TRANSCRIPT - KINGSLEY LAFFER MEMORIAL LECTURE, THE UNIVERSITY OF SYDNEY - THURSDAY, 24 AUGUST 2023

E&OE TRANSCRIPT

KINGSLEY LAFFER MEMORIAL LECTURE

THE UNIVERSITY OF SYDNEY

THURSDAY, 24 AUGUST 2023

SUBJECTS: Workplace relations, closing loopholes in the Fair Work Act, Secure Jobs, Better Pay, revitalising enterprise bargaining, Hawke / Keating reforms, family and domestic violence leave.

TONY BURKE MP, MINISTER FOR EMPLOYMENT AND WORKPLACE RELATIONS, MINISTER FOR THE ARTS: This is very much the format of a talk show. This is lovely. I know Auntie Joan, Auntie Joan Bell has left, but I just wanted to express my gratitude for that Welcome to Country that we heard.

I think we often forget how extraordinary it is that we go to events, and we're constantly welcomed. If you think of all the things that could be said and what we keep hearing is welcome, there is just a generosity in that, and a similar generosity in the Uluru Statement from the Heart.

When I studied here, the juxtaposition was always extraordinary. Today I drove down Abercrombie Street, but I used to always catch the train from Beverly Hills station and you’d get off at Redfern and walk through here. As you walked through, you walk past The Block, and you'd walk past some of the greatest levels of disadvantage in Australia to arrive at some of the greatest levels of sandstone privilege in Australia. It always stood out that if you wanted an example of who had the loud voice – do we really think the gap would be so wide if the people we were walking past had anything like the power in the voice to Parliament that people graduating in the Great Hall would have?

I'm very pleased to be here as part of a government that is asking Australia to respond to the Uluru Statement from the Heart with the same level of generosity that it offers to us with a Yes vote later this year in the referendum.

What I'd like to go to now, first of all, some quick acknowledgements, if I may. To Vice‑Chancellor Mark Scott, thank you so much for the introduction, and for welcoming me back. Associate Professor Anya Johnson. And of course, Professor Rae Cooper, not only for the work tonight, and putting all this together, but for the work of the Gender Equality In Working Life Centre.

There are so many elements of the Secure Jobs Better Pay Bill that we legislated last year, and I was going to ‑ listing them off, there are the gender equality objectives, the gender equality panels, the pay equity principle to be legislated, the support bargaining stream. So much of the genesis of those ideas came from the work that Professor Rae Cooper has done.

As I go through some of the elements of what we'll be legislating for later this year, I want to draw in on some of the significance that people often won't appreciate of what happens at universities and how it finds its way through the Parliament and through there ultimately into the working lives of every Australian.

Added to the acknowledgements though – I had no idea Professor Ron McCallum was coming tonight, and it feels weird for me to be the one talking and you to be the one listening, so it's a great honour to be here.

Can I also just acknowledge the Secretary of my Department, Natalie James, who is also a former Fair Work Ombudsman, but we have the future Fair Work Ombudsman here as well in Anna Booth that I want to acknowledge. So thank you all for being here.

In 1993 my dear friend Bob Hawke delivered the first Laffer lecture. In 1993 I was also a student, not studying industrial relations on this campus but the old law school campus by then at Phillip Street. I was still coming to this campus, but mainly for debating and for Manning Bar, at that point.

But Bob in that speech said, "We are now witnessing one of the most dramatic periods of change in Australia's IR system", and what he was referring to at that moment in time in 1993 was the moment in time when the then Government decided to move from a fully centralised wage fixing system, and open up the concept of enterprise bargaining.

That shift was radical, and while that exact shift is something that you’ll often see some of the business organisations in the media, particularly last year, being critical of what we were doing with multi‑employer bargaining and being critical of what the Government was doing using this argument that the real productivity gains come from enterprise bargaining.

Don't forget that back then in 1993, at the time that Bob Hawke gave his speech here, business was running a campaign against that legislation. A whole lot of the changes have happened then, where people look back and say, "The great reforms of the Hawke/Keating years". They didn't happen automatically, and they often didn't happen with some of the people now who acknowledge how significant they were to the Australian economy. It was similar with the full‑page ads opposing the introduction of compulsory superannuation.

In all the arguments, one thing that I've been reluctant to do is simply find a compromise based on where stakeholders want you to land. You need to be constantly looking at what difference will it make for working people's lives. What difference will it make right at the first principles. You want to make sure that jobs are being offered, but you want to make sure that those jobs are meaningful and provide people with the security and remuneration and safety that is so significant and essential to working life in Australia.

