SOCIAL DEMOCRATIC PARTIES AND UNIONS IN A GLOBALIZED WORLD

The Australian Experience

DENNIS WOODWARD

The relationship between social democratic parties and the union movement has been under stress in many liberal democratic states since the 1970s. The combination of globalization’s free movement of “footloose” capital, the decline in the blue-collar workforce, and the ascendancy of neoliberalism have seriously challenged the programmatic raison d’être of social democratic parties. Their perceived need to abandon traditional policies promoting equality, full employment, and a comprehensive welfare state in favour of embracing the neoliberal program has threatened to undermine their core base of supporters. Indeed, most social democratic parties around the world initially suffered electorally in this climate, but, despite the rising dominance of neoliberalism, by the end of the twentieth century they were again achieving electoral success (Gamble and Wright 1999). This success was attained by their acceptance of key elements of the neoliberal agenda, an agenda that has shown little sign of diminishing even in the face of more recent global economic uncertainty.

This neoliberal policy agenda not only confronted social democratic parties with the prospect that social democracy was a “bankrupt project” that was no longer viable (Gray 1997, 13) but also placed a major strain on their relationship with unions, with whom they have traditionally been aligned or have represented. As Piazza (2001, 418) notes, social democratic parties “opted to weaken, or in cases jettison, their traditionally strong relationship with organised labour.” This led, according to Lavelle (2008, 12), to social democratic parties treating unions “as just another interest group.” Thus, social democratic parties shifted to the right in the 1980s (Callaghan 2003, 129), abandoning their traditional policy stance and embracing neoliberalism — either explicitly or in the guise of a “Third Way.” Ultimately, they distanced themselves from their core union base to regain electoral viability (Lavelle 2008, 167; Piazza 2001, 426).

The aim of this chapter is to trace this relationship between social democratic parties and unions in Australia, which has one of the oldest continuous social democratic parties in existence and arguably one of the most successful of its kind in electoral and political terms. To illustrate this relationship, I use as a case study the heavily contested battle over reform of the industrial relations system under the Rudd Labor government that was elected in 2007. I argue that the Australian Labor Party (ALP) both differs from and conforms to its counterparts in other advanced democracies in terms of its relationship with the unions. The ALP has maintained a delicate balance between the competing pressures of union and business interests. While retaining its union affiliation, the party has, like other social democratic parties, tended to treat unions as “just another interest group,” thereby demonstrating the limits of social democracy in a globalized era.

THE ALP AND THE UNIONS: A CENTURY OF CHANGE

The ALP was established in the 1890s as the “political wing” of the emerging trade union movement, taking the form of a typical “mass-class” party as depicted by Duverger (1964, 63–70). Its organization was dominated by its affiliated trade unions, but almost from the outset, there were strains between its parliamentary and extra-parliamentary wings, with the former seeking a degree of autonomy that was viewed with suspicion by the latter (McSwiney 2005, 46). Accusations that the parliamentary wing of the ALP had betrayed the labour movement, the working class, and socialism have a long pedigree. The actions of the Chifley ALP government at the national level in breaking the coal miners’ strike in 1949 offer a particularly vivid example of conflict between the party’s parliamentary wing and its nominal trade union base. Nevertheless, trade unions continued to dominate the party because they held the majority of delegates to State Conferences, at which state officials were selected, state policies formulated, and representatives chosen for Federal Conferences and the Federal Executive, which, respectively, determined official party policy and handled the party’s day-to-day management at the national level. This trade union dominance continued until the organizational wing was restructured in the latter part of the 1960s. Even then, trade union dominance at State Conferences was maintained; however, the inclusion of federal and state parliamentary leaders in Federal Conferences opened the way for those leaders to control the policy agenda, which subsequently moved away from working-class appeal toward a more middle-class appeal typical of “catch-all” parties (Kirchheimer 1966). Relations between the Whitlam ALP government (1972–75) and the trade union movement were certainly strained by policies of cutting tariff protection and seeking wage-control powers in the wake of the stagflation that followed the first OPEC oil hike.

Following three successive electoral defeats at the national level, the ALP National (formerly Federal) Conference was again expanded in 1981 — effectively being doubled to a hundred delegates, with greater representation coming from branch members. This reflected the move to limit union delegates to State Conferences to 60 percent as the party sought to shed its image of being “union dominated.” The National (formerly Federal) Executive was similarly expanded in 1986, with additional delegates elected from the National Conference, further diluting state-based trade union influence.

