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British Journal of Industrial Relations doi: 10.1111/j.1467-8543.2008.00694.

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46:3 September 2008 0007–1080 pp. 532–554

ANNUAL REVIEW ARTICLE 2007


The Neoliberal State, Trade Unions and
Collective Bargaining in Australia
Rae Cooper and Bradon Ellem

Abstract

For nearly 12 years from 1996, the Australian government pursued a neoliberal
industrial relations agenda, seeking to break with structures based on collective
bargaining and trade unions. In the name of choice and deregulation, this
agenda involved unique levels of state intervention and prescription — and
anti-unionism. In the last round of legislative change, the 2005 laws badged as
Work Choices, the government overreached itself and in 2007 was defeated in a
general election. As in the UK after Thatcher, the extent to which collective
bargaining can be restored and trade unions regain a voice is problematical.

1. Introduction

Clothing itself in the rhetoric of the individual and choice, the conservative
coalition government1 led by John Howard presided over the most significant
transformation of the employment relationship in a century in Australia.
From 1996 until 2007, this government promoted a particularly virulent form
of neoliberalism, driven and supported by other arms of the state and most
business interests, in which attacking collective bargaining was elemental.
Many scholars have pointed out that neoliberal states are highly interven-
tionist and that under neoliberalism the state becomes more, not less, impor-
tant as a regulator (Hyman 2001; Murray 2006; Peck 2001). As a result,
regulation may become more complex and directive — and the outcomes
may be highly diverse between sectors, industries and regions, dependent
upon market power. The so-called ‘deregulation’ of the labour market in
Australia demonstrates these complexities very clearly. This government’s
neoliberal re-regulation involved high levels of intervention — and anti-
unionism — which were quite at odds with Australia’s past.

Both authors are at the University of Sydney.

© Blackwell Publishing Ltd/London School of Economics 2008. Published by Blackwell Publishing Ltd,
9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.
Neoliberalism, Unionism and Collective Bargaining 533
We ask how and why the state, under the Howard government, reshaped the
regulation of the employment relationship, and with what effects. In answer-
ing this question, we argue that the central mission of the government was in
line with neoliberalism elsewhere: to reduce union power and drive the indi-
vidualization of the employment relationship. On the eve of first winning office
in 1996, John Howard himself made his ambitions clear: ‘meaningful reforms
. . . cannot be achieved unless the union monopoly over the bargaining pro-
cesses in our industrial relations system is dismantled’ (in van Barneveld and
Nassif 2003: 27). To achieve these goals, massive intervention was required.
In some respects, the focus on unions in Australian neoliberalism seems
curious. After all, this statement came 17 years after his heroine, Margaret
Thatcher, had come to office to implement an anti-union agenda. However,
making such a change was a matter of faith for the Prime Minister and many
of his closest allies in government and the business community outside it. In
writing about these 11 years of industrial relations policy, it is quite legitimate
to argue that despite a great deal of rhetoric about ‘fairer’ and ‘flexible’ bar-
gaining systems, the overarching purpose was to attack collective bargaining
and trade unions. Making Australian neoliberalism unusual was that unions,
with some exceptions, had been co-operative partners with the state under the
previous Labor government in a corporatist programme of changes in work
and regulation. They had not been engaged in wage militancy or political
agitation and union membership had been declining for six years by 1996.
Indeed, there was some disquiet that unions had been too close to the Austra-
lian Labor Party (ALP) and, despite falling membership, had become rather
too complacent (e.g. Bramble 2001; Wilson et al. 2000). None of this, however,
was enough to persuade the coalition parties and increasingly hostile business
groups that union bargaining was an impediment to flexibility and growth.
To some extent, our thinking about the state and industrial relations draws
upon Howell’s innovative work (2005) on Britain. Britain and Australia have
often been seen as similar societies. In both cases, labour parties emerged from
trade union movements, politics were largely constructed around class inter-
ests, and union structures and cultures were more alike than different (James
and Markey 2006; Patmore and Coates 2005). However, there are also signifi-
cant differences between industrial relations in Britain and Australia, and in
the writing about industrial relations in the two countries. If, as Howell argues,
a major failing of British industrial relations scholars is that they do not ‘see’
the state, then, in Australia, we have been very good at describing the role of
the state, albeit in ‘empiricist’ ways (Dabscheck 2000; Treuren 2000). The hand
of the state in industrial relations in Australia has long been obvious to us, in
the forging of institutional structures, not least from 1996 under the banner of
de-regulation. The argument that it is at times of crisis that the state acts to
resolve what Howell calls a ‘panic’ is, with some modification, very important
in understanding Australian industrial relations, as we shall show.
We now move to a description of the origins and nature of the Australian
‘arbitral model’ which provided the basis for the regulation of the employ-
ment relationship for most of the twentieth century. The empirical core of the
© Blackwell Publishing Ltd/London School of Economics 2008.
534 British Journal of Industrial Relations
article lies in Sections 3 and 4. These examine the ways in which the state
intervened to undermine collective bargaining between 1996 and 2005,
largely through the Workplace Relations Act 1996, and then between 2005
and 2007 through the still more radical but short-lived ‘Work Choices’ leg-
islation of 2005. In concluding we try to explain the breadth of change and
the opposition to it.