The CEO of the Chamber of Manufacturers, from The Age, at that exact time in 1993, just to give you an example, and I like this example because it was reported by a journalist at The Age by the name of Innes Willox. The legislation would be, and I quote, "A body blow to investment and job prospects, and would significantly increase the power of unions at the expense of employers and employees". All a fear campaign. Now is acknowledged for the economic asset that it is.

I'll say a little bit about the campaigns but not much. I want to say a lot about the workplaces, and I want to say a lot about how our laws make those workplaces much more productive in terms of not simply what they provide for the employer, but in how they enrich the lives of the employee as well.

The first principles here are actually contestable. It's contestable right from the beginning. This is one of those areas of policy in the Parliament, and some of this is probably because the political divide in Australia started with workplace issues because of union affiliation to the Labor Party.

But the political divide in terms of what's the destination we're trying to achieve is different. It is different. This Government has an objective to get wages moving. It's something we actively want to do. We replaced a government that wanted to keep wages suppressed, that had low wage growth as a deliberate design feature of their economic management – and each policy was successful.

There have only been nine quarters in the history of the Wage Price Index in Australia, only nine quarters where the figure has been so low as to have a one in front of it. All of those quarters under Coalition governments.

With the change to policies we've had we have started to see a real uptick in what's happening with wages. If you change how you argue before the Annual Wage Review, if you change how you argue before the Aged Care Review, if you change the power in bargaining, and you create the legal changes just to get bargaining happening again, if you have policies about gender equality, if you have policies about childcare, if you have policies about paid parental leave – you will get increased participation from women.

It is no accident that the gender pay gap has now gone to a record low of 13 per cent. It's no accident that as inflation is coming down wages are going up. To the point where at the last quarter, for the first time, if you look at the quarterly figures, the media went straight to the annualised figures, but the annualised figures are the addition of the previous four quarters. If you just look at the last quarterly figures that came in, for the first time the line’s met. Wages 0.8. Inflation 0.8.

Now that doesn't mean all of a sudden people have stopped hurting. But it does mean the strategy to get inflation down and to get wages up – because until those lines cross you don't have real wage growth. The legal changes we're making, the policy changes we're making, are making a difference in that.

To give the quick statistics there. What's that meant? The Annual Wage Review – in terms of the minimum wage, the minimum wage is only 80,000 Australians, but they're our lowest‑paid Australians. For those last two annual wage cases we've had the two highest figures that we've ever had in the history of Annual Wage Reviews, a 5.2 per cent followed by an 8.6 per cent.

In terms of what that has meant across the award system, for the lower levels of 5.2 in the first year, the higher levels of 4.6, and the last Annual Wage Review, 5.75 across the board except for the minimum wage of 8.2.

Those figures would not have happened without the advocacy which was made at the Fair Work Commission from the new Government arguing that the country could afford for this to occur, and workers could not afford to have wages that kept falling so far behind inflation. Inflation caused not by a wage price spiral. Inflation caused by a combination of supply constraints within Australia and internationally, and the uptick in prices globally caused by the war in Ukraine.

So, the policies to gradually get inflation down, the policies to get wages up.

Those figures, you take that 5.75 per cent for the 2.7 million people that are on the award system, add on top of that if you're an aged care worker the fact that the Government turned up, as the previous government had refused to, and said we will argue for a better wage increase, a significant wage increase for aged care workers. They got the 5.75 per cent – and this is a quarter of a million workers – and an additional 15 per cent pay increase.

And what has been the response since that's happened? Inflation has not been going up, it's been coming down. The argument about somehow wages being the problem with respect to inflation is not what's going on at the moment. The argument for lower wage growth is an argument purely made in Australia by those who want the profit share to go less to wages than it goes to profit. That's effectively the argument, because there is not a national economic case to hold back wages.

The Secure Jobs Better Pay Bill that we put through last year, dealt with job security, dealt with wages through bargaining, dealt with flexible work, and this was, as I said before, while we had the various changes for the implementation of the Respect@Work Report with improvements in paid parental leave and early childhood education.

All the work last year that came through in Government policy was asking this question: “How do we raise the floor? How do we get wages moving across the board?” Last year's legislation, in different ways, affected every workplace in the country, whether it was a flexibility provision, whether it was changes to be made to the objectives – not just of the Act but of the awards themselves – or whether it was the changes that are now starting to happen with bargaining. D on't forget the first change that happened with multi‑employer bargaining had nothing to do with multi‑employer bargaining. Because what we did was we delayed the start on multi‑employer bargaining and said to the employers who didn't want to be involved in multi‑employer bargaining, "Well, you won't be involved if you have an enterprise agreement and you've said that enterprise agreements are the ones you prefer".