When the ALP regained government at the national level in 1983, it — unlike other social democratic parties in this period — did not distance itself from its trade union affiliates but entered into an “accord” with them that was initially aimed at restoring centralized wage fixing, maintaining real wages, and boosting the “social wage” in return for industrial peace and wage restraint (Carney 1988; Singleton 1990; Stilwell 1986; Wilson, Bradford, and Fitzpatrick 2000; Schwartz 1988). Over time, this accord underwent a number of renegotiations and the ALP presided over labour market “reforms” that moved in the neoliberal direction, leading to accusations that it had betrayed “Labor tradition” (Maddox 1989). This resulted in working-class voters deserting the ALP and contributed to its defeat in 1996 (Manning 2010, 278). There is considerable debate over both the efficacy of the accord and whether it was ultimately beneficial or detrimental to workers and trade unions (Dabscheck 2000; Kenyon and Lewis 2000; Kuhn 1991; Beilharz 1994; Manning 1992). Clouding this issue is the fact that Bob Hawke, the ALP prime minister for much of the period (1983–91), had previously been the head of the peak trade union body and was a bridge between the parliamentary party and the unions. His successor as prime minister, Paul Keating, was less committed to Hawke’s consensual style and (notwithstanding maintenance of the accord) alienated many members of the working class by presiding over a recession and pursuing a policy focus that they viewed to be not in their interests. He also presided over the 1994 National Conference, which saw a further expansion of the conference to 190 members (Lloyd 2000, 66).

During its eleven years in opposition (1996–2007), the ALP further distanced itself from its trade union supporters, maintaining its commitment to most neoliberal tenets and shaping policies in accordance with its belief that globalization had drastically limited its options (Lavelle 2005, 56). While the ALP maintained its trade union ties, unlike some European social democratic parties (Manning 2000), the possibility of future accords with the trade union movement was ruled out and further changes to the party’s organizational structure lessened the unions’ influence. In 2002 the National Rules Conference introduced the “fifty/fifty rule” whereby delegates from affiliated unions had their representation at State Conferences limited to 50 percent, with the remaining places going to branch members. The 2004 National Conference approved policy changes that extended the time between conferences from two to three years and expanded conference membership to four hundred. The National Conference had effectively ceased to be a policy-making body: that privilege now lay firmly in the hands of the parliamentary leadership. This distancing of the ALP parliamentary wing from its erstwhile trade union base was driven by the belief that too close a relationship was electorally detrimental and, given declining trade union membership, of limited advantage. It is somewhat ironic, therefore, that a major reason for the ALP’s return to office in 2007 (under its new leader, Kevin Rudd) was the result of a multi-level campaign conducted by the trade unions aimed at the defeat of the conservative Liberal–National Party coalition government and the overturning of its radical industrial relations legislation, which went under the rubric of WorkChoices (Muir 2008; Spies-Butcher and Wilson 2008; Bongiorno 2008; Bachelard 2007). The ALP’s reaction to the introduction of WorkChoices while in opposition and its actions to dismantle it when it attained government sheds light on its relationship with the trade unions.

WORKCHOICES LEGISLATION

Historically, industrial relations in Australia have enjoyed a degree of bipartisanship based upon acceptance of an arbitration system capable of settling disputes and setting minimum wages. Despite attacks by neoliberal ideologues and some modifications carried out under the previous Labor government, this regulated labour market was still largely intact when the conservative Liberal Party–National Party coalition government led by John Howard came to power in 1996. The Howard government’s initial efforts to fundamentally alter this system led to substantial compromises, and a later attempt was abandoned because it lacked a Senate majority. However, once the government fortuitously found itself with Senate control (starting on 1 July 2005), it quickly passed its WorkChoices legislation in November to come into effect on 3 April 2006.

