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British Journal of Industrial Relations doi: 10.1111/j.1467-8543.2008.00694.x 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 interventionist and that under neoliberalism the state becomes more, not less, important 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 antiunionism — 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.

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We ask how and why the state, under the Howard government, reshaped the regulation of the employment relationship, and with what effects. In answering this question, we argue that the central mission of the government was in line with neoliberalism elsewhere: to reduce union power and drive the individualization 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 processes 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’ bargaining 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 Australian 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 interests, and union structures and cultures were more alike than different (James and Markey 2006; Patmore and Coates 2005). However, there are also significant 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 employment relationship for most of the twentieth century. The empirical core of the © Blackwell Publishing Ltd/London School of Economics 2008.

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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’ legislation 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 compulsory 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 assumptions 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 unionized workforces occupied the vital connecting points between local production 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 Commonwealth of Australia had been created by the federation of the previously © Blackwell Publishing Ltd/London School of Economics 2008.

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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 predominantly 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 Arbitration 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 compulsory 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.

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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 antiinflation 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 enterprise 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.

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TABLE 1 Union Membership and Density under the Howard Government Year

Members

Density

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

2,194,300 2,110,300 2,037,500 1,878,200 1,901,800 1,902,700 1,833,700 1,866,700 1,842,200 1,911,900 1,786,000 1,696,400

31.1 30.3 28.1 25.7 24.7 24.5 23.1 23.0 22.7 22.4 20.3 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 twentieth 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 artefacts of the early twentieth century. They might have agreed that between © Blackwell Publishing Ltd/London School of Economics 2008.

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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 neighbour, 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 government wasted little time and spared little legislative force in bringing in sweeping change. The government was keen to argue that it was being evenhanded, 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 relations were held in check by an uncooperative Senate until 2005. Upon gaining control of the upper parliamentary house, an even more profoundly antiunion 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 movement 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 agreements, 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; © Blackwell Publishing Ltd/London School of Economics 2008.

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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 significance reached well beyond their direct coverage. The total number in operation 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 collectively bargained and determined rights, conditions and wages. The government 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 practices 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 documents 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 maintain 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). © Blackwell Publishing Ltd/London School of Economics 2008.

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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 circumscribed (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 bargaining 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 waterfront, 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 conditions, 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 university 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 © Blackwell Publishing Ltd/London School of Economics 2008.

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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 Australian 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 Commission’s proceedings. ‘Suspects’ lost their right to silence under examination (McCrystal 2006). Finally, although we cannot explore them in detail here, it must be remembered 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, privatization 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 responsibilities (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 membership seemed to have bottomed out at 1,842,200 in 2004, but union density © Blackwell Publishing Ltd/London School of Economics 2008.

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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 government 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 considered 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 extraordinary 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.

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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 overviews, 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 employees (Stewart 2008). These changes were also profound because they abandoned altogether the use of the Constitution’s labour power as the basis for regulating the employment relationship in favour of the Constitution’s corporations 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 comprehensive. 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 commitment to non-union arrangements. This was the ‘employer greenfields agreement’, 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 employees 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.

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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 workplaces. 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.

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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 harrowing accounts of work and life in what were largely non-union sectors. They found that significant changes had occurred in the workplace, including 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 industrial 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 government information hotline had been instructed not to use the term. The more substantive change was that the Workplace Authority was to vet new agreements 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.

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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 bargaining’ (Howell 2005: 188). At the time of writing, the Workplace Relations 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’ bargaining 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 membership (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 consistently 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.

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5. Conclusions Business lobby groups launched a sustained offensive on collective bargaining 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 institutions 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 productivity 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.

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comments and questions. The authors alone are responsible for the interpretation 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 coalition 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 spokespeople 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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