What was the response? A whole series of businesses that had left the bargaining table came back. Some to avoid multi‑employer bargaining, others because unions had used the provision that was in the new Act where if you had any agreement that had expired over the last five years, then you could simply write and say, "We want to start negotiating again". Because one of the techniques that had been available under our system was to get flatlining wages just by doing nothing.

The expiry of an agreement would freeze wages with the only possible uptick being if the award itself caught up and started to overtake.

By creating a circumstance where, "No, no, no if you’ve had an agreement in the last five years and we want to return to the bargaining table, we're back bargaining again", it took that incentive away to just get a financial benefit to the bottom line by doing nothing. And then we add the additional element for those workplaces – particularly those that are more feminised and more casualised – where industrial action is just harder, where it's just harder, to create the intractable bargaining provisions so that you get to a point where you can go to the Commission and say, "We are getting nowhere here, can you please arbitrate?"

Once again, as we get closer to the time limits on those intractable bargaining provisions we will find them being effective in part by not being used. The fact that they are there at all will cause some businesses that otherwise would have just let the negotiation go forever to now decide they would rather take control, avoid arbitration, and cut the agreement, and cut the deal. All of those behaviours are what we're going to see now.

That's what last year was about, and it reached, as I said, into every workplace. This year's legislation is different. Many workers will be unaffected by what happens this year, but those who are affected will be affected often in a much more substantial way than last year's legislation did. Because this year we are dealing with the loopholes, and most businesses don't use loopholes.

I want to go through today with you six of the loopholes – the six main ones – that will be in the legislation that I'll be introducing in a few weeks to Federal Parliament.

The first is a concept of wage theft. Employers and employees each have access to each other's money. In the simplest example, if you're in a shop, the employee has access to the money that's in the till, and the employer has access to the money that the worker is owed. Here's the loophole. At the moment if the worker steals the money from the till, it's a crime. If the employer steals the money from the worker, it's not. That's a straight‑out loophole, ought not be the case, will be corrected this year.

Not all under payments are what I just described. Not all under payments are wage theft. But when a worker steals money from the till they know what they're doing, and on too many occasions – and we saw some of this with some of the most famous examples, like those on 7‑Eleven that were on TV some years ago with the video footage of people being walked to an ATM to withdraw their wages and hand it over. On too many occasions we do have employers who know exactly what they're doing and are engaging in as much theft as the worker who steals from the till, but at the moment in a world that's free of criminal penalties. That will end this year.

The second loophole is this concept of someone who is forced to be a permanent casual. Now it always used to be the case you were either a permanent or a casual. Increasingly now we have people who are rostered the same way you would roster a part‑timer and yet are called casuals.

There will be many people – and there will be a lot of them in this audience – who actually prefer it that way. Because you'd rather have the loading and have complete control of being able to say, "I've got exams, I don't want to work. I need these hours off. I need the flexibility". And we need to make sure we don't do anything to undermine those rights where people want them.

But there's a statistic that I found in a speech of Innes Willox, who I mentioned earlier, that really stunned me. Which he referred to workers - he said something in the order of, I didn’t write this figure down, but I think this is right. He gave a number of workers who were casuals under the age of 35, and said, you know, it's 60 per cent. But of course what that tells you is there's 40 per cent of casuals who are older than that, and they're the people who are less likely to be staying with their parents, more likely to be supporting dependants, more likely to be in a situation where their job might be casual, but their bills aren't casual, their rent's not casual, the rest of their life's not casual. And some of those workers will want to say, "Can you just transfer me across? You're rostering me that way anyway". At the moment they don't have a right to be able to enforce that. That loophole needs to be closed, and that will be closed this year.

You won't get both, there will be no back pay in the sense that you will either get leave or you will get loading, you won't get both at once. But if you have the regular hours, I no longer want a circumstance where employers can double‑dip and get all the benefits of a reliable committed workforce and provide none of the security in return.

The third loophole, and there will be people here who are working in this section of the economy, and that's the gig economy. Now at the moment if you work in the gig economy, some people will be doing this in the care economy, through apps where you work in the NDIS or aged care, there will be people here that work for Uber, whether it's food delivery or whether it's rideshare platforms. If you were to go to the Fair Work Commission to try and get your rights enforced, the Fair Work Commission at the moment asks one question: are you an employee? If the answer is no, all your rights fall off a cliff. If the answer's yes, you've got a whole series of rights. But if the answer's no every one of those rights falls off a cliff.