2. The practices of collectivism in Australia

The laws introduced in 1996 and rounded out in 2005 signalled the end of a
collective system of labour regulation that had first been introduced at the
national scale in 1904. There were, of course, changes in law and practice
between 1904 and 1996, but the Howard government quite rightly saw itself
as delivering a paradigmatic shift. At the high point of change, introducing
what he called ‘the most fundamental modernization of our system yet seen’
(Howard 2005), the Prime Minister made clear that his government intended
to bury the collectivist legacy once and for all. We explain the Australian
arbitral model in some detail in order to demonstrate the extent of the
changes made.
The origins of the system lay in debates which were global in nature but
perhaps particularly important in ‘settler societies’ such as Canada, New
Zealand and Australia (Denoon 1983). The latter two antipodean dominions
were the only two countries to adopt national, union-based systems of com-
pulsory conciliation and arbitration. Australia’s system built on overseas
examples and Australasian precedents (Barry and Wailes 2004; Macintyre
and Mitchell 1989). The immediate spur lay in the worldwide depression and
industrial unrest of the 1890s. In brief, a series of strikes and lockouts had
resulted in union defeat and massively reduced union presence. The state
intervened unambiguously on the side of employers, harassing, fining,
gaoling and pointing guns at striking workers (for an overview, see Markey
1988: ch. 5). Despite this, most unionists — and the emergent middle class —
looked to the state for a solution. Most agreed with this unionist viewpoint
about the role of the state in industrial relations: ‘The more our liberties were
infringed by the State, the more freedom was possessed’ (Trenwith quoted in
Macintyre 1985: 47). If this statement is at odds with the voluntarist assump-
tions about the state and industrial relations, its context is also at odds with
Howell’s critique of them. It was not militant unions that caused the anxieties
leading to policy change but hard-line employers and an unstable economy.
In part, this was because the sites of the conflicts were of obvious economic
significance, in the rural and mining industries and in transport, where union-
ized workforces occupied the vital connecting points between local produc-
tion and the global economy. As we shall see, these anxieties would be no less
important a century later.
The arbitral system was introduced only three years after the Common-
wealth of Australia had been created by the federation of the previously
© Blackwell Publishing Ltd/London School of Economics 2008.
Neoliberalism, Unionism and Collective Bargaining 535
discrete colonies. The system of compulsory conciliation and arbitration was
based on the Australian Constitution’s ‘labour power’, which vested in the
national Parliament the power to make laws for ‘conciliation and arbitration
for the prevention and settlement of industrial disputes extending beyond the
limits of any one State’ (Section 51.xxxv). Parliament was therefore required
to establish tribunals to resolve disputes and determine conditions should it
wish to make use of this power. National arbitration expanded through the
twentieth century and across the Australian landscape through a range of
mechanisms designed to make the system workable and accessible and
through High Court interpretations of the meanings of the Constitution. In
addition, arbitration was the norm because the Australian States had their
own roughly equivalent frameworks for most of the last century, and indeed
these often covered more workers than the Commonwealth system, being
especially important for public sector workers and many areas of pre-
dominantly female employment. Nonetheless, the national system gradually
assumed the greater economic and strategic importance (for an overview, see
Isaac and Macintyre 2004).
The introduction of arbitration in 1904 was inseparable from the concerns
of citizens and the state in building a new nation. Employers would be given
protection from cheap producers by a tariff wall as long as they paid ‘fair and
reasonable’ wages to their workers. The arbitration tribunals decided what
these wages would be and based them on the assumption that the worker was
a male. For women, cast as dependants, low wages were sanctioned by the
state until equal pay cases of 1969 and 1972; for non-wage-earners, there was
a residual welfare state (Castles 1985; Lake 1986; Ryan and Conlon 1975).
This set of intersections between global trade, local circumstance, social
policy and industrial relations policy is important for understanding not only
the ‘old’ Australian model but also its demise (Ellem 2006a).
The most important feature of the system for the argument in this article is
that arbitration relied upon trade unions. An early President of the Arbitra-
tion Court made this explicit: ‘The system of arbitration adopted by the Act
is based on unionism. Indeed, without unions, it is hard to conceive how
arbitration could be worked’ (Higgins 1920: 15). This was because compul-
sory arbitration regulated relationships between organizations, between
employers and employer associations on the one side and unions on the
other. It did not regulate relations between individuals. Typically, unions
made demands on employers, which would be resolved through tribunals
which delivered decisions known as ‘awards’ to resolve disputes, and set
wages and conditions. For minimum-wage cases and ‘test cases’ around
equal pay, leave entitlements and the like, the Australian Council of Trade
Unions (ACTU) organized inter-union claims to bring to the Court or as it is
now known, the Australian Industrial Relations Commission (AIRC). The
system allowed for union-won conditions to be spread through the workforce
by covering all workers employed by a company bound by a union claim.
This may have reduced the incentive for workers to join unions, but it also
reduced the incentive for employers to employ non-union labour.
© Blackwell Publishing Ltd/London School of Economics 2008.
536 British Journal of Industrial Relations
Equally, it has been suggested that unions relied upon arbitration and the
state more broadly. Alongside arbitral procedures, there were, for much of
the twentieth century, various forms of compulsory unionism which boosted
union membership levels. Indeed, one scholar argues that Australian unions
were ‘industrial cosmetics’ dependent upon the state for their existence
(Howard 1977). While much contested (e.g. Cooper 2002; Markey 2002;
Sheldon 1993), this argument has the merit of alerting us, as with Howell for
the UK, to the importance of the relationship between national unions and
the state.
The system was not immutable. The most significant changes before 1996
began, with union agreement, under the ALP government that was in office
from 1983 to 1996. At first, bargaining was totally centralized, as an anti-
inflation measure, and then from 1987, there was a process best understood
as ‘managed decentralism’ (Buchanan and Callus 1993) which developed
within ALP policies winding back tariffs and promoting competition and
against the backdrop of anti-union State governments and growing militancy
by many employers.
A two-tier wages system was introduced in 1987 under which wage
increases were awarded in two components. There was a national increase for
cost-of-living adjustments (although not matching inflation) and there were
wage increases awarded for agreeing to measures to improve productivity
(McDonald and Rimmer 1989). In 1992, a new system of union-based enter-
prise bargaining was introduced, but still within the confines of conciliation
and arbitration, and with a number of safeguards for employees. A ‘No
Disadvantage Test’ was established to safeguard employee earnings and
entitlements, and the process of making agreements was closely scrutinized
by the national tribunal, the AIRC (Forsyth and Sutherland 2006: 184).
When Paul Keating took over from Bob Hawke as Labor Prime Minister,
he soon signalled that he wanted more change: ‘we need to find a way of
extending the coverage of agreements from being add-ons to awards, as they
sometimes are today, to being full substitutes for awards. Over time . . . we
would have fewer awards with fewer clauses’ (Keating 1993). The Industrial
Relations Reform Act 1993 which codified union-based enterprise bargaining
and introduced a limited right to strike (McCrystal 2006) also established a
non-union bargaining stream. This stream was criticized at the time for
undermining union collective bargaining and for seeking employee ‘consent’
rather than facilitating genuine bargaining between the parties (Bennett 1994,
1995; Nomchong and Nolan 1995). However, the non-union stream was not
used much because employers were deterred, among other things, by the
capacity the legislation gave to unions to intervene in the process (Briggs
2001; Briggs and Cooper 2006). Employer criticism, promoted by neoliberal
think tanks, was not mollified and in fact became more hostile to union-based
bargaining and awards (for examples of the origins of this thinking, see BCA
1989; Nicholls Society 1986; for the particular importance of the mining
industry lobby, see Hearn McKinnon 2007; for overviews of the period, Bray
and Neilson 1996; Dabscheck 1995; Watson et al. 2003; Wooden 2000: ch. 2).
© Blackwell Publishing Ltd/London School of Economics 2008.
Neoliberalism, Unionism and Collective Bargaining 537
TABLE 1
Union Membership and Density under the Howard
Government