This legislation (Australia 2005) radically altered the balance of power in favour of employers at the expense of workers and trade unions. Traditional arbitration was effectively ended with the sidelining of the Australian Industrial Relations Commission (AIRC) and the establishment of a new body, the Fair Pay Commission, which was tasked to set minimum wages (Van Gramberg 2006). Tougher penalties were introduced for strikes deemed illegal, and the scope for legal strikes was severely restricted. Even if strikes were legal, they required the passing of a compulsory secret ballot by the union membership. Restrictions were also placed on union officials entering workplaces. In addition, existing awards continued in force for only ninety days after their expiration date during renegotiations, after which they would revert to the five minimum standards (explained below) if no agreement had been reached. Limitations were placed on what could be included in awards negotiated through enterprise bargaining and greater encouragement was given to replacing these with agreements negotiated between employers and individual employees. These Australian Workplace Agreements (AWAs) needed to meet only five minimum standards with respect to the minimum wage, which could be averaged over a year; a maximum of thirty-eight ordinary hours per week; four weeks paid annual leave, two weeks of which could be traded; ten days paid personal/carer’s leave; and fifty-two weeks unpaid parental leave. Moreover, AWAs were no longer subject to the “no disadvantage” test that had previously been in force (Teicher, Lambert, and O’Rourke 2006). That is, the way was open for workers to accept lower wages and less favourable conditions.

The balance of power was further shifted in favour of employers by the effective removal of existing “unfair dismissal” laws. These no longer applied to workers in businesses that had up to one hundred employees and could be circumvented in larger firms if the dismissal was deemed necessary for (ill-defined) “operational reasons” (Pittard 2006). With the protection of unfair dismissal laws removed, vulnerable workers felt insecure and could potentially be confronted with the choice of accepting AWAs with worse conditions or face dismissal.

WorkChoices led to employers dismissing workers and then inviting them to reapply for their jobs at lower rates of pay and less favourable conditions; workers forced to trade penalty rates for miniscule increases in their hourly rate of pay; and AWAs that removed previously held award conditions such as annual leave loadings, shiftwork loadings, penalty rates, and entitlements to public holidays. In particular, vulnerable workers (casual and part-time) in retailing and hospitality on AWAs were significantly worse off than workers on collective agreements (Peetz 2007; Australian Bureau of Statistics 2007). Government figures revealed that as many as 45 percent of AWAs had removed all eleven “permissible” award conditions — that is, they only included the five minimum conditions protected by law — and that nearly a third might have illegally undercut even one of these five (Davis 2007).

FORWARD WITH FAIRNESS: THE ALP POLICY MANIFESTO

Although the trade union movement anticipated WorkChoices and took the lead in campaigning against it (Muir 2008), the ALP, then led by Kim Beazley, also staunchly opposed the industrial relations changes. Beazley spoke at union-organized “rights at work” rallies and pledged to “rip up” AWAs, to dismantle the Fair Pay Commission, to return the power to fix minimum wages to the AIRC, and to make “wholesale changes” to the unpopular new unfair dismissal laws (Grattan 2005, 2006). When Beazley was replaced by Rudd as ALP leader in early December 2006, it fell to Julia Gillard, Rudd’s new deputy leader and spokesperson on industrial relations, to negotiate with the unions in drafting the party’s industrial relations policy.

The resulting policy manifesto, Forward with Fairness: Labor’s Plan for Fairer and More Productive Australian Workplaces (Rudd and Gillard 2007a), was endorsed by the ALP National Conference in late April 2007. It unequivocally stated that AWAs and statutory individual contracts would not be a part of its workplace laws although it did promise that there would be “transitional arrangements.” It pledged that there would be a legislated safety net for all Australian employees, which would expand the five minimal conditions of WorkChoices to ten by adding long-service leave entitlements, penalty rates for work on public holidays, minimum notice and redundancy pay for terminations, and the right for parents of school-age children to ask for flexible working hours. Awards could also contain a further ten minimum employment standards, increasing the “permissible” conditions in awards from sixteen to twenty. These additional matters were to cover minimum wages; type of work performed; arrangements for when work would be performed; overtime rates; penalty rates; provision for minimum annualized wages; allowances; leave; superannuation; and consultation, representation and dispute-settling procedures.

At the heart of the ALP’s policy was a commitment to collective enterprise agreement making. Awards were to provide a “floor” for collective bargaining and collective agreements were to override award entitlements, provided that employees were “better off overall.” There was a promise to simplify and reduce the number of awards and to develop a system of “modern awards” to provide minimum terms and conditions appropriate to particular industries, occupations, or enterprises. Awards would be reviewed every four years. Moreover, bargaining would have to be in “good faith.” However, while the ALP’s list of “workplace rights” included not only collective bargaining but also “freedom of association” and the “right to representation, information and consultation in the workplace,” the role of unions in the new system was more implicit than explicit. Employees were to have the right to seek advice and representation from their union, but the role of unions was definitely underplayed and restrictions on their activities remained. Indeed, the limiting of industrial action to periods of enterprise bargaining was to continue, and not all the union constraints imposed by WorkChoices were to be lifted. The ALP was not proposing to implement all the demands sought by the unions.

