Identifier
Created
Classification
Origin
05CANBERRA944
2005-06-01 06:45:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Canberra
Cable title:  

UNIONS/ALP SEEK TO BLOCK GOA LABOR LAW REFORMS

Tags:  PGOV PREL ELAB ECON KTDB AS 
pdf how-to read a cable
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 02 CANBERRA 000944 

SIPDIS

SENSITIVE

STATE FOR EAP/ANP, DRL/IL AND EB
STATE PASS TO USTR FOR WEISEL/COEN

E.O.12958: N/A
TAGS: PGOV PREL ELAB ECON KTDB AS
SUBJECT: UNIONS/ALP SEEK TO BLOCK GOA LABOR LAW REFORMS

REF: CANBERRA 285

SENSITIVE BUT UNCLASSIFIED, PROTECT ACCORDINGLY.

Summary
-------
UNCLAS SECTION 01 OF 02 CANBERRA 000944

SIPDIS

SENSITIVE

STATE FOR EAP/ANP, DRL/IL AND EB
STATE PASS TO USTR FOR WEISEL/COEN

E.O.12958: N/A
TAGS: PGOV PREL ELAB ECON KTDB AS
SUBJECT: UNIONS/ALP SEEK TO BLOCK GOA LABOR LAW REFORMS

REF: CANBERRA 285

SENSITIVE BUT UNCLASSIFIED, PROTECT ACCORDINGLY.

Summary
--------------

1. (SBU) The Government of Australia on May 26 announced a
major reform of laws governing industrial relations. If
passed, the reform package would dramatically reduce the
bureaucratic hurdles that currently characterize how
Australian workers are hired, fired, and paid. The GOA
expects that introducing greater flexibility into industrial
relations, and tying pay and benefit increases to
productivity, will help to extend the current 14-year run of
robust economic growth and job creation. Some GOA
ministers, however, privately worry that it could be at
least two to three years, and perhaps an election, before
the economic benefits are apparent to voters. The reforms
should remove a significant layer of complexity to doing
business in Australia, a move welcomed by domestic and
foreign firms looking to increase their operations or set up
shop here. Trade union leaders have denounced the plan and
launched an A$6 million ($4.6 million) media campaign to
rally opposition. Only unions in Victoria, however, have so
far threatened strikes and other industrial action. End
Summary

PM Howard Launches IR Revolution
--------------

2. (SBU) Prime Minister John Howard and Employment and
Workplace Relations Minister Kevin Andrews in a joint
appearance at Parliament on May 26 announced a wide-ranging
reform of industrial relations in Australia (reftel).
During dinner with the Charge on May 25, Minister Andrews
said that the reform package was intended to grant greater
freedom and flexibility to employers and employees to
negotiate in the workplace, and to encourage the further
spread of individual workplace agreements without abridging
the right of workers to have a trade union negotiate on
their behalf. Specifically, the reforms are designed to
simplify employment contracts, standardize the process for
setting minimum wages and benefits, streamline workplace
agreements processing, limit the use of "unfair dismissal"
laws, and press the states to surrender most of their

industrial relations powers to the federal government.
Separate legislation will also mandate secret ballots to
approve strikes, further restrict union access to
workplaces, and extend union liability for damages caused by
secondary strike action (septel). Parliament will likely
approve the package after July 1 when the Liberal/National
Coalition Government adds majority control of the Senate to
its current dominance of the House of Representatives.

Hiring, Firing, Pay, and Benefits
--------------

3. (SBU) Australia has six different workplace relations
systems with thousands of different federal and state
statutory employment contracts, or "awards." According to
Andrews, the reform package would decouple collective
bargaining from Australia's highly complicated awards system
and simplify the registration process for both collective
and individual agreements. Future collective and individual
employment agreements would also be less expansive than in
the past, Andrews said, as basic employment conditions,
including annual, sick, and parental leave, and hours of
work, would instead be determined by national legislation.
The GOA also expects the package to increase industrial
stability by extending the maximum life of both agreement
types by 24 months to a total of five years.