Year Members Density

1996 2,194,300 31.1


1997 2,110,300 30.3
1998 2,037,500 28.1
1999 1,878,200 25.7
2000 1,901,800 24.7
2001 1,902,700 24.5
2002 1,833,700 23.1
2003 1,866,700 23.0
2004 1,842,200 22.7
2005 1,911,900 22.4
2006 1,786,000 20.3
2007 1,696,400 18.9

Sources: ABS 6325.0. Trade Union Members, Australia.


Canberra: Australian Bureau of Statistics (1996); ABS 6310.0,
Employee Earnings, Benefits and Trade Union Membership.
Canberra: Australian Bureau of Statistics (1997–2008). These
figures are for August of each year.

The state support which arbitration, compulsory unionism and a system of


award conditions for non-union employees provided for unions, coupled
with policies to deliver full (male) employment, saw union membership reach
high levels by the standards of English-speaking countries. On one count,
density peaked at 61 per cent of the paid workforce in 1954 (Bain and Price
1980: 121–25). With some variations, membership grew through the twenti-
eth century to a peak of 2,659,600 (40 per cent density) in 1990 (Peetz 1998).
Thereafter, as in so many other countries, the number of union members and
union density fell due to changes in the nature of work, and new employer
and state orientations, along with, in many instances, weak workplace union
organization after decades of arbitration. Shortly before the national general
election of 1996, when Howard won office, membership still stood at
2,251,800; density at 31.7 per cent (see Table 1).
This union-based, collective and relatively egalitarian system could not
have been more different from the policies propounded by neoliberals at the
end of the twentieth century. It was largely because of the union base to
arbitration that the system aroused so much antipathy. For employers, the
necessary ‘flexibilities’ to run business could not be achieved with this kind of
‘third-party intervention’. We now explore the nature of the attack on unions
and collective bargaining.

