Paul Howes' speech to the National Press Club 5th February 2014
Watch the video here
Today I want to express my vision for industrial relations change that I believe will deliver prosperity for Australia.
But before I do there is, of course, another matter to attend to.
After a week-and-a-half of front page allegations of corruption in some unions there are things that need to be said - and said in the strongest possible terms.
Any union official proven to be engaged in corrupt or criminal behaviour is a traitor.
...to our members they have betrayed.
...to our cause they have dishonoured.
...and to our future they have undermined.
The eternal truism of leadership is that you define the environment lest it define you.
And so the challenge for the leadership of the modern trade union movement is this:
We must not allow this treachery to define us.
We must not allow the traitorous minority to usurp the meritorious majority.
We can achieve this. A prescription already exists in my own union’s recent history.
As you know, the AWU was nearly wiped out by corruption and scandal in the 1990s.
We understand - more than most - the costs of inaction.
As a result we have been ruthless and uncompromising when it comes to even the suggestion of impropriety.
I have moved swiftly and harshly over relatively minor matters – and I would do it again at the drop of a hat.
I also know that I’ve made myself unpopular on occasion by insisting on adherence to standards that might seem trivial.
Yet the point isn’t the compliance detail itself but the culture it creates.
If we turn a blind eye – if we ignore any pocket of dishonesty – it will grow like a cancer.
It is my job - and the job of every union leader - to cut that cancer out. We must be the first to identify the indiscretions.
We must be the first to crack down hard before they get out of control. I am talking about developing corruption resistance at every level. Developing a culture which is repulsive to corruption.
In doing this we should be under no illusion – those who act dishonestly from within the union movement are worse than any crook boss.
They are wearing the badge of our movement and exploiting it for their own personal agendas.
When that agenda is basic theft it is a disgrace. We should have no sympathy for such criminals.
And when that agenda is playing out some sort of immature, Sopranos-style, tough guy fantasy – that is just as bad.
And I've got a message for you - you are unwelcome.
You are hijacking our agenda.
You are undermining the interests of two million hard-working, decent men and women who simply believe in the fair go.
And believe that we all have the right to share in the spoils our nation has honestly earned.
The wealth for toil that our national anthem promises.
You undermine every battle we have fought – every victory we have achieved – every sacrifice that we, and the generations that came before us, have made.
There is no place for you in any corner of our movement.
We must never confuse strength with thuggery.
Being a strong unionist, is not about how many bikies you know.
Or about scary slogans.
Or about how you walk or how you talk.
It is not an attitude.
We are a movement - not a subculture.
The Australian Workers' Union is strong.
But our strength is from using our brains - not our brawn.
We work hard.
We work smart.
We are open.
And we engage like civilised adults.
And that, in fact, is the story of our movement.
We are about civilising capitalism.
We are about workplaces happier – not angrier.
We are about delivering for all – not just a few.
That is why we exist.
With that in mind I now turn to the type of industrial relations system we need to drive our prosperity.
And if we are to be prosperous, we need to start by being honest.
The truth is, today we are facing a real jobs crisis.
This country has shed 130,000 jobs in manufacturing alone since the GFC. Tens of thousands more lie just around the corner.
Indeed, 3000 more lie down the road in Shepparton.
Over my seven years as National Secretary I've travelled to many good factories in deep strife.
Yet until recently - for every struggling factory I visited – I could visit a mine or construction site in some remote area – and see blue-collar workers earning decent wages.