenge an agreement which undercut industry standards, in cases where the deal was cooked up without the union being involved.

6. Greenfields agreements

So-called “greenfields” agreements are used by companies for supposedly new projects and enterprises. A longstanding complaint of the Minerals Council of Australia (MCA) is that resource development projects often run for more than four years (the maximum length of an EA), which creates the possibility of legally protected industrial action. The MCA complains, for instance, that brutal rostering arrangements for fly-in, fly-out workers have been renegotiated with unions under the threat of strikes on some of these projects.

The government’s bill would allow the minister to extend greenfields agreements to eight years on any “major project” of over $250 million. ACTU Secretary Sally McManus gave a “qualified yes” to these changes so long as there is access to Fair Work, telling the AFR in early December: “We would be prepared to look at longer agreements so long as you make sure there are protections and fairness in there”. This would effectively outlaw strike action on major resource projects, dramatically weakening the bargaining power of unions and workers.

7. Loaded rates

The central part of the wage-cutting deals designed by the SDA was having slightly higher hourly rates, so-called “loaded rates”, which were meant to compensate for reducing or abolishing penalty rates for weekend or evening work. Of course these arrangements led to a big majority of workers losing out under these arrangements. At the request of the federal government, the Fair Work Commission has launched hearings to investigate whether “loaded rates” could be reinstituted in hospitality and retail. No firm proposals have been put forward so far, and it’s far from clear whether anything will come of this – but a collection of employer organisations have queued up to make submissions on how to revive this notorious wage-cutting scam.

Additional research and writing by Kath Larkin

The detailed ACTU briefing note on the government’s attacks is available here.

You have successfully subscribed to the newsletter

There was an error while trying to send your request. Please try again.

Marxist Left Review will use the information you provide on this form to be in touch with you and to provide updates and marketing.