4. (SBU) Employers with 100 or fewer employees -- some 99
percent of private firms and 90 percent of the Australian
workforce, according to Australian Council of Trade Unions
(ACTU) National Secretary Greg Combet -- would be exempt
from responding to a fired employee's claim of an "unfair"
(vice unlawful) dismissal. (Current unfair dismissal rules
permit workers to challenge their firing if they feel they
were treated harshly, unjustly or unreasonably, while
separate employment laws protect workers from dismissal on
discriminatory grounds such as race and sex.) Minister
Andrews said that explicit legal provisions against unfair
termination on the grounds of discrimination or other
illegal action by an employer would remain in effect,
despite exaggerated union claims and breathless media
reporting to the contrary.
Federal Regulator to Displace State Regulators
-------------- -

5. (SBU) The PM on June 3 will ask the State premiers, all
of whom are members of the opposition Australian Labor Party
(ALP),to turn over their industrial relations regulatory
powers to the federal government. If, as expected, the
premiers refuse to surrender their powers, the Federal
Government plans to enact legislation overriding the states'
labor laws, the PM said in his May 26 announcement. A
federal/state industrial relations agreement, or a
legislative fix if required, would cover at least 85 percent
of the workforce and leave the states with limited
regulatory control of unincorporated companies,
partnerships, and small farm businesses. Union leaders and
some state premiers have responded to the PM's initiative
with a promise to challenge its constitutionality in the
High Court.

Government Committed, Unions/ALP Divided
--------------

6. (SBU) Minister Andrews told the Charge that the proposed
reform package was the most significant change to
Australia's labor laws in the past 90 years. He added that
the GOA had made the political judgment that the package
would not overly antagonize moderate union members or be met
by sustained nationwide strike action. To that end, the PM
has sought to dampen workers' suspicions about the reforms
by pointing to the Coalition's record of delivering over 14
percent in real wage growth over its nine years in
Government, and by arguing that the flexibility built into
the package would benefit both workers and business owners.
Andrews told the Charge that his main political concern at
this point was not legal, union, or parliamentary
opposition, but rather whether the reforms yielded greater
flexibility and even lower unemployment rates in advance of
the 2007 federal elections.


7. (SBU) ACTU's Combet publicly denounced the reform
package as a "kick in the guts of workers" and expressed
alarm over the removal of appeal rights against "unfair"
dismissal in companies with 100 or fewer employees. Some of
the more radical elements of the union movement have
committed themselves to a week of statewide industrial
action in Victoria starting June 27, while the ACTU
leadership has launched a $A6 million ($4.6 million) media
campaign to rally opposition to the reforms. Nonetheless,
with union membership at historically low levels (22 percent
of the total workforce, including 17 percent of the private
sector, according to last year's official statistics),
unemployment at a 27-year low of 5.1 percent, and the lowest
level of industrial disputation ever, few of our
interlocutors in organized labor or the federal opposition
are holding out much hope of stopping the GOA's IR reform
package.

Comment
--------------

8. (SBU) PM Howard believes passionately in industrial
relations reform and has recognized that with his political
stock among the electorate high, and the Coalition soon to
be in control of both houses of Parliament, he has a once-in-
a-lifetime opportunity to transform Australia's labor
relations landscape. The GOA's reform package should remove
a significant layer of complexity from doing business in
Australia, a move that has been welcomed by Australian
companies and by foreign firms looking to set up shop or
increase their operations here as well. Meanwhile, the
campaign against the reform plans should be viewed as the
first major test of organized labor and the federal ALP
after the loss they suffered at the hands of the Coalition
in the 2004 election. In terms of their ability to deliver
at the workplace and in Parliament, organized labor and the
ALP appear, at this point, to be poised to fail that test.
As Minister Andrews told the Charge, however, how industrial
relations reform plays out over the next few years will
weigh heavily on the fortunes of the governing Coalition,
and the opposition ALP, in the 2007 election. End comment.
STANTON