US embassy cable - 05CANBERRA944

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 
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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