3. Howard and the Workplace Relations Act 1996–2005

The government argued that collective bargaining and arbitration were arte-
facts of the early twentieth century. They might have agreed that between
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538 British Journal of Industrial Relations
1983 and 1996, the Labor government had undone the ‘national settlement’
of 1901 by reducing trade barriers, floating the Australian dollar, allowing
international finance freer access and generally opening up product markets
in the name of competition. For the coalition and business interests, the last
‘regulated’ and ‘protected’ market was the labour market. Australia’s neigh-
bour, New Zealand, had dispensed with arbitration in dramatic legislative
change in 1991 (for an overview of employers, see Sheldon and Thornthwaite
1999). Some of the Australian States had done likewise, notably Victoria and
Western Australia (Nolan 1998). With these examples in mind, and with all
the other policy elements of twentieth-century economic protectionism much
reduced, the retention of national minima based on collective bargaining and
union rights was, the government said, illogical.
Having characterized the Australian form of collective bargaining as a
‘union monopoly’ (van Barneveld and Nassif 2003: 27), the Howard govern-
ment wasted little time and spared little legislative force in bringing in sweep-
ing change. The government was keen to argue that it was being even-
handed, that it was simply allowing employers and employees, equally able
and equipped, to have a choice in the type of agreements under which work
would be regulated. In fact, the Workplace Relations Act, passed in 1996,
tilted the scales very heavily against union-based collective bargaining. As we
detail below, the Act undermined collective bargaining and the award system,
stripped unions of their traditional armoury as bargaining agents, and
reduced their capacity to recruit, access and effectively represent members.
The attack on unions was not limited to this Act. Militant unions were
targeted through special legislation and direct government intervention. And
there was always the sense that more was to come because, as wide ranging as
these changes were, the government’s grander ambitions in industrial rela-
tions were held in check by an uncooperative Senate until 2005. Upon gaining
control of the upper parliamentary house, an even more profoundly anti-
union regime was instituted.
The Workplace Relations Act introduced — for the first time under labour
law — individual contracts, known as Australian Workplace Agreements
(AWAs). Common law contracts predated them, but this new statutory
contract was a superior instrument for individualizing employment relations.
It could exclude unions and undermine at least some award conditions in
ways that common law contracts could not. The government constructed the
AWA stream to allow employers to bypass unions and for the conditions in
awards and other collective agreements to be overridden (Coulthard 1999;
Creighton and Stewart 2005; MacDermott 1997). Accentuating the move-
ment from the traditional methods of collectively regulating work, AWAs
were approved and administered under a separate stream to other forms of
agreement, and were open to considerably less public scrutiny, partly because
unions were not party to them but also because they were secret agree-
ments, not available for public scrutiny nor, supposedly, to be shown to
fellow employees. The only safeguard, insisted upon by the Senate, was the
application of the No Disadvantage Test to AWAs (McCallum 1997, 1998;
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Neoliberalism, Unionism and Collective Bargaining 539
Mitchell et al. 2005; Stewart 1999; van Barneveld and Waring 2002). This was
designed to ensure that employees were no worse off, overall, under AWAs,
but close scrutiny of AWAs themselves and consistent interpretations of the
test were required. Critics soon suggested that neither was necessarily taking
place (Peetz 2006: 102–06).
The take-up of AWAs was slow between 1996 and 2005, but their signifi-
cance reached well beyond their direct coverage. The total number in opera-
tion at any one time probably did not rise above 3 per cent of the workforce
(Peetz 2007b) although the number on the typically less aggressive individual
common law contract was much greater.2 However, AWAs played a very
important role in unionized sectors in two ways. First, they threatened col-
lectively bargained and determined rights, conditions and wages. The gov-
ernment made much of macro level data but when workers doing the same
jobs were compared, with only few exceptions it was clear that collective
bargaining continued to deliver higher wages (Peetz 2004; van Wanrooy et al.
2007). Likewise, there is little doubt that they were one of the ways in which
managerial prerogative was enhanced in these years (Bray and Waring 2006).
Second, they affected union power and presence because they made collective
representation useless and because employers used the threat of AWAs to
drive unions to engage in concession bargaining (Cooper et al. 2008).
The ‘decollectivization’ in the Workplace Relations Act went beyond the
introduction of individual bargaining. Almost all of the principles and prac-
tices of collective determination of wages and conditions were transformed.
Awards were limited to only 20 ‘allowable matters’ through a process of
award simplification, or ‘award stripping’ to its critics. Because the AIRC
could only arbitrate on ‘allowable matters’, the scope of the arbitral system
itself, and with it employee protections, was correspondingly reduced. Even
then, arbitration was to be a last resort, coming into effect only when the
national economy or health and safety were threatened (Ostenfeld and Lewer
2002; Waring and Lewer 2005). The contraction of awards had significant
implications for bargaining and other activities of unions, as the recast docu-
ments became a mere ‘safety net’ beneath enterprise bargaining. This meant
that key conditions of employment, very often industry wide or national
minima, were contestable at every workplace, forcing union action to main-
tain them, a very challenging situation for unions considering the context of
membership crisis and declining income (Cooper 2005).
When the government did provide a new avenue for collective bargaining,
it was, unsurprisingly, as an alternative to union bargaining. Under the
Workplace Relations Act, non-union collective agreements were made much
more attractive to employers than they had been under the ALP’s legislation
partly because employers were no longer required to notify the relevant union
of their intention to make non-union agreements. This led to a modest
growth in non-union agreement making in the late 1990s and early 2000s. On
the eve of Work Choices, almost 10 per cent of agreement-covered employees
in the federal jurisdiction were covered by operative non-union agreements,
up from 8.4 per cent in 1998 (Briggs and Cooper 2006).
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540 British Journal of Industrial Relations
The architecture of the collective regulation of work was thus turned on its
head by the Workplace Relations Act, and the key institutions in collective
bargaining, the trade unions, faced new and imposing restrictions on their
