The New Australian Socialist Experiment
The labour market revolution
In this article I look at the new Australian socialist experiment by examining changes to labour market laws now well underway.
This article considers how the recent and planned labour market changes are designed to advance the socialist agenda of neutering management autonomy. This article also looks at proposals to suppress or eliminate competition from independent workers and non-traditional work arrangements which challenge the traditional employee models of worker engagement. Essentially, the package of new labour laws now in place (as well as new ones that have been promised) are designed to neutralise competition across the Australian labour market and place all control in a central labour court.
As mentioned in the other articles in this series, I’m not seeking to debate the rights or wrongs of where the socialists are taking Australia but rather to understand their thinking.
Labour market changes 2022
Towards the end of 2022, the Australian corporate sector, their lobbyist associations, and businesses in general received a blunt wake-up call about the new socialism. The existing labour laws created by Labor in 2009 were dumped. In their place is a new regime that delivers to the socialists’ agenda. It’s big.
But first some background to give context and understanding.
When Keating/Kelty introduced the superannuation system in 1991, the two sought to accompany this with a free-market-style reform of Australian labour laws. Around 40 percent of workers at that time were union members. But the union movement soundly rejected the idea and it was dumped. It was not until the Rudd/Gillard period that a version of the Keating/Kelty vision on labour law was implemented.
The essence of the 2009 Fair Work Act was a system of voluntary bargaining at the enterprise level which overlaid a simplified award system that secured minimum pay rates and conditions. It delivered on the Keating/Kelty vision that higher wages would result from greater productivity in a worker–bosses negotiation system that focused on the needs of individual enterprises. That is, that competition between enterprises in a free-market-style labour environment would result in greater productivity generating higher worker incomes. That’s all fine, but something went terribly wrong for one key, powerful constituency—the union movement.
Unions are the traditional ‘bread and butter’ homes for socialists. It’s where they are most likely to be able to secure an income that enables them to engage in socialist organisational activity. But since the Keating/Kelty era union density had halved to 20 percent of the 2009 figure at the time of the introduction of the Fair Work Act. Since then, it’s dropped further to 12 percent (2022). Worse still for the union movement, private-sector membership is down round the 7–8 percent range.
At the same time as union membership has collapsed, the numbers and reach of enterprise agreements have fallen off a cliff.
23,500 such agreements existed in 2013 but only 10,000 in 2021. The number of workers covered by agreements has close to halved—from around almost 30 percent to just under 15 percent of the workforce. According to a 2022 analysis by one Professor of Workplace Law, the main cause for the collapse is that “…enterprise bargaining was designed for an economy that no longer exists.”
Whatever the reasons, socialist (and non-socialist) union organisers and dependents cannot allow their institution to die over time. The result has been a wholesale dumping of the Keating/Kelty style vision of enterprise agreements in late 2022. It’s been replaced with a labour law regime which, in socialists’ eyes, will secure their future.
The 2009 enterprise system was built around voluntary agreements. Individual businesses would negotiate with their workers (with or without input from unions). Nothing compelled workers or managers to undertake negotiations. What happened over time was that businesses began to realise that, once in negotiations, the system was legally complex and time-consuming. Further, nothing in the system prevented businesses from paying workers more without needing an agreement. In effect, by ignoring the negotiation system and paying more than the legal minima, pay rates could be set on an individual basis across enterprises. By default, the system allowed a breakout of free-market-style wages setting. This explains why the numbers of enterprise agreements collapsed. Socialists could not allow this to continue. The dictatorship of the proletariat (controlled by unions) did not prevail. Market forces did prevail, although this was never really admitted.
This system was dumped in late 2022.
The replacement system, the Secure Jobs, Better Pay Act is built around compulsion. It eliminates competition (about wages and worker conditions) between individual enterprises, between industry sectors, and hence across much of the economy. This new labour regime is a big piece of the new Australian socialist experiment.
The new law removes control of workers’ wages and conditions from individual enterprises and puts this in the hands of the labour court, the Fair Work Commission. The Act is a complex legal document of 250 pages. It’s a lawyers’ procedural picnic. This suits unions perfectly. Since union membership is so low, particularly in the private sector, unions have enormous logistical difficulty in organising workers ‘on the ground’. For today’s unions, their strongest strategic jurisdiction is the labour court where legal process favours them.
The Act enables unions to ask the labour court to decide who is covered or is to be covered by an agreement or agreements. Effectively, workers are dealt out of the process. Business managers, likewise, are mere pawns in a legal game of chess. Once the labour court determines an agreement for one enterprise, this agreement can be applied to multiple other enterprises. This strips the business environment of competition between enterprises on labour matters.
It’s not just an accountant’s cost analysis where competition is removed that’s important here. More importantly, it’s about how businesses are managed. Enterprise agreements are heavy with procedural detail on what managers can or cannot do in running a business. The capacity of managers to manage and respond to market forces is what drives productivity and responsiveness to fast-moving economic change. This is the Keating/Kelty model. It envisages managers engaging with workers to enable that change. The new Act dumps all that.
