Lazarus Rising

by John Howard

  The Government received support from the IMF and, in a general fashion, from the governor of the Reserve Bank, Ian Macfarlane, who said that industrial relations reforms to date had allowed the economy to run faster without generating inflation. The Business Council would, later in the year, launch a television campaign lauding the benefits to the economy of a number of economic reforms and stressing the desirability of still more industrial relations reform.

  Such support as the Government was able to garner was puny against the campaign of fear and misrepresentation launched by our opponents. Yet, despite this, most of our colleagues remained committed in their determination to see the reforms through. Their reasoning was that this was the first year in a three-year term. It was a big and necessary reform. In the past when large reforms had been introduced, such as the GST, the Government had gone through bad times politically, but as the fearmongering abated and the reality of the new laws proved different from what our critics predicted, the Government’s standing improved.

  The other unspoken reality was that if the Government had done very little by way of industrial relations changes it would, by the middle of 2005, have been beset with mounting criticism from economic commentators, the business community and certainly from within its own ranks that it lacked the bottle for further economic reform.

  The reforms were good policy. After eight years in office, with control of the Senate, a thriving economy, falling unemployment and an apparently dispirited opposition, the Coalition would not have been easily forgiven if, in the face of all this, it had baulked at the changes for fear of the political consequences.

  Media responses and those of serious political commentators were overwhelmingly favourable, endorsing the view that the Government would have failed the test of political will if it had not opted for significant reform. The respected commentator and author Paul Kelly said of the changes, ‘This is the final saga in the 1980s project to remake Australia’s economy.’ Kelly said that in opposing the changes, Kim Beazley and the Labor Party were trapped on the wrong side of history. He went on: ‘Howard’s package is a declaration that Australia’s egalitarianism does not depend upon wage regulation but should be achieved via the tax-transfer system … It is the model Australia needs for the globalised age, and a model that Labor, at some stage, must embrace.’4 The Australian editorialised in support of the measures, saying that in opposing them Kim Beazley was ‘plain wrong’.5 The newspaper said that the reforms had not gone far enough. The Daily Telegraph said, ‘The Prime Minister’s package is the basis for a new and productive era in the way the nation works.’6

  From the Fairfax stable the Financial Review was full of praise, the Sydney Morning Herald mildly supportive, and the Age, normally more left-of-centre, raised a series of questions, rather than launching an all-out attack. The most critical paper of note was the Courier-Mail.

  Both the Business Council of Australia (BCA) and the Australian Chamber of Commerce and Industry (ACCI) said the changes had not gone far enough, as did Des Moore, former deputy secretary of the Treasury and economic commentator. He said the package was ‘a dud’. Naturally, the unions attacked the changes, as did Labor spokesmen.

  In summary, independent responses were predominantly supportive, and, where critical, it was on the grounds that not enough change was in prospect. There would have been a caustic response to a less ambitious set of measures. As for falling behind in the polls, that had occurred before and we had recovered, especially when the Government held its nerve on something really important. This was all part of the collective political memory of the Coalition as we worked our way through 2005. Yet for six months, the poll news for the Coalition had been bracing. Most believed that our slump was due to the unpopularity of WorkChoices.

  The membership of the Fair Pay Commission was finalised on 17 March 2006. Chaired by the respected Melbourne economist Professor Ian Harper, it was as balanced a group as could be practically put together. Kevin Andrews made several attempts to obtain the services of well-known union figures, with a number saying privately they would be happy to serve but because of pressure from the broader union movement they simply could not accept the Government’s invitation. One of the members, Hugh Armstrong, had a strong union background. Judith Sloane, a free-market economist, provided what might be termed economic rigour from the right; Patrick McClure, the former chief executive of Mission Australia, would bring welfare compassion and plenty of commonsense. Mike O’Hagan, the owner of a successful furniture removal business, MiniMovers, would bring extensive small-to medium-sized business experience. It was a top-class team.

  The first decision of the commission, on 26 October 2006, gave increases larger than expected and immediately blunted a likely union attack. So far from the minimum wage being cut, as some had feared, it had been lifted to a level that probably would not have been delivered by the Industrial Relations Commission, which had been replaced by the Fair Pay Commission as the arbiter of the wage.

  Most of the bill’s major provisions came into operation on 27 March 2006. The continued delay in the legislation actually taking effect, and thus the opportunity being available for a lot of the fearmongering to be disabused, did not help the Government. Delay with such complicated legislation was unavoidable. The Rudd Government’s new workplace relations system was not fully operational until July 2010, two-and-a-half years after that government took office.

  The most formidable challenge the Government faced in this war of attrition was the united front of the federal opposition, the ACTU, the state Labour Councils and by then eight state and territory Labor governments. State Labor governments were only too ready to run advertising campaigns, commission reports, establish committees of inquiry and generally weigh in heavily against the Government’s changes.