activities. It was more difficult than in the past for union officials to enter
worksites (Naughton 1997; Pyman 2004); it became more difficult to take
legal industrial action; and unions exposed themselves (and their members) to
significant fines if they moved outside this system. The ability of unions to
‘pattern bargain’ or take ‘sympathetic’ industrial action was severely circum-
scribed (Lee and Peetz 1998). Furthermore, employers were permitted to lock
their employees out to coerce them into signing an individual agreement and
to undermine their preference for collective bargaining. And many employers
were only too willing to do this (Briggs 2005).
In the years following the passage of the 1996 legislation and indeed after
Work Choices, successive Workplace Relations Ministers incited employers
to take a more militant approach to unions in their workplaces, giving active
encouragement and assistance to employers seeking to resist union bargain-
ing demands, and encouraging them to take industrial action against their
workers and to pursue de-collectivized employment relations (see Briggs and
Buchanan 2000 for an overview). This often led to a significant hardening in
employer strategy (see Peetz 2002 for a typology), most notably in the water-
front, construction and manufacturing industries, and also in white-collar
workplaces, notably in the banks, telecommunications and the civil service
itself (Cooper 2004; Ellem 1999; Howe 2005). As well as the generalized
impact of legislative and judicial change, then, there were particular impacts
in different industries (Bray and Waring 2008; Waring and Bray 2006). Here
we highlight four industries: the waterfront, the civil service, higher education
and construction.
First, in the most public and divisive intervention of all, the government,
consultants, ex-military personnel and Patrick Stevedores, one of the two
major employers on the docks, planned in secret — and in the eyes of the
High Court unlawfully — to de-unionize the company’s operations. At
Easter 1998, all of the firm’s union hands were dismissed, setting in train the
biggest dispute of the period, one featuring massive media coverage, global
and local union support, and community engagement. Although it was the
major dispute of the Howard years, it was not at all typical. The union
survived and although there were controversial changes to working condi-
tions, these were arrived at through negotiation between union and employer
(Ellem 1999; Sadler and Fagan 2004; Trinca and Davies 2000; Wiseman
1998). Second, the government dealt with some of its own employees. AWAs
were made a condition of employment in the senior levels of the civil service,
once a stronghold of unionism (Forsyth 2003). Third, it intervened in uni-
versity governance. Unions and employers in the education sector faced
extraordinary government controls in the management of universities
through the Higher Education Workplace Relations Requirements which,
among other things, made increases in government funding conditional
on universities making ‘genuine’ AWA offers to their staff. Collective
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Neoliberalism, Unionism and Collective Bargaining 541
agreements at universities were monitored, and mutually agreed terms
struck out if failing to satisfy requirements (Forsyth and Sutherland 2006;
Howe 2006). Finally, in October 2005, an agency was established to deal
with Australia’s rough-and-tumble construction industry where a militant
union was very well organized in the booming commercial sector. The Aus-
tralian Building and Construction Commission had very wide powers to tap
phones and put workers under surveillance. High fines were imposed on
unions and individual workers. It was unlawful even to report on the Com-
mission’s proceedings. ‘Suspects’ lost their right to silence under examination
(McCrystal 2006).
Finally, although we cannot explore them in detail here, it must be remem-
bered that there were many other aspects of government policy which, as in
neoliberal regimes elsewhere, had implications for industrial relations in
general and, often, collective bargaining and unions. For example, privati-
zation and contracting out of public sector jobs had deleterious impacts
on union jobs (Fairbrother et al. 2002). More broadly, ‘welfare to work’
initiatives, a truly archetypal neoliberal strategy, reshaped the connections
between industrial relations and social policy (Ramia and Wailes 2006) and,
more particularly, sought to increase the labour market participation of
unskilled women at precisely the same time as protections and collective
bargaining were being undermined (Carney 2006; Cortis and Meagher 2008).
At the same time, a new juridification of industrial relations emerged, with
old arms of the state assuming new importance in the field of industrial
relations — and deciding matters, for the most part, in ways at odds with the
arbitral tradition and against unions. The AIRC became much less important
in resolving major disputes and also in making decisions about rights and
procedures under the new Act. Instead, the Federal Court of Australia (and
occasionally the final court of appeal, the High Court) assumed these respon-
sibilities (Dabscheck 2001). Among the most telling results were that it was
deemed lawful to require new employees to agree to AWA coverage as a
precondition of employment; employers could engage in lockouts to force
workers to sign AWAs (Briggs 2005); and that a refusal to recognize a union
did not imply that freedom of association had been curtailed. All these
findings undermined union power, most notably the last, which arose from a
union dispute over freedom of association with the mining company BHP.
BHP was able to convince the Federal Court that its explicit goal of removing
union voice did not amount to breaches of freedom of association. Therefore,
the Court had accepted that membership of a union could be separated from
the activities of a union. The response of the ACTU to this line of argument
is hard to improve upon: this was like saying you could belong to a golf club
but not use the course (Ellem 2004: 35–37). By comparison, the European
Court of Human Rights has ruled that ‘the right to organise extends beyond
the mere right of an organisation to exist’ (quoted in CELRL 2005: 13).
The outcomes of these policies, rhetorics and interventions were largely as
the government intended and as its critics had feared. The long fall in mem-
bership seemed to have bottomed out at 1,842,200 in 2004, but union density
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542 British Journal of Industrial Relations
continued to decline, now standing at 22.7 per cent (ABS 2005a) compared to
31.1 per cent when the coalition was elected (see Table 1). Other indicators
provided little comfort for unions: industrial action, measured by the number
of working days lost and the number of workers involved in strikes, had
declined to record lows by the 2004 election (ABS 2005b). Many, if not most,
of the disputes which did occur were designed to achieve such basic goals as
bringing employers to the bargaining table or were simply defensive, aiming
to minimize defeat, secure entitlements, or ward off specific anti-union
approaches of employers (Cooper 2004, 2005; Cooper et al. 2008; Gorman
1996; Whittard et al. 2007; Wiseman 1998).