The approach around some countries around the world has been to say that we should turn people into employees. Most people who work on these platforms don't want to be employees. They like the flexibility of knowing that they can hop on the app when they've got a spare minute and see if there's some work available. If they go off for a few weeks, it doesn't matter. They like that flexibility. Sometimes they have a secure job and they're doing this for extra money on top. There can be a whole lot of reasons. Sometimes they're using a friend's vehicle and it's not always available. There's a host of different circumstances here, but neither the platforms nor the workers want to be shown to be turned into employees.

So what we're wanting to do is to turn that cliff I referred to into a ramp, so that down that ramp we have a class of people who work in the gig economy who are employee‑like, where they would not get all the rights that you would get as an employee, but the concept that they currently have no rights can't go on.

The concept that somebody delivering pizzas on the back of a bicycle is a small business person independent contractor I just don't buy. I know what a small business is. I grew up in a small business family, and I've run my own business. That's not a small business. That's the exact sort of person who historically in Australia had always had the protection of minimum standards.

In the election debates that happened there was one debate – and I think it was the one in Perth – where each of the prime ministerial candidates, Scott Morrison, Anthony Albanese, was able to ask the other person a question. The question that Anthony asked Scott was, "Should every worker in Australia be paid at least a minimum wage?" The then Prime Minister of Australia couldn't answer it and started talking about small businesses.

I'll tell you in my time in this portfolio there is one thing I am absolutely determined to make sure of. I never want this to be a country where you have to rely on tips to survive. I don't want that for us. If we have a low‑skilled, low‑entry section of the workforce for which there is nothing but a cliff and no minimum standards at all, then that's exactly where we land. That loophole needs to be closed.

There's a further loophole in the entirety of the road transport industry that hits safety on the roads as well. But the challenge in the road transport industry which was tried ‑ there was an attempt to address it some years ago and the attempt failed, because what that attempt did ultimately was to have a system that deliberately preferred the employment relationship over independent contractors.

We need to have a system where there are some minimum standards in road transport, and contract terms, for example, could be an example of that. But those minimum standards need to be set by an independent body, and it needs to be done in a way that we have a guarantee that it cannot prefer an employment model over a contractor model, that it accepts that the different models are out there and works out what are the minimum standards to be put in place.

It's a loophole that will be closed with what we'll do with road transport in the Fair Work Commission.

Number five. This is the one that's been the target of most of the ads. It's been targeted as same job, same pay. A quick story on political messaging. So we were talking to people, doing all the different things that political parties do, working out how do you explain this policy, and discovered very quickly that same job, same pay took people down a pathway where they were thinking about something quite different. So we stopped using the term and started referring to the labour hire loophole.

The labour hire loophole is this: if you have an enterprise agreement in place at a workplace and that enterprise agreement has a really good rate of pay for various classifications, then that should be the rate of pay for working there. But the labour hire loophole says you can go to a labour hire firm because they're not party to the enterprise agreement, and they can then bring workers in right back down at the award level, regardless of what you just agreed and registered with the Fair Work Commission. So all the negotiations you just went through will apply to the current workforce, but they're not guaranteed for a single new worker on site, because a labour hire firm can undercut everything. That's a loophole we need to close.

In closing that loophole, we were confronted with the ads that said it was all about same job same pay, and the laws that the Government was bringing in – and some of you will have seen these ads, some of you will have had text messages about this one as well on your phones, telling you that there was a plan from the Government that someone who's been working for six months is going to have to be paid the same as someone who's been there for six years. That someone who doesn't work hard at all is going to have to be guaranteed the exact rate of pay as you, working really hard. I've seen the ads, it's a terrible idea, it's a dreadful policy. I don't know which Government they're talking about that is proposing it, but whoever it is, I'm against them and I'm in favour of this campaign succeeding. But they haven't run a campaign yet about the issue itself.

Should it be fair, should it be legal, should it be allowed that you agree and register, this is the minimum rate of pay for a classification, and then the next day go through a technically different employer, have them there at the same workplace, same uniform, embedded with the same staff at a lower rate of pay, because the enterprise agreement technically doesn't apply to the labour hire firm? That’s the fifth loophole, and we'll be closing that this year.

The final one, and one that I really wanted to talk about with this audience and I haven't spoken about publicly before. It's a very small number of people who will be affected by it, but it's really important, and it's one that I thought the right place to announce it was at a university. At a university that has such a strong record on trying to improve the rights of women in the workplace.

The first piece of legislation that I introduced as Workplace Relations Minister was for ten days of paid family domestic violence leave. Even though I introduced it, it didn't start with me. It had been adopted as policy by my party and my caucus for many years, and before my party and my caucus had adopted it, it had been adopted by the trade union movement.