  As well, the states mounted a full High Court challenge against the validity of the legislation, which was heard in May 2006. The Victorian Labor Government, though, resisted pressure to reclaim the industrial relations authority ceded to the Commonwealth by Jeff Kennett.

  With different strategies, state Labor governments legislated, purportedly, to protect state employees from the alleged evils of WorkChoices, in most cases only adding to protections already available. In the political drama at the time, they did, however, keep WorkChoices and its claimed negative effects before the public eye.

  A real headache for the Government was Senate Estimates hearings. In May 2006 the Office of the Employment Advocate told a Senate Estimates hearing that of a sample of 4 per cent of all AWAs filed under WorkChoices, 16 per cent excluded all protected award conditions, and 22 per cent didn’t provide for a pay rise over their term. As was so often the case with such answers, the media coverage did not tell the full story. For example, it did not address the issue of whether or not the protected award conditions (penalty rates, leave loadings, etc), when absent, were compensated for in the overall wage payment. The scale of the changes was such that there was an almost limitless availability of individual stories, appearing negative on the surface at least, to be told about the new laws.

  Generic good news about falling unemployment, rising real wages and a continued boom in the Australian economy had become so commonplace and taken for granted that it could not match the coverage of individual cases involving people who claimed to have been hurt by the new laws.

  Almost all of the attacks came from people who said the legislation had gone too far. Occasionally flak came from the opposite direction. In December 2005, Ray Evans, president of the H.R. Nicholls Society, a group formed in 1986 to campaign for a freer labour market, wrote an article for the Australian, attacking me for not having gone far enough.

  In his column Evans said that so far from my Government turning Mr Justice Higgins ‘on his head’, the learned judge had turned me on my head. Evans said that we should legislate to cut the minimum wage in the name of reducing unemployment and that, as far as possible, we should throw industrial relations to the operation of
the common law. He attacked the award system and the continuing role of the Industrial Relations Commission. His attitude was politically unrealistic, as no government could possibly embrace such a radical agenda.

  Senator Nick Minchin, the Leader of the Government in the Senate, hurt the Government when, in March 2006, he apologised to an H.R. Nicholls Society dinner because the Government’s WorkChoices laws had not gone further. He said, ‘We do need to seek a mandate from the Australian people at the next election for another wave of industrial relations reform.’ He said that these new reforms should target what Minchin called ‘the whole edifice’, including awards and the Industrial Relations Commission.7

  Unbeknown to Minchin his speech had been recorded and was played, shortly afterwards, to the mass audience of the ABC Radio program AM. He had been naïve, had broken very directly with the principle of cabinet solidarity and, worst of all, had played into the hands of the Labor Party. It reinforced a Labor argument that the Coalition had secret plans to reduce protection for Australian workers.

  The sudden rising against Beazley late in November 2006 was to change the Australian political landscape, and I analyse this elsewhere. Beazley’s replacement, Kevin Rudd, maintained the lines of Beazley’s attack on WorkChoices.

  By the end of 2006 it was becoming increasingly apparent that unless the business community retaliated with a well-funded hard-hitting campaign in support of WorkChoices, then the public relations debate would be won by the union movement and the Labor Party. Government-funded publicity campaigns could explain new laws but not make the sharp political points so essential in rebutting the union onslaught.

  Both the BCA and the ACCI did run valuable campaigns. They were hampered, however, by the reluctance of many companies to contribute financially. The challenge for the Coalition government and also supporters of WorkChoices in the general community was that the circumstances required an emotional rebuttal of union distortions, including an all-out assault on excessive union power, and a passionate espousal of policies designed to reduce unemployment. This meant lots of companies providing large amounts of money to fund a heavy advertising campaign.

  Employers were usually reluctant to take this additional step. They argued they had to live with whichever government was in power. The weakness, on this occasion, of that argument was that at long last a government had legislated in a fashion which many of them had advocated for decades. What is more, the profit share was at a record level and there were fewer industrial disputes than at any time since before World War I. Yet when it came to the crunch, most of them were unwilling to chance their arm in support of that government. They wanted it both ways. The hard-hitting 2010 mining industry campaign against the Rudd Government’s Super Profits Tax was just what the doctor would have ordered regarding WorkChoices.

  At least the BCA and elements of the ACCI were prepared to sponsor a campaign. Many other employer groups and individual companies, despite benefiting enormously from the industrial relations reforms of more than a decade from the Coalition, refused to commit any resources and adopted pious neutrality towards a political debate which would define for many decades to come the shape of industrial relations in Australia.

  The 2007 election would be historic for workplace relations in Australia. If the Coalition were returned, our changes would be cemented, never to be overturned by a future Labor Government. The less regulated system would be so entrenched that it would be too disruptive to upend it. By contrast, a Labor win would see these vital reforms rolled back. That has happened. Julia Gillard’s changes have taken us back to the rigidities of the 1980s. For the first time in a generation, a major economic reform has been reversed. It will be a while before the consequences are felt, but in time they surely will be. The impact of that will be dire for our economy.

