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  John Howard's industrial revolution November 20, 2005 Reporter :Sarah Ferguson, Researcher: Jo Townsend Producer : Nick Rushworth  This Christmas, Australian business will get its biggest present ever. And, courtesy of control of both Houses of Parliament, Prime Minister John Howard will finally achieve a career-long dream — a stripped-down system of industrial deregulation that prefers individual contracts between employers and employees, sidelines unions, scraps the "no disadvantage" test, removes recourse to unfair dismissal for employees of small business and reduces the minimum conditions of employment to a set of five. Sunday went behind the scenes with the Minister and his advisers on the day the legislation was introduced. Sunday tracks the history of the legislation and its chief architects from the big mining companies and big law firms. The ideological underpinning for WorkChoices was forged in the bitter disputes of the 1980s and 1990s — at mines like Weipa, Pilbara, Bell Bay, and Blair Athol. Many of the key players took their de-unionising strategies into other sectors of the economy, like the banks and Telstra. John Howard admits his reforms are politically risky but says over time people will realise Labor's campaign is only scaremongering. While through the stories of employees, Sunday's Sarah Ferguson shows what life is like for the more vulnerable in the workplace ...TRANSCRIPT SARAH FERGUSON: It's 6:00am and, like millions of others, Steve is on his way to work. Kevin is on his way to work too. But as a government minister, he gets a chauffeur. Kevin works at the big house on the hill. Steve works at the sewerage plant. STEVE ARCHER, SEWERAGE WORKER: I think the first day I came here I came in the front gate and was overwhelmed by the smell of the place. KEVIN ANDREWS, WORKPLACE RELATIONS MINISTER: Ladies and gentlemen, this is a historic day. SARAH FERGUSON: It's a big day for Kevin, so he's brought his wife, Margie, along. Today he'll introduce the industrial relations bill that will revolutionise Australia's work force. What's in these tanks? STEVE ARCHER: OK. Sludge. Ah, waste products. You name it, we've got it. SARAH FERGUSON: Steve Archer's work contract is an example of what many fear awaits them after the IR revolution. STEVE ARCHER: Well, we're on about $16.50 an hour on this job. There's no conditions. We work for a private contractor and he virtually dictates to us, whatever, you know. SARAH FERGUSON: 'Whatever' means no overtime, no annual leave loading, no paid lunch break and none of the other benefits, like the daily hygiene allowance, that the unionised workers get. We'll leave Steve sifting sewerage and return to him later. From the Government's point of view, one of the best things about Kevin Andrews is that he doesn't look like a revolutionary. JOHN HOWARD, PRIME MINISTER: I've really been impressed with his mastery of the detail. He's a very calm, meticulous person. SARAH FERGUSON: But if he doesn't look like a revolutionary, he does sometimes sound like one. KEVIN ANDREWS: I think it is the beginning of the power being returned to the hands of ordinary workers in Australia, rather than people saying "We're just going to go along with whatever the union bosses tell us to do." SARAH FERGUSON: With mastery over both houses, the Government is now betting its shirt on this mild-mannered minister and his 700 pages of legislation. Labor thinks it's the biggest mistake the PM's ever made. BOB HAWKE, FORMER LABOR PRIME MINISTER: What is being involved here is the destruction of the very essence of the Australian character. JOHN HOWARD: It's at least as important, and in some respects even more important, than tax reform. SARAH FERGUSON: Politically it's more risky, isn't it? JOHN HOWARD: A tougher political challenge because it's easier to misrepresent the industrial relations changes, although over time, of course, as people experience them they'll find that all the hullabaloo has been just that and the world won't come to an end and babies won't be eaten and people won't die on picket lines. SARAH FERGUSON: Watched closely by his staff, the bill goes into Parliament for the first time. KEVIN ANDREWS: It's Beazley. ADVISER: I think you should actually run that terrorism line against him. My word. That's a bloody... It is an outrageous line. SARAH FERGUSON: The next contest is Question Time. KEVIN ANDREWS: He will be all overblown and puffed up rhetoric. ADVISER: You should actually run a little sweep on how many times he uses the word 'extreme'. KIM BEAZLEY, OPPOSITION LEADER: I refer to the introduction of the Government's extreme industrial legislation into the Parliament today. ..extreme industrial relations legislation... ..extreme and complex law... JOHN HOWARD: These measures are not extreme. These measures are