4. Enter — and exit — Work Choices

Although the coalition won the elections of 1996, 1998 and 2001, control of
the Senate remained elusive. Beginning with the coalition’s ‘wish list’ headed
‘More Jobs, Better Pay’ of 1999, a series of amending bills with usually
Orwellian titles was passed by the lower house and presented to the Senate
(Riley 2001). The Genuine Bargaining Bill of 2002 was eventually passed,
aiming to make it much harder for unions to establish and maintain collective
agreements and more difficult for them to use traditional union bargaining
tools without exposing members to fines and legal action (Riley 2003: 158).
The Fair Dismissal Bill of 2004 sought to remove unfair dismissal protection
for employees in small business, while in the same year, the Small Business
Employment Protection Bill attempted to remove the requirement for small
businesses to make redundancy payments to employees. However, these two
bills, and dozens like them, were rejected by the Senate (Riley et al. 2005:
175–76).
In 2004, the Howard government was not only re-elected but, to almost
everyone’s surprise, secured control of both Houses of Parliament, effective
from July 2005 when the new Senators would take their seats. The new
industrial relations policy was formally outlined on 26 May 2005. The gov-
ernment argued that it was simply pulling together amendments rejected by
the Senate since 1999. However, in the 2004 election, industrial relations had
not been a major issue at all. Now, two dramatic changes came as a complete
surprise: protections against unfair dismissal would be removed for all
workers in workplaces with up to 100 employees whereas the figure consid-
ered before had been around 20, and the No Disadvantage Test would be
abolished.
Work Choices, as the suite of changes was known, was extraordinarily
complex, with over 1,700 pages of legislation and accompanying regulations
— so much for simplifications of the neoliberal state. Only when read
together and seen in action was the full extent of this assault on conditions,
rights, collective bargaining and unions revealed. There was quite extra-
ordinary prescriptive detail as to the form and content of the new forms
of ‘workplace agreement’, including many ‘prohibited matters’ not to be
© Blackwell Publishing Ltd/London School of Economics 2008.
Neoliberalism, Unionism and Collective Bargaining 543
included or even discussed. It was made easier for employers to back out of
agreements; it was easier, too, to close down businesses and reopen with the
same staff on individual contracts or much reduced conditions (for over-
views, see Baird et al. 2006; Catanzariti 2006; Stewart 2008).
The new laws attacked the old regulatory institutions already much
reduced under the 1996 Act. Work Choices introduced new institutions,
notably the Australian Fair Pay Commission (modelled loosely on the UK’s
Low Pay Commission), which would set minimum wage rates as and when it
saw fit, without any union claims as the trigger to do so. For the first time,
there were legislated minimum conditions covering the minimum wage,
various forms of leave and mandating a maximum ‘ordinary’ working hours
of 38 per week, averaged over 12 months. Direct legislation like this further
appeared to reduce the profile of unions as useful agents. All other terms and
conditions of employment were negotiable between employers and employ-
ees (Stewart 2008). These changes were also profound because they aban-
doned altogether the use of the Constitution’s labour power as the basis for
regulating the employment relationship in favour of the Constitution’s cor-
porations power. For one legal critic, this change in itself subordinated the
worker to the corporation (McCallum 2006). This mechanism also seemed
likely all but to kill off the ability of the States (all under ALP rule) to
maintain their own systems to regulate private sector employees (Stewart and
Williams 2007).
The attack on arbitration, collective bargaining and unions was compre-
hensive. The vestigial power of the traditional arbitration system was reduced
by the abolition of the No Disadvantage Test. No new awards would be
made except as part of an ‘award review’ process designed to rationalize
remaining awards. AWAs remained, of course, and judicial decisions were
now codified, especially those making it clear that new employees could be
compelled to sign them. There were also union and non-union agreements
and a new kind of agreement that underscored the government’s commit-
ment to non-union arrangements. This was the ‘employer greenfields agree-
ment’, which employers could make for a new business or project — but with
no other party. That is to say, they made this agreement with themselves,
inspiring a member of one of the minor parties to describe them, memorably,
as ‘industrial onanism’ (Murray 2005).
Work Choices placed still more restraints on union activity as rights to
access workplaces were wound back. These changes made it more difficult for
officials to meet with union members, or to police workplace standards.
Work Choices prohibited unions from bargaining over terms that would
assist a union to maintain its collective bargaining or representative rights,
such as providing protections for workplace union representatives or training
for union members. Unions could only take ‘protected’ industrial action in a
very limited range of circumstances and had to hold a secret ballot of employ-
ees before they could do so. The processes were time consuming, cumbersome
and, by way of comparison, more complex than ballot provisions in the UK.
Employers, however, were not required to negotiate with unions even when
© Blackwell Publishing Ltd/London School of Economics 2008.
544 British Journal of Industrial Relations
100 per cent of employees had either joined the union or expressed their
desire to enter into a union collective agreement with their employer (Cooper
and Ellem 2009).
Under Work Choices, the decline in union density accelerated. By 2007,
when the government lost office, union density had fallen to 18.9 per cent
and membership stood at just 1,696,400 (ABS 2008a). Collective industrial
action had been all but killed off, hitting new lows in 2007 (ABS 2008b).
Union officials saw the laws as disastrous. In organized workplaces, it
became much harder to police agreements and develop new ones. Work
Choices also curtailed the efforts of unions to organize non-union work-
places. Together with additional barriers to union right of entry, uncertainty
over union coverage and fear about job security and victimization, the
legislative barriers we have described acted as powerful disincentives for
workers to join unions in non-union workplaces (see Murray 2006 on the
‘choice’ in Work Choices).
If much (although by no means all) of the impact of the first nine years of
Howard’s policies were discussed in terms of industrial relations processes,
then the focus of critiques of Work Choices was more in terms of outcomes.
What was most striking in the political debate was the impact on wages and
conditions for workers in low paid and, often, non-union jobs. This was in
spite of the fact that securing good data about the impact of the changes
was hard. From the beginning, unions had been joined by academic
researchers, some faith groups and others in attacking the economic
assumptions behind, and ethical fairness of, the new laws. For example, as
the centrepiece of a massive advertising campaign, the government claimed
that award conditions (particularly holidays, loadings and penalty rates)
were ‘protected by law’ against unscrupulous employers, but when the
Office of the Employment Advocate (OEA) released a sample of AWAs, it
became clear just how few protections there were in practice. ‘Protected
conditions’ meant that employers were merely obliged to inform employees