The new system is heavily influenced by union success in the commercial construction sector in Australia. By commercial construction think of CBD high rise and so on. All such commercial developments are easily controlled by exercising control over cranes. Through strategically ‘pinching’ such points of control, Australia’s construction unions control the sector, even if union density in the sector is not high. The key for unions is that they insist on enterprise agreements that they want and apply these to all commercial construction firms. If a construction firm does not agree to union agreements, the construction firm simply can’t get anything built. The cranes cease to operate! These ‘non-union friendly’ firms go out of business. What this process does is remove or heavily limit competition in the commercial construction sector. This system was constrained while government had an industry watchdog that curtailed such union behaviour. But that watchdog has been closed down with the introduction of the new labour Act.
For the union movement now, the new labour Act enables the squeezing of businesses at a key ‘pinch’ point on a national scale. That is, the legal process of compulsory imposition of agreements is like the ‘pinch point’ of cranes on a high-rise building site. It cannot be ignored or avoided. It’s a new legal and commercial reality. The Keating/Kelty model is consigned to history.
The new replacement labour model is entirely socialist. In an environment where the proletariat are not joining unions and thus enabling the dictatorship of the proletariat, the members of the proletariat (workers) are being side-stepped. The ‘dictatorship’ has been remodelled, rethought and reconceived and is being imposed by legislative impost. It’s a new form of socialism, one that should not be considered akin to that envisaged by Karl Marx, because Marx’s underpinning idea was that the proletariat would arise together in union. That is not the reality of today. What has been introduced is socialism with Australian characteristics.
More Labour changes planned for 2023 and beyond
There’s a clear labour law changes agenda both stated and implied. Expect action on each of the following.
Compulsory unionism – actual or default
Given the 2022 labour laws, where labour unions are cemented at the core of the structures and institutions that control wages and conditions, it’s not surprising that unions are calling for compulsory union levies on workers. Unions maybe don’t care if workers join them or not, but they will be happy to garnishee workers’ money if they can. In fact, having large numbers of workers as members could be a bit of an annoyance. Unions only need enough members to justify their right to appear before the labour courts. It’s control they need, and money, not necessarily large membership. Expect legislation on this agenda item.
Same job, same pay
The Albanese government has a firm labour policy of ‘same job, same pay.’ It was an election promise that it intends to implement. A Bill was introduced in 2022 and is to proceed in 2023 as the next phase of the government’s labour law agenda. The law is intended to neutralise pay differences across industry sectors, and hence the economy, where jobs are determined to be ‘the same’. Conceptually, for example, if the job requirements of a cleaner in north Queensland were determined to be the same as those of a cleaner in Sydney central CBD, both cleaners should be paid exactly the same. The process of deciding and defining job requirements will presumably be handled by the labour court.
The Bill has wide-ranging implications across Australia. But what it clearly seeks to do is remove competition on wage outcomes within sectors and job descriptions across the nation.
Suppress the gig economy
Self-employed people are not subject to employment laws and labour courts. They earn their incomes through commercial contracts subject to competition regulation. Over the last two decades between 17 and 19 percent of the workforce have been/are self-employed.
Over the last decade, the rise of the gig economy has facilitated the ability of Australians to engage in income-earning work through commercial arrangements. That is, gig platforms enable individuals to engage in competitive income-earning behaviour. This does not accord with the new socialist experiment. The government intends to constrain this. The process has already been declared.
Information from the Victorian government coupled with statements from the federal government explain what is to occur. The commercial status of self-employed people will likely not be tampered with legislatively. However, overlaid on this will be legislation targeted specifically at gig platforms which will impose on the platforms employee-like regulations to determine/control pay rates, hours of work, and more. Although the detail is unknown, it is possible that the ACCC could be charged with enforcing this, as has been done with the gas sector (see article three). More likely a new gig-specific regulator will be established.
The intention to regulate the gig economy is consistent with the new Australian socialist agenda. What it intends to do is remove or suppress free-market-style competition in a sector of the economy that is a model of free-market behaviour.
Eliminating competition in the trucking sector
The Albanese government announced in January this year that it plans to introduce laws to regulate ‘safe’ pay rates in the trucking sector. This is effectively a reintroduction of Labor’s 2012 Road Safety Remuneration Tribunal.
That Tribunal lay somewhat dormant until 2016 when it implemented ‘safe’ pay regulations. The effect of this was to strip the 35,000 long-haul truckers in Australia of their capacity to compete. The regulations stipulated precise rates that had to be paid, which removed the independent truckies’ flexibility on how, when, where, and at what price they could offer services to customers. The outcome was that independent truckers were going broke at a rapid rate. A string of suicides was reported. In April 2016 the Coalition government repealed the Act.
At its core, the ‘safe rates’ model is about the elimination of the competition posed by independent, self-employed truckies to the major trucking companies who operate under ‘friendly’ deal-making arrangements with the transport unions.
Articles in this series