big measures, but they're fair measures. SARAH FERGUSON: The Government's strategy is reassurance. Its slogan could be, "Just trust us." But the labour movement is on its last crusade. KIM BEAZLEY: We need that TV debate, sport. You haven't bothered to answer any of our questions! BOB HAWKE: It is an all-out assault on trade unions. and I reject it for that reason. There is not one of your viewers in employment, not one, whose wages and standards of conditions haven't been basically set by the work of trade unions over the years, the dues paid by trade union members to finance cases before the commission, to finance collective bargaining, to finance campaigns for reform of legislation. SARAH FERGUSON: Steve Archer's wages and conditions were set not by the union but by a private contractor supplying workers to Sydney Water. Here there are two classes of workers - those on the union award and contract workers like Steve. As the union men leave, they are replaced by contract men. And the reason is simple - those on the union award get better conditions and better pay. STEVE ARCHER: I've spoken with Sydney Water people that do do this job and there's something in the order of around about $170 a week difference, for the same job. SARAH FERGUSON: How do you feel about the fact that you're paid so much less to do the same difficult work? STEVE ARCHER: I think it's pretty self-explanatory, isn't it? Yeah, why can't we be paid the same? This is the question. SARAH FERGUSON: Critics call it "the race to the bottom". So will the workplace end up with millions of Steves? JOHN HOWARD: I'm not going to even try and answer the Steve example because I don't know all the details. SARAH FERGUSON: What is to stop, though, people in those industries that are governed only by price, where people bid against one another to provide services at the cheapest cost, what is to stop them bringing the wages down and down and down? JOHN HOWARD: They can't go down and down. I mean, that is the language of an industrial relations system that has no statutory minima. That is not our system. It's a quite inaccurate depiction of our system. SARAH FERGUSON: They can go down, can they not? JOHN HOWARD: It is an inaccurate depiction of our system to say it's about going down and down. We have a minimum. You can't go below that. SARAH FERGUSON: But you accept that people can be driven down below the point at which they're at now? JOHN HOWARD: Well, the question of whether somebody can be driven down from the point at which they are at now, that is an observation that can be made of any industrial relations system. The worst situation to be in, of course, is to lose your job. GREG COMBET, ACTU SECRETARY: What, they've sacked him for that? All of them? And when did this happen? When did they get the sack? SARAH FERGUSON: For all the noise in Parliament, the real opposition to the Government's changes is here, in the low-key persona of ACTU Secretary Greg Combet. GREG COMBET: What the Government is aiming to do is to have only five minimum conditions of employment underpin the labour market in Australia. And over and above that, the Government wants people to negotiate - ha, ha - an individual employment contract with their employer. And that, as Peter Costello described it, is the predominant form of employment relationship the Government wants to achieve. SARAH FERGUSON: Today he's in Wollongong meeting a group of young apprentices who had been given jobs in a local restaurant. They were given individual contracts, called AWAs, or Australian Workplace Agreements. BRENDAN: We were working full-time on a contract, they call it an AWA, but we're guaranteed a minimum of three hours a week, which is... Yeah, I mean, there's just no point. Like, Amanda was saying before, we're on one flat rate, which includes our sick pay, our holiday pay, our Saturday, Sunday penalty rates. So if I take a day off sick, I don't get any money. GREG COMBET: What's your hourly rate? BRENDAN: My hourly rate is just over $17, which is only, not much above the award rate. GREG COMBET: And it cashes out all your entitlements? BRENDAN: That cashes out everything. GREG COMBET: That's extremely upsetting to hear all those things. I'm really sorry that's happened to you. SARAH FERGUSON: Did you say, back in '79, that you thought leave loadings and penalty rates were 'ridiculous'? JOHN HOWARD: I would have said a lot of things in my political career. What I am being judged on now, quite fairly, is what this policy does. I don't believe, speaking as I am, I don't believe they are ridiculous. I believe they should be paid if they are in the award. If somebody is not covered by the award, then they should be a matter to be negotiated. SARAH FERGUSON: So has your thinking evolved to the point where you now accept that your view on those things was too extreme in the past? JOHN HOWARD: I'm not going to answer questions about something I said 20 years ago. I'm happy to answer questions about what I'm putting to the Australian people now. SARAH FERGUSON: These apprentices say they never got the chance to negotiate. NAOMI: And it was signed, what I would consider under duress, because it was at the end of a Saturday night busy shift. We had no choice but to sign it because we were told if we didn't sign it they would find someone else to replace us. BRENDAN: Basically it is a term of getting the job - "If you want this job, sign this paper." It's a term of employment. If you don't sign this, you don't get the job, basically. So if you need the job... GREG COMBET: The Government says that you must have been happy, though, to sign that. So why are you unhappy about it? BRENDAN: Not happy with the conditions, but happy that I got a job. BOB HAWKE: What opportunity has a young kid, boy or girl, going for employment, being presented with a fait accompli contract? What opportunity have they got? And what can happen now is that all these things that have become part of the Australian way of life - the concept of public holidays, paid public holidays, the concept that if you work over normal hours you will get penalties for overtime - all those rights are going to be taken away. JOHN HOWARD: The problem for Australia now is not that we've got too many workers, but that we have too few. And the market conditions are going to remain, in my opinion, very strongly in favour of employees, very strongly. BOB HAWKE: And you believe in fairies at the bottom of the garden too? ACTOR: Here are key facts about the new industrial relations laws that have been left out of Government advertising. SARAH FERGUSON: In a radio studio in Melbourne, the ad agency and the union fine tune their response to the Government's $50 million blitz. AD AGENCY MAN: Maybe just be a little firmer with it, John, the whole message. SARAH FERGUSON: The union's campaign appears to have been effective. One measure of that - the sudden drop in the PM's approval rating, which recently hit a 4-year low. ACTOR: There will be no legal requirement for individual contracts to include penalty rates, public holiday pay, redundancy pay, control of the roster, overtime pay, meal breaks, or a host of other Australian workplace rights. SARAH FERGUSON: Sachie Murata fell foul of an individual contract, an AWA. There are workers with skills to sell who do very well out of individual contracts, and university-educated Sachie might have been one of them. Instead, she's on her way to court, where she's brought a case against her former employer. SACHIE MURATA: He didn't offer... That was, now I know it's AWA. I didn't know what it was. He gave me paper to sign. First I said, "I have to read it." And he said, "No, you don't." SARAH FERGUSON: Sachie worked as a waitress and manager in a cafe franchise for $15 an hour, flat rate. All the staff, like her, were from non-English speaking backgrounds. While he stood over you? SACHIE MURATA: Yes. SARAH FERGUSON: You were supposed to sign? SACHIE MURATA: Yeah. SARAH FERGUSON: Did you sign? SACHIE MURATA: Yes. SARAH FERGUSON: Why did you sign it then? SACHIE MURATA: I didn't want to lose the job. I didn't want to leave the country. If I lose the job, I can't stay here, even though I did everything right. SARAH FERGUSON: Sachie's employer denies he intimidated her. Under the new legislation, his actions would be illegal. But workers like Sachie will have to take employers to court individually. JOHN HOWARD: No person will be forced to negotiate on his or her own. You will always be able to employ somebody if you want to negotiate on your behalf, and no employer can deny you that right. SARAH FERGUSON: But are you concerned about those people who will be placed in a more vulnerable position precisely because of the legislation? JOHN HOWARD: Well, I don't accept that lots of people will be placed in a vulnerable position. SARAH FERGUSON: Now that she's married, Sachie has left her job managing the cafe after nearly three years hard labour. SACHIE MURATA: I usually do 9, 10, or 12-hour shift. SARAH FERGUSON: And how many days a week? SACHIE MURATA: Seven. SARAH FERGUSON: Seven days a week? SACHIE MURATA: Seven days a week. SARAH FERGUSON: Was there a discussion with the manager, or in the contract, about holidays, what holidays you would get? SACHIE MURATA: No. SARAH FERGUSON: She wasn't even paid for travelling on work business between his two cafes. SACHIE MURATA: He said I was listening to the radio in the car, relaxing, so he doesn't have to pay. JOHN HOWARD: So far from crushing the living standards, they will continue to enhance the living standards of Australian workers. SARAH FERGUSON: According to the Government, this kind of abuse will be policed by newly recruited workplace inspectors. KEVIN ANDREWS: We're