Before it had been adopted by the trade union movement, at the Clearing House at UNSW, the Domestic and Family Violence Clearing House in 2009, the academics there, having spoken to frontline workers, thought about the possibility of this form of leave and went to Unions New South Wales about starting to organise around it.

The work of the university and the academics at the University of Sydney and other places got behind it. Then one local council with a mayor who's now our member for Corangamite, Libby Coker, adopted it as the first workplace in the world to have family domestic violence leave, and a whole lot of big businesses, and small and medium, but big businesses in particular, started to adopt it and prove that this could work.

When we came to adopt the law, the principles were really simple, and this was the principle: no one should have to choose between her safety and her pay. No one should have to choose between her safety and her pay. The concept then was you make leave available. But do you make leave available in the normal way, where it's only there for permanent workers at their normal rate of pay? Because we know you're more likely, disproportionately, to be in insecure work if you're a target and a survivor of family domestic violence.

To exclude casuals and say, "Well they get a loading", would have forced casuals to choose between their safety and their pay. So, we applied it to casuals as well.

To not include loadings that would have applied to the shift, as you normally don't apply them in leave entitlements, would have forced shift workers to choose between their safety and their pay. Think about the hours of the day where those loadings are most likely to apply and the hours of the day where family and domestic violence is often at its most chronic, and we needed to treat this leave differently to any other.

But one loophole remains that still needs to be closed. One that we missed last year that's been pointed out to us since, and it will be dealt with as the final loophole to be closed in the legislation that I introduce in a few weeks.

We have a series of general protections in the Act, but we don't have family and domestic violence – being a target of it or survivor of it – as a listed protected category in the general protections in the Fair Work Act.

The challenge of this, does that stop you from taking leave? No, and you can't be punished for taking a leave entitlement. But take this scenario, which shouldn't be possible, and we missed it, but it will be fixed in this Bill. A worker's experiencing family and domestic violence, a part‑timer. The worker confides in the employer, or in whoever's in charge doing the rostering. You're getting up to the busy Christmas period and the person doing the rostering thinks, "There's a real chance that worker's going to be unreliable" and so cuts their shifts in half. Cuts their shifts in half. The reason is because they know that the person's experiencing family and domestic violence. At the moment, legal. You couldn't sack the person, that would be an unfair dismissal. You couldn't deny them leave because we’ve put a leave entitlement in place. But there's not coverage yet in the general protections in the Act. That loophole will be closed this year. And that loophole, I should again pay tribute, that entire area of public policy is possible because of the work that our universities do.

Bob Hawke, when he gave that speech 30 years ago – this speech 30 years ago – in that moment where enterprise bargaining was just being started, he referenced an ANU academic by the name of Steve Dowrick. Steve Dowrick's work had referred to the two forms of setting wages. Do you have a decentralised system of bargaining, or do you have a centralised system? And argued in terms of productivity that it was in fact a U shape as to the productivity outcome. That if you went fully centralised, you know, go full North Korea, you can get a system going where you've got good productivity, or if you go fully to decentralised, you can get good productivity, but if you're anything in the middle productivity starts to fall away.

We've proven that wrong in Australia. And what the new Government, what the Albanese Labor Government is trying to do now is to work out what are all the pieces in between, not just the simply ‑ we all understand the centralised model, you've got your model of bargaining, but who misses out in between? Women were missing out in feminised workplaces. Last year's legislation was to open the bargaining up for them. The entire gig economy is currently missing out through being minimum standards free. We're dealing with that this year.

Each of the people affected by the loopholes we will deal with this year. To make sure that instead of saying, "If you're a mixture between the two productivity falls away". Start with the principle that a secure, happy, dedicated workforce is always going to be a more productive one. Always going to be more productive. And to look at the different circumstances in each of those workforces and workplaces and target rules and standards that will work.

The end result of all of this will come out of the data, but the data so far is encouraging.

Enterprise bargaining is back. Multi‑employer bargaining is about to start. The gender pay gap is at a record low. Wages are going up as inflation is coming down and the lines have now met. And industrial action, let's not forget all the predictions last year of widespread coast‑to‑coast strikes if we put that legislation through. The last quarter of the previous Government, the last quarter, 128,000 days lost to industrial action. The last quarter just finished, it was not 128,000 days – it was 7,700.

When you give people laws to work with, they'll work with them. If you push people into their corners, they'll behave like they're in their corners. People are rational.

But the silent statistic that we'll never get the data on, not in the real sense that we could categorise, will be all individuals – not exclusively but overwhelmingly women – whose lives have changed because they didn't have to choose between their safety and their pay.

If we can deliver that at the same time as delivering more secure jobs, better pay and safer workplaces, then as a government we'll be doing our job. It's a pleasure to be with you tonight.

ENDS