While the ALP policy included a pledge to protect Australian employees from unfair dismissal, this did not mean the restoration of the pre-WorkChoices status quo. For example, high-income employees were to be excluded from access to unfair dismissal procedures, and qualifying periods were to be imposed on eligibility. For businesses with less than fifteen employees, a worker would need to have been employed for twelve months before qualifying for unfair dismissal protection while a six-month probation period would be required for those working in larger businesses. Compensation for unfairly dismissed workers would also be capped.

The promise to create a “genuinely independent umpire” to oversee the ALP’s industrial relations system was to be fulfilled by the creation of a “one-stop shop”: Fair Work Australia (FWA). This was to be established by merging the AIRC, the Fair Pay Commission, the Office of Workplace Services, and the Office of the Employment Advocate. The resulting body would determine the minimum wage (annually), review awards, and give recommendations about national employment standards. It would also provide information and advice, undertake formal and informal dispute resolution, and have an inspectorate to monitor compliance. Within FWA, an “independent judicial division” and a separate (low-cost, lawyer-free) division would hear and determine unfair dismissal claims.

This announcement of the ALP’s industrial relations policy triggered sharp opposition from the business community, not least because it felt that the policy had been devised through negotiations with the trade union movement without consulting business interests. Mining industry leaders were the most vocal proponents of keeping AWAs (and excluding unions), and Gillard found herself under pressure to qualify what were seen as her threats to business if they adopted a partisan approach (Schubert, Bachelard, and Moncreif 2007; Bachelard et al., 2007; Grattan 2007a). Some of the most influential business industry bodies mounted an advertising campaign to support the continuation of WorkChoices (Grattan 2007b, 2007c; Muir 2008, 151–60).

In August 2007 Rudd and Gillard released Forward with Fairness: Policy Implementation Plan (Rudd and Gillard 2007b). This document was the result of consultation with business groups (as well as unions and others), and Rudd’s greater involvement was partly intended to soften strained relations between business and Gillard, and to give assurances to business that would minimize its opposition to the ALP. The Implementation Plan had two goals: (1) to set out clear guidelines for the transition to the ALP’s new industrial relations policy should the party win the approaching election and (2) to enhance the party’s electoral stocks by minimizing the scope for the coalition government to mount a successful scare campaign by painting the ALP as dominated by the trade unions and thus liable to allow a return to “the bad old days” of strikes and “union thuggery.” The document emphasized that the ALP’s industrial relations policy was one that “gets the balance right in the workplace and achieves both fairness and flexibility” (1). The subtext to balancing fairness and flexibility was that the ALP would “get the balance right” between union and business demands. Being perceived in this way was an important goal for both Rudd and Gillard, who, informed by the party’s focus group research (Jackman 2008, 136), were keen to be seen as not under the sway of either unions or business; they pointed to criticisms from both as evidence that they had achieved the right balance.

To this end, the plan restated not only that the “unfair” Work–Choices laws would be abolished (as promised in Forward with Fairness) but also that business could be certain that existing “right of entry laws” would be retained and that existing secondary boycott laws would be kept, as would “tough restrictions” on industrial action (such as mandatory secret ballots before protected industrial actions could take place) and prohibitions against “pattern bargaining” (2). In addition, the Australian Building and Construction Commission, the building industry’s watchdog organization, would continue in operation until the end of January 2010; thereafter, its responsibilities would be transferred to another body (24). The ALP’s “sensible transition arrangements” included a two-year transition period before its new industrial relations system would be fully implemented, during which individual “transitional employment agreements” could be made available for new employees as well as those already subject to AWAs. Existing AWAs would be allowed to continue to operate for their full term (2). Moreover, while AWAs would eventually be phased out, common law agreements for employers and employees who wanted flexible individual arrangements would be allowed under three conditions: they didn’t undermine the “safety net,” employees earning more than $100,000 could have flexible common law agreements without the award system applying, and flexibility clauses would also be included in enterprise agreements (1).

In sum, the plan went a long way toward satisfying business concerns by keeping some of the restraints on unions and by allowing AWAs (without that name) so long as they did not undercut award conditions. In “getting the balance right,” the ALP had bowed to business pressure. Effectively, the ALP was not promising to restore the pre-WorkChoices industrial relations conditions. Little wonder that some union leaders were angry that the ALP policy did not go far enough in removing WorkChoices (Schubert 2007a) and that the main union body, the Australian Council of Trade Unions (ACTU), did not directly campaign for an ALP vote in the Senate but rather issued how-to-vote cards calling for support for a party that “would abolish WorkChoices” (Bachelard, Murphy, and Grattan 2007). For the most part, however, union leaders muted any criticisms and maintained discipline because they were desperate to see an ALP victory (Muir 2008).

POST-ELECTION MANOEUVRES

The Rudd-led ALP achieved a decisive electoral victory on 24 November 2007. Opposition to the Howard government’s WorkChoices was a major factor in that victory, as confirmed by exit polls (Browne 2007), internal ALP polling (Jackman 2008, 236), ACTU-commissioned polling (Bachelard 2007; Van Onselen and Senior 2008, 75), and the Liberal Party’s federal director, Brian Loughnane (Shanahan 2007). Given the role played by the union movement in mobilizing opposition to WorkChoices and helping the ALP to victory (Muir 2008; Spies-Butcher and Wilson 2008), it is understandable that the immediate aftermath of the election included union demands to stop companies from entering into new AWAs and to backdate the rollback of WorkChoices. Rudd rejected such demands and maintained that the detail and timetable announced prior to the election would be honoured (Schubert 2007b).

The new ALP government did, however, move quickly to start the process of dismantling WorkChoices. The governor general, in his address to the opening of Parliament, announced that the government’s “first legislative act” would be to abolish the capacity to make AWAs (Grattan 2008). On 13 Februray, the government introduced the Workplace Relations Amendment (Transition to Forward with Fairness) Bill 2008 (Australia 2008), urging the opposition, which still controlled the Senate, to “respect the will of the voters” by passing the legislation before Easter (Murphy and Schneiders 2008).

Essentially, the Transition Bill sought to prevent the making of new AWAs, to create new Individual Transitional Employment Agreements (ITEAs) during the period of transition to the new industrial relations system, to establish a new “no disadvantage” test for future workplace agreements, and to establish the framework for the Australian Industrial Relations Commission (AIRC) to begin the process of modernizing awards. This bill represented the first steps toward honouring the ALP’s pre-election promises and involved extensive consultation with industry groups (Gollan 2008). It is worth noting, however, that while the bill prevented new AWAs from being signed, existing ones could continue indefinitely and ITEAs (which could be signed until 31 December 2009) could also continue indefinitely unless either the worker or employer terminated them after their nominal expiry date (Schubert and Schneiders 2008). That is, the ALP partially reneged on the promise made in Forward with Fairness that individual contracts would have no place in the party’s new industrial relations system. With the “no disadvantage” test, though, such new contracts could not be used to undermine working conditions (Cooper 2009, 287). Despite some divisions within the opposition, the shadow cabinet deemed it politically unwise to be seen to be still supporting the unpopular Work–Choices (Schubert and Schneiders 2008) and supported the legislation, which was duly passed before Easter and took effect on 28 March 2008.

THE FAIR WORK ACT

The passing of the Transition Bill was merely a limited first step for the Rudd government in seeking to establish a new industrial relations system that would replace WorkChoices. While the ALP government was determined to honour its pre-election promises, it faced a number of challenges, one being the need to write from scratch, rather than amend, the Workplace Relations Act 1988 in order to honour its promise to produce shorter and simpler legislation (Sutherland 2009, 305). This would be a lengthy process. Another problem was that the new Senate from 1 July 2008, while no longer controlled by the opposition, was still one in which the ALP was in the minority. To pass its legislation, it would need either the support of the opposition or that of the Greens, Independent Nick Xenophon, and Family First’s Stephen Fielding. There was also always the danger that as the time from the party’s election victory increased, its “mandate” would be weakened and the threat of forcing a double dissolution election to get its legislation through the Senate would lose its potency. Yet another challenge was the need to negotiate a course that largely satisfied union expectations and demands while not alienating key industry groups. Finally, the onset of the global financial crisis and the prospect of a major global recession had drastically changed the economic climate in which the legislation was to be enacted, which led to calls from business to delay the industrial relations changes.