that the conditions were being removed. The same report revealed that all
the sampled AWAs removed at least one ‘protected’ award condition
(McIlwain 2006).
Subsequently, it was revealed that a sample of AWAs registered between
May and October 2006 showed that 45 per cent of these AWAs removed all
so-called protected conditions. As well as still higher proportions removing
loadings and penalty rates, incentive payments and bonuses were also being
removed in 70 per cent of cases (Sydney Morning Herald 2007). Non-union
collective agreements increased in number and these too tended to remove
protected conditions. It emerged that in the first year or so of Work Choices,
over three-fifths of AWAs abolished penalty rates for working unsocial hours
and more than four-fifths of AWAs abolished or reduced overtime pay. Most
abolished or reduced shift-work loadings, meal breaks and public holiday
payments (Peetz 2007a,b; see also Considine 2006; Gahan 2006).
The impact of change on earnings was also grim, and was markedly
gendered. On one reading, the gap between average hourly earnings for men
© Blackwell Publishing Ltd/London School of Economics 2008.
Neoliberalism, Unionism and Collective Bargaining 545
on AWAs and men on registered collective agreements was 2 per cent. For
women, however, it stood at 11 per cent. Peetz argues that, given the gender
division of labour, effects occurring due to the dominance of particular
industries must be taken into account. For example, in the State of Western
Australia, men were earning 22 per cent more under AWAs than under
collective agreements. This was due to the boom in the still overwhelmingly
male mining sector, where employers were reporting record profits and were
more concerned to exclude union voice than cut wage costs (Ellem 2006b;
Peetz 2007b: 30–35). Women in that State, however, working in very different
conditions, made 9 per cent less than under collective agreements (Peetz
2007b: 30–35). Other research undertaken into the impact of Work Choices
on employees, particularly ‘vulnerable’ workers, was damning (Evesson et al.
2007; Peetz 2007b; van Wanrooy et al. 2007).
Against the backdrop of the statistical evidence which showed women
losing supposedly ‘protected conditions’ and growing gender inequities
under individual contracts, a series of reports into the impact of Work
Choices on low-paid women was released. These reports painted often har-
rowing accounts of work and life in what were largely non-union sectors.
They found that significant changes had occurred in the workplace, includ-
ing reductions in pay for these already low-paid workers, less certainty
about wage rates and pay rises, intensification of work, weakening of job
security, less financial independence, less money for children and basic
household costs, less representation and say at work and in the community,
and poorer health and well-being. Perhaps of most significance was that
there appeared to be growing uncertainty and even fear for these women
because of employers’ increased managerial discretion and, above all, the
lack of protection against dismissal (for a national overview, see Pocock
et al. 2008).
In the context of these revelations and with an emerging union campaign,
the government, after more than 10 years, finally conceded ground on indus-
trial relations. A new Minister was appointed to sell Work Choices and
amendments were made to Work Choices in May 2007. The changes were in
part cosmetic in that they included renaming of the OEA as the Workplace
Authority and the renaming of the Office of Workplace Services as the
Workplace Ombudsman. At the same time, it was claimed that the term
‘Work Choices’ had become so unpopular that staff employed on a govern-
ment information hotline had been instructed not to use the term. The more
substantive change was that the Workplace Authority was to vet new agree-
ments compared to some award conditions, according to a ‘Fairness Test’,
for employees earning less than $75,000 per annum, thus, to some extent,
backtracking on the abolition of the No Disadvantage Test (Sunderland
2007).
Beginning soon after the 2004 election, a well-resourced union campaign
was waged against Work Choices. The Your Rights At Work campaign was
the longest and most expensive campaign run in the country and probably the
most sophisticated, focusing on identifying and winning the ‘swinging voter’
© Blackwell Publishing Ltd/London School of Economics 2008.
546 British Journal of Industrial Relations
in vital electorates. It had a big-budget media strategy, a consistent message
about individual, not union, rights and busy union and community groups
active in the targeted marginal electorates (Barnes 2007; Muir 2008; Oliver
2008). The ALP, under Kevin Rudd’s leadership, won the November 2007
election with one of the largest ever swings against a government. It did not
quite win control of the Senate, but from July 2008 the government will be
anticipating that more or less sympathetic minor parties will support it. The
Your Rights at Work campaign and public antipathy towards Work Choices
were credited with playing a critical role in the outcome by the leaders of the
Labor and Liberal parties as well as union peak council leaders and emerging
academic research (Bachelard 2007; Gartrell 2007; Kelly 2008; Loughnane
2007a,b; Spies-Butcher and Wilson 2008).
If the Australian electorate has so decisively rejected Work Choices, what
can be expected of Labor? Howell’s work offers some insights. He argues
that while British unions welcomed the election of New Labour in 1997,
those expecting respite from Thatcher’s decollectivism were mistaken.
Rather than scrapping this regime and constructing something new, Howell
argues that the Blair government simply tinkered at the edges of the system
and, instead, maintained Thatcher’s individualized ethos and institutions
‘with only a peripheral role for collective representation and collective bar-
gaining’ (Howell 2005: 188). At the time of writing, the Workplace Rela-
tions Minister, Julia Gillard, was negotiating with business groups and
unions about the content and scope of the laws and regulations to replace
Work Choices. During the 2007 election campaign, Gillard repeatedly
promised to ‘rip up Work Choices’ and to replace it with a ‘fairer’ system.
The policy alternative to Work Choices she presented included the (phased)
abolition of AWAs for employees earning less than $100,000 per annum,
legislated minimum standards, the introduction of a new no disadvantage
test against which all new agreements would be judged, a reinstatement of
unfair dismissal provisions and, among other things, a ‘good faith’ bargain-
ing regime.
Whether, and to what extent, the details of policy change affect collective
bargaining remains to be seen. Prior to the election campaign, many union
demands were watered down by the ALP, notably around unfair dismissal,
rights of entry and the building industry. Rudd has been keen to distance
himself, and his party, from rowdy union leaders and has been at pains to tell
anyone who is listening that unions will have no ‘special place’ under his
administration (Norington 2008; Sheridan 2007). Gillard expressed similar
sentiments upon the most recent release of official figures on union member-
ship (Schneiders 2008). Despite Labor’s caution and the focus of the election
on workers’ rights, rather than union rights, it is the case that polling con-
sistently shows, as in the UK, that a weakened union movement has public
support, that only a small (and falling) number of people believe the country
would be better off without unions, and that there are many non-union
workers who would prefer to be in a union (Bearfield 2003; Meagher and
Wilson 2007).
© Blackwell Publishing Ltd/London School of Economics 2008.
Neoliberalism, Unionism and Collective Bargaining 547
5. Conclusions