  These were themes which I hammered repeatedly. There was furious private assent right across the business spectrum, but it was never matched with enough public passion. The one exception seemed to be Western Australia, where I found a deeper realisation of what was at stake than in any other part of the country.

  In many respects the most disappointing of all of the employer groups was, surprisingly, the NFF. Long before other groups came out in support of industrial relations reform, the farmers’ body had been advocating it. Farmers had been huge beneficiaries of waterfront reform and they, more than most, were people who needed a fair and more open industrial relations system. In 2003 the NFF had called for the abolition of the no-disadvantage test. In framing the 2005 legislation, the Government went through a lot of legal hoops to protect the position of the farmers who, not in the main being corporations, were not picked up by the national scheme.

  Back in the 1980s, when Ian McLachlan led the farmers, a large fighting fund had been amassed. I, and many others, thought that this fund was available to support causes for the future wellbeing of farmers. In fact money had been raised at the very time when industrial relations disputes such as Mudginberri were in the public eye.

  On several occasions in 2007, I directly approached David Crombie, the president of the NFF, asking that the fighting fund be used to support an industrial relations structure which had been so helpful to the farmers. Ian McLachlan remained a trustee of the fund, so I lobbied him as well.

  The NFF did run some TV advertisements, consisting of comments to camera by its president. One of them praised workplace flexibility, urging a continuation of workplace reforms. It was bland and lacked any punch or emotion. The NFF had entered the lists but only just. Such an approach had no impact in a rhetorical battle which had reached fever pitch towards the end of 2007.

  The verdict must be that the union movement demonstrated the courage of its convictions. Its members had been prepared to contribute vast amounts of money to fund a most effective campaign. The campaign was often dishonest, excessively emotional and, in the long run, because of its political success will have done damage to the Australian economy. That the business community was unwilling to match this campaign, not with dishonesty, but full-on advocacy of the benefits of our changes, implicates sections of that community in the ultimate responsibility that must be carried for the damage that the reversal of WorkChoices and other industrial relations changes of the Howard Government will finally represent for the Australian economy.

  Despite reassuring legal advice about the ambit of the Corporations Power, I remained apprehensive about the outcome of the challenge of the Australian states to the High Court. David Bennett QC, the extremely able Commonwealth Solicitor General, had told me after completion of the case that he was confident that the validity of the legislation would be upheld — by a margin of 5 to 2 in favour of the legislation. His advice proved stunningly accurate. This was a load off my mind. It was not going to stop the unions or the Labor Party campaigning against the legislation. However, if the High Court had gone in the opposite direction, that would have delivered a mortal blow to the Government’s authority on such a contentious piece of legislation.

  Despite its resources, the Government was fighting a lone political battle, with even the popular culture being conscripted to the union/ALP cause. The Nine Network program McLeod’s Daughters featured a scene where a WorkChoices AWA was offered, reducing pay, resulting in the character quitting his employment.

  So in August I appointed Joe Hockey as minister assisting Kevin Andrews on industrial relations, because I believed he needed assistance in a defining political battle. Andrews had an excellent grasp of the details of the legislation, and had done a first-class job in steering it through parliament, but different styles of media presentation were needed in response to the all-out assault from the other side.

  The anecdotal evidence, particularly from MPs in marginal seats, suggested no great public resentment against WorkChoices. I regularly telephoned our marginal seatholders asking about their experiences with the legislation. To a man and a woman virtually, they said that few people raised particular cases with their offices, and
the general advice I continued to receive was that because the legislation was good policy, and was contributing to an accelerating decline in unemployment, we should stick it out and that eventually public opinion would come around.

  Nonetheless, specific public polling on WorkChoices continued to be bad. For example, on 26 March 2007 an A.C. Nielsen opinion poll said that 59 per cent of voters nationally, including 25 per cent of Coalition voters, opposed the WorkChoices changes. As evidence of the carpet-bombing character of the anti-WorkChoices campaign, the Victorian Government, on 27 March 2007, released a negative report on the effects of WorkChoices. Two days later Senator Fielding, of Family First, introduced a Private Member’s Bill aimed at restoring certain conditions allegedly removed by WorkChoices.

  From the time he took over as Labor leader in December 2006, Kevin Rudd took his party to a big lead in the polls. That lead never faltered from then until the election just on 12 months later. It is now obvious in retrospect that Rudd coming to the leadership brought about a sea change in political attitudes across the nation.

  Elsewhere I will deal with the Coalition’s declining political fortunes during its last year in office.

  Rudd and Gillard set about emphasising the differences between Labor and the Coalition on industrial relations, although their pitch was not all that different from what Kim Beazley’s had been. Yet they seemed to have more impact. Perhaps because Beazley lacked overall acceptance, the electorate had not taken his commitments seriously.