The Rudd government released a draft of its new minimum employment standards the day after introducing the Transition Bill in Parliament. These National Employment Standards (NES) were not to take effect until 1 January 2010, but the early release of the draft was to allow for public consultation before a finalized version could be concluded in June 2008 to be incorporated into the Fair Work Bill (Sutherland 2009, 303). While this process was important because the AIRC would need to take these standards into account when drawing up its modern awards, it was also typical of the Rudd government’s extensive consultation process in devising its new industrial relations system. The government established three advisory groups to help in drafting the legislation: the Business Advisory Group, the Small Business Advisory Group, and the Workers’ Advisory Group. The Committee on Industrial Legislation, which was a subgroup of the government’s Workplace Relations Consultative Committee, held exhaustive meetings with these three groups, as well as with state governments, in drafting and redrafting the bill (Cooper 2009, 288).

The product of these consultations, the Fair Work Bill 2008, was introduced into Parliament on 25 November 2008 — almost exactly one year after the election of the Rudd government. Many of its key features, however, had been foreshadowed in earlier speeches by Gillard that were politically astute in softening up opposition and preparing the groundwork for the bill. For example, details of the changes to unfair dismissal laws and the retention of some anti-strike laws were announced in September, provoking some union anger, and the (limited) scope for compulsory arbitration was outlined in mid-November (Schneiders 2008; Teicher 2008). The bill itself was greeted with general acceptance. Malcolm Turnbull, now leader of the opposition, conceded that the government had a mandate to implement its industrial relations policy and stated that the opposition wouldn’t oppose the bill, save for possible amendments. Business groups, while not totally happy with the greater employee and union rights, had told the opposition that they could “work with the flexibility” of the bill. Heather Ridout, head of the Australian Industry Group (and a member of the Business Advisory Group), for example, saw the bill as “by and large” a workable compromise. And overall, unions were satisfied with their greater rights and the restoration of the centrality of collective bargaining although spokespersons such as Victorian Trades Hall Council secretary Brian Boyd argued that the bill did not go far enough (Grattan and Schneiders 2008). It was expected that the bill would be passed in the new year after a Senate inquiry, with its main provisions taking effect on 1 January 2010 and its unfair dismissal laws coming into operation on 1 July 2009.

By late February 2009, the changed economic conditions brought about by the global financial crisis had brought stronger opposition to aspects of the Fair Work Bill from employer groups and the opposition Liberal Party. The Victorian Employers Chamber of Commerce and Industry called for a year’s delay and then a review of conditions before introducing the changes to unfair dismissal laws, and the Minerals Council of Australia criticized the increased powers given to trade unions (Schneiders and Schubert 2009). At the same time, the Communications Electrical and Plumbing Union sought to take its complaints regarding the continued limits on trade union activities to the International Labour Organization (Schneiders 2009a). Yet the government remained resolute in resisting pressure to alter its laws, which were duly passed by the Senate after a compromise deal with Senator Fielding that allowed a phase-in period for changes to the unfair dismissal provisions (Murphy 2009; Karvelas 2009).

The Fair Work Act (Australia 2009) gave legislative form to the promises made in the ALP’s Forward with Fairness manifesto and its Implementation Plan. It established Fair Work Australia (FWA) and the Office of the Fair Work Ombudsman as its “one-stop shop” industrial relations body by merging the Workplace Authority, AIRC, Australian Industrial Registry, Workplace Ombudsman, and Fair Pay Commission as set out in Forward with Fairness. The promised judicial division of FWA, however, was replaced by Fair Work divisions within the Federal Court and the Federal Magistrates Court because of employer concerns with the lack of separation between judicial and non-judicial roles in the original proposal (Sutherland 2009, 305). The act expanded the safety net of guaranteed minimum conditions from Work–Choices’ five to the ten National Employment Standards and increased the “permissible matters” in awards from sixteen to twenty as outlined in Forward with Fairness. Similarly, the act delivered on the pledge to introduce four yearly reviews of awards and yearly minimum wage rulings. It also fulfilled the ALP’s promises to return collective agreements to centrality (with a “better off overall” requirement) and to stipulate that bargaining had to be “in good faith.” Other commitments made in Forward with Fairness that were covered in the act were those to simplify awards and introduce a system of “modern awards” on an industry basis, to maintain some of the restrictions on union actions, and to enlarge the coverage of the unfair dismissal laws.

The Fair Work Act also brought to fruition modifications to the ALP’s industrial relations policy that had been announced in its Implementation Plan. In particular, the plan’s promise to allow “flexibility clauses” in enterprise agreements was incorporated in the act (Australia 2009, 196). Its outline of a transition period for individual agreements had already been honoured in the Transition Act’s ITEAs while its contentious pledge to maintain the building industry watchdog until January 2010 was upheld although not through the Fair Work Act.