Business lobby groups launched a sustained offensive on collective bargain-


ing and unions from the 1980s. The political agents of change in the Liberal
Party of Australia had transformed the party in the years leading to its
election win in 1996 to make it a party of ‘dries’, of Thatcherites, purged of
the ‘wet’ liberals who stood on the party’s left on many issues including
industrial relations. Its leader was a man with an antagonism to trade unions
evident throughout the 22 years he served in Parliament before becoming
Prime Minister, backed by a Treasurer who had been a founder of a key
anti-union think tank in 1986. All these neoliberal individuals and institu-
tions understood globalization as a given, a force either requiring or allowing
labour market flexibilities, be it through unilateral control or cost-cutting, be
it in the mines or the hospitality sector.
As to the events of the last year or so, the ‘Your Rights at Work’ campaign
focused on removing the Howard government in order to bury Work
Choices. A fundamental paradox lay at the core of the impact of Work
Choices, one which, in the end, was fatal to the government. This was the fact
that, for all the talk about ‘union bosses’ and, more broadly, about produc-
tivity and unionism in mainly male industries such as mining and building,
the chief victims of the new regime were typically non-union, low-paid
women. The evidence as to the impact of the laws was fragmentary, partly
because of government intransigence about releasing official data, but it soon
became clear enough that the dire predictions made by the critics about the
laws were being borne out. And the existence of any offsetting factors, such
as productivity growth — which in any case would not have been shared by
these workers — was, to say the least, highly questionable. The 2007 election
result suggests that this campaign went some way towards generating the
‘panic’ which Howell sees as a prerequisite for change. However, unions have
been so weakened that it is difficult to argue, using Howell’s model, that these
circumstances create the conditions for remaking a collectivist industrial
relations regime. If the panic of a century ago led to the system created in and
after 1904, it is by no means clear yet how it will be remade in the early years
of the twenty-first century.

Final version accepted on 29 May 2008.

Acknowledgements

We would like to thank Sarah Kaine for her research assistance in the
preparation of this article. We are grateful to a number of our colleagues for
delivering — under tough time constaints — detailed feedback and helpful
comments on earlier drafts of this article: Marian Baird, Mark Bray, Diana
Kelly, Russell Lansbury, Sarah Oxenbridge and David Peetz. We also thank
the members of the editorial board of the Journal for their very useful
© Blackwell Publishing Ltd/London School of Economics 2008.
548 British Journal of Industrial Relations
comments and questions. The authors alone are responsible for the interpre-
tation and failings of the article.

Notes

1. The coalition consisted of the Liberal and National Parties, which in broad terms
represent urban and country voters, respectively, and are similar to the British
Conservative Party. Neither party has formed a government alone, but as a coa-
lition they have held office for more than 40 of the 63 years since the end of World
War II.
2. The numbers were not collected systematically, and some government spokes-
people were keen to play up the numbers, referring, for example, to the total
number of AWAs made since 1996 as opposed to those in force at any one time.

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