going to boost it from currently about 90 to well over 200. SARAH FERGUSON: And how many workplaces are there in Australia? KEVIN ANDREWS: I don't know the exact number, but there are thousands and tens of thousands of workplaces. SARAH FERGUSON: So with all the best will in the world, your inspectors are not going to be able to police every work force? KEVIN ANDREWS: Look, can I say, I don't start with the proposition that all bosses are bastards. SARAH FERGUSON: How do you feel now about the way he treated you? SACHIE MURATA: Very upset. So many things he did wrong to me. Seems like... ..especially this AWA, seems like I'm all alone. SARAH FERGUSON: As Kevin Andrews prepares for Question Time on legislation day, his advisers focus heavily on union abuses. ADVISER TO KEVIN ANDREWS: There were organised crime elements and crooks infiltrating his union. KEVIN ANDREWS: Oh, right. ADVISER: That was at the time we were setting up the royal commission. SARAH FERGUSON: There's no shortage of expertise. ADVISER: The advice would appear to be, "This isn't about our members, it's about the union." KEVIN ANDREWS: That they can operate as a union in our system anyway? ADVISER: That's correct. SARAH FERGUSON: Daniel King came from Freehills, the IR law firm that specialises in anti-union strategies. Ian Hanke, the media manager, cut his teeth working alongside Peter Reith on the waterfront dispute. Is it about breaking that nexus between unions and the Labor Party? KEVIN ANDREWS: I think the nexus between the unions and the Labor Party is bad for the unions and bad for the Labor Party. This is a union, Mr Speaker, that is doing the bidding for the Leader of the Opposition. SARAH FERGUSON: The practical lessons on how to break union power were learnt in the mining industry. It's a legacy John Howard is happy to acknowledge. JOHN HOWARD: The truth is that the reforms we have been able to make, for example, with the mining industry, have boosted productivity in the mining industry, through the use of individual contracts, to an amazing extent. SARAH FERGUSON: Rio Tinto's managing director, Charlie Lenegan, was literally at the coal face. CHARLIE LENEGAN, MANAGING DIRECTOR, RIO TINTO AUSTRALIA: If we go to the late '80s and very early '90s, mineral prices were under pressure. In fact, within the Australian environment we really had operations that institutionalised a whole series of really unacceptable work practices. SARAH FERGUSON: Industrial disputes were common. CHARLIE LENEGAN: The unions, through the early '90s, were very, very resistant to change. GREG COMBET: We had very strong workplace delegates. There were issues there that really - things that were done, that, in hindsight, we would have been a bit smarter to deal with them a bit differently. But, you know, the sledgehammer that the mining companies took to those issues was really unwarranted. SARAH FERGUSON: Rio Tinto's strategy was to use individual contracts to break the power of the unions. Working jointly with industrial lawyers from Freehills, they blazed a trail through the workforce, boosting productivity, they say, by as much as 200%. BRUCE HEARN-MACKINNON, HUMAN RESOURCES MANAGEMENT, DEAKIN UNIVERSITY: So then it happened at Hamersley Iron in WA, in Weipa, Bell Bay, Gladstone, basically across most of the operations. They proceeded on that basis, knocking over dominoes, if you like, until they got to the coal sector. There they faced much stiffer opposition from the CFMEU. SARAH FERGUSON: At the Blair Athol coal mine, Rio subsidiary Pacific Coal wanted to shed 80 employees. They put together a list of workers they wanted to get rid of - all members of the CFMEU. CHARLIE LENEGAN: I think a number of those individuals actually opted not to participate into that, not to buy into, I guess the changes, that we were seeking. They happened to be union members. SARAH FERGUSON: Mine management drew up this document, the union members are marked “black list still to go” ... the names of the workers clearly spelt out. It was clear that a black list was drawn up of union members who were targeted for dismissal. That's right, isn't it? RUSSELL ALLEN, HEAD, EMPLOYEE RELATIONS, FREEHILLS: No, it's incorrect. As I said, I don't want to talk about specific cases, but that isn't correct. SARAH FERGUSON: Freehills senior partner Russell Allen was Rio's chief advocate in the Blair Athol case. When the Government presented its IR reforms this year, he was in the audience. His firm helped the Government draft the legislation. RUSSELL ALLEN: Let me make it clear, that black list was not - you have a piece of paper there which is black on white. It's as simple as that. It was not a document that it's made out to be. Again, I don't want to go into the specifics. SARAH FERGUSON: In August this year, nine of the Blair Athol workers were reinstated under orders from the Industrial Relations Commission. It declared their dismissal was: "capricious, spiteful and prejudiced". Rio Tinto and Freehills fought the reinstatement. Rio's medical adviser, Dr Peter Fenner, testified that someone at Freehills other than Russell Allen told him to change the way he wrote medical certificates the union claims to prevent the blacklisted men returning to work. RUSSELL ALLEN: The allegation is not correct. But the specifics of that I don't think are helpful to the real issue here. The real issue we're talking about is how business can best get a more productive workplace. SARAH FERGUSON: The PM draws different lessons from the case. For him, it's about workers manipulating unfair dismissal laws. JOHN HOWARD: There was a well-known case involving 16 employees of the Blair Athol coalmine. SARAH FERGUSON: You cited the Blair Athol case in Parliament the other day. Were there lessons from that case that were influential in the drafting of the legislation? JOHN HOWARD: No, I just mentioned it in passing. SARAH FERGUSON: I don't believe you mention anything just in passing. You must have had a good reason for mentioning it. JOHN HOWARD: I know why I mention things. You can assert a contrary view, but you're asking me the context in which I used it, I'm giving you the answer. SARAH FERGUSON: What was that context? JOHN HOWARD: In a debate. SARAH FERGUSON: You didn't just pluck it out of the air. JOHN HOWARD: I knew about it. SARAH FERGUSON: So what is it about it you think is interesting? JOHN HOWARD: It illustrated something. SARAH FERGUSON: What was that? JOHN HOWARD: It illustrated how, in certain circumstances, people can double dip, if they are paid a redundancy and then claim in some way that their redundancy has amounted to an unfair dismissal. SARAH FERGUSON: The strategy of using individual contracts to wrest control from the unions spread from the mining industry. GREG COMBET: This is like a running battle we've had going for years. I see the same sort of lawyers and partners, from Freehills, in particular, the same kind of individuals that have come out of companies like CRA, now Rio Tinto, have found their ways into organisations like the Commonwealth Bank, or Telstra and other large firms. And sooner or later you start to see the same philosophies. BRUCE HEARN-MACKINNON: First of all, you had people like John Ralph, who was the CEO, went on to become onto the board of the Commonwealth Bank. You had Les Cupper, who was head of human resources at Comalco, as part of the Rio Tinto group, heading up HR at the Commonwealth Bank as well. You had Mike Angwin, who was head of employment relations at Rio Tinto, co-opted onto the task force by the Howard Government in drafting the original Workplace Relations Act, back in 1996. Rio Tinto had its hands all over the current legislation that we have. SARAH FERGUSON: The Commonwealth was the most unionised of the big banks. The Rio Tinto men used individual contracts to take on the union there. JOE CATANIA, FINANCIAL ADVISER: Basically it was just a way in order so that they could hire, fire and control the staff levels and just avoid the legality of unfair dismissals, cases as such. SARAH FERGUSON: Joe Catania was a manager with the Commonwealth Bank's premium banking division. In 2002, the division was moved into a subsidiary of the bank called ComSec. Staff had to resign from the Commonwealth and sign an individual contract. Joe and hundreds of other employees refused. JOE CATANIA: My career was basically stagnant. I could remain on the current employment conditions, but I could not be promoted within ComSec unless I signed the ComSec contract. SARAH FERGUSON: In September this year, the Federal Court described the bank's strategy in this way - "CBA's scheme, which is essentially an industrial regulation avoidance scheme... possesses an ingenuity reminiscent of the tax avoidance schemes of the 1970s." SARAH FERGUSON: Modestly taking plaudits in the back room from his industrial relations task force, Kevin Andrews is about to deliver Australian business its biggest Christmas present ever. KEVIN ANDREWS: Our aim is that we have this through by the time that the Parliament gets up for Christmas. SARAH FERGUSON: Under his new legislation, crafted by some of the cleverest veterans of past anti-union battles, there'll be no more need for avoidance schemes. ADVISER: Basically, what I'm sensing in Queensland, is that small business support is still very, very solid. Employers have been waiting for these changes since 1975. I think it will be great for Australia and Australians. SARAH FERGUSON: As far as business is concerned, the Government has covered all points of the compass. They've got the political will and now the power to rush the laws through. Only one question remains - will the people accept it? |
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