Some elements of the Fair Work Act were not spelled out in detail prior to the 2007 election and became matters of dispute with interested parties, but overall, the government was able to satisfy most sections of the union movement without raising undue ire from business groups. For example, FWA was given the power to arbitrate disputes (as wanted by unions), but this was greatly restricted (as wanted by business) to “first agreement” situations in low-paying industries and to situations where industrial disputes were “causing harm” and/or bargaining was not being conducted in “good faith.” Similarly, although some restrictions on union activities remained, unions benefitted by the provision that union officials could now visit worksites where there were persons “eligible” to join the union (and not just where unionists existed) and by the removal of some anti-union prohibited matters in awards such as union training leave and union fee deductions.

THE AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSION

With the passing of the Fair Work Act and the launch of Fair Work Australia on 1 July 2009, the Rudd government’s drive to establish a new industrial relations system to replace that of WorkChoices was almost complete. However, the government still faced a challenge over building industry regulation. As noted above, one of Rudd and Gillard’s public pre-election promises was that the Howard government’s Australian Building and Construction Commission (ABCC) would be kept as “a strong cop on the beat” until the end of January 2010 and that its functions would thereafter be transferred to another body. For many unionists — not just those directly affected — this body was seen as discriminatory and anti-union with its powers to summon witnesses and impose heavy penalties for non-compliance. Hence, for them, it typified the worst features of the Howard-era industrial relations and needed to be abolished. In contrast, its maintenance was a subject of fierce lobbying and campaigning by employers in building and construction (Cooper 2009, 288).

The Rudd government appointed Murray Wilcox (a former Federal Court judge) to head an inquiry to recommend what would replace the ABCC, and the resulting report recommended continuation of the strong controls over workers and unions in the building industry, including keeping, for at least another five years, the legal power to force building workers to be interrogated. Indications that the ALP government would follow the report’s recommendations prompted some unionists to claim that Rudd had promised in April 2007 (prior to $500,000 being donated to the ALP by the Communications, Electrical and Plumbing Union) to abolish the ABCC and that a similar promise had been made by Gillard later that month at the ALP conference (Schneiders 2009b). The unionists concerned clearly understood from the “trust me” assurances of both Rudd and Gillard that the ABCC would be abolished as soon as the ALP was elected to government, and they would have been unhappy with the later commitment, given in the Transition Plan, in August 2007 that the body would remain until 2010. No wonder, therefore, that there was considerable anger among unionists at the prospect that the abolition of the ABCC appeared to be in name only and that it would be replaced by something with largely the same powers.

In the lead-up to the ACTU Congress in June 2009, the unions called for further changes to the industrial relations system, with the ABCC’s abolition a major priority (Hannan 2009). Gillard’s address to the ACTU Congress acknowledged the “debate and difference” over the Rudd government’s honouring of its election promise to abolish the ABCC and replace it with a new specialist Fair Work body (Gillard 2009). She was booed by conference delegates (Allen 2009). Neither Gillard nor Rudd, however, was dissuaded from this course; they were able to overcome some backbench opposition to their legislation, which was introduced into Parliament on 17 June in advance of the ALP’s National Conference. Once again, Rudd stated that complaints from both unions and industry over the issue suggested that the government had “got the balance right” (Grattan and Schneiders 2009). Prior to the conference, the ACTU, in its submission to the Senate inquiry on the legislation, had reluctantly accepted the proposed changes (Schneiders 2009c), and despite some protests from union leaders at the conference over the retention of coercive powers in the building industry (Grattan 2009), the government position won the day. The legislation did reflect something of a compromise since fines in the building industry were to be reduced to bring them into line with other industries and greater safeguards against the coercive interrogation powers were to be introduced despite their continuation. However, the fate of the legislation, which would see the ABCC abolished and replaced by a specialist division of the Inspectorate of Fair Work Australia, was uncertain as Senator Fielding, once again finding himself holding the balance of power, insisted on a number of amendments that would prevent a softening of the new body’s powers (Schneiders 2009d). Faced with this Senate opposition, the Rudd government decided not to persist with this particular piece of legislation and the ABCC, to the chagrin of the unions, has continued with its powers untrammelled. Julia Gillard, Rudd’s replacement as prime minister, has shown no signs of abolishing the ABCC, and a building industry watchdog is liable to continue to be a matter of contention between the ALP and the unions.

THE 2010 ELECTION

In the wake of unfavourable opinion polls that presaged a Labor Party defeat and showed falling support for Rudd, Julia Gillard assumed the prime ministership on 24 June 2010 in what was seen as a coup engineered by party and union powerbrokers (Grattan 2010a). Within a month, she called an election to be held on 21 August. The ensuing campaign ranked as one of the most negative ever as Opposition Leader Tony Abbott maintained a mantra of stopping waste, stopping asylum-seeker boats, stopping the ALP’s new taxes, and restoring the budget to surplus. Gillard, as a newly appointed leader, found it difficult to campaign on her government’s record, especially since she had justified her replacement of Rudd in terms of the need to get the government “back on track.” She was also in the position of being unable to make expensive promises as both sides vied with each other to appear the more fiscally conservative and the best placed to restore the budget to surplus. The ALP, therefore, attempted to make industrial relations a major issue by mounting a scare campaign based on the possibility that Abbott, as a former Workplace Relations minister and committed supporter of WorkChoices, would, if elected, reinstate WorkChoices. A parallel campaign was conducted by the ACTU (Packham and Hosking 2010).

Abbott moved early in the campaign to assure voters that WorkChoices was “dead, buried and cremated” and that, if elected, he would not change the Fair Work Act in his first term of government, but when the Liberal Party failed to release an industrial relations policy, unions were not convinced (Schneiders 2010). Not all unions, however, supported the ALP. In Victoria, the Electrical Trades Union, which had disaffiliated from the ALP, chose to donate funds to the Greens, helping them win the formerly safe ALP seat of Melbourne. Neither the ALP nor the ACTU campaign over industrial relations proved effective, and the ALP suffered a heavy loss of seats in Queensland and lesser losses in New South Wales and elsewhere; despite strong support in Victoria, South Australia, and Tasmania, it lost its parliamentary majority. The opposition, however, also failed to gain a majority of seats, and protracted negotiations ensued to see which of Gillard or Abbott could form a minority government. The ALP had won 72 seats in the 150-seat chamber while the Liberal–National Party coalition had also won 72 seats — or 73 seats, if the National Party member elected in Western Australia, who initially refused to join the coalition (preferring to sit on the cross benches), was included in their numbers. The newly elected Green member and the Independent from Tasmania sided with the ALP and the Western Australian National Party member finally backed the coalition. This left three rural Independents, who were ex–National Party members, with the balance of power. Ultimately, seventeen days after the election, the two New South Wales Independents plumped for the ALP while the Queensland Independent backed the coalition, giving Gillard the barest of majorities with which to form a government (Grattan 2010b).

CONCLUSION

The ALP’s handling of industrial relations policy affirms the bind that social democratic parties find themselves in — trying to maintain close relations with trade unions in a globalized world in which neoliberalism still dominates policy discourse, even if they are inclined to reject its more extreme policy outcomes. The Rudd government did not show itself to be overly beholden to the union movement despite its role in the ALP’s election victory. In the name of honouring election promises, the ALP government resisted pressure from sections of the union movement to go further in undoing anti-union aspects of the industrial relations system left over from the Howard government years. It did not dissociate itself from organized labour, but it did, like other social democratic parties, tend to treat it more as “another interest group.”

At the same time, it can be argued that the Rudd government both acceded to and resisted business pressure. Before the election, the ALP modified its policy in response to business opposition and showed considerable latitude in allowing lengthy transition periods before its new policies would take effect, but after the election, it resisted delays to its pre-election timetable. It certainly sought a closer relationship with business and undertook extensive consultation with representative business groups in formulating its policy and drafting its legislation. It did indeed seek to strike a balance between union and business interests. The ALP position in support of unions was strengthened by the public unpopularity of WorkChoices, which meant that such support was not an electoral liability in 2007. This also enabled it to resist business demands to a limited extent. As the distance from its election victory increased, however, the ALP found itself either less inclined or less able to resist business demands to maintain the building industry watchdog despite its earlier assurance to unions that it would be abolished. The failure of both the ALP’s and the ACTU’s scare campaigns over the possible return of WorkChoices to sway voters in the 2010 election and the subsequent reduction of the ALP to minority government status, moreover, is liable to further weaken its links with the trade unions. Thus, while the ALP has, unlike some other social democratic parties, been able to maintain its links (albeit weakened) to trade unions, its need to placate business groups has also demonstrated the limits of social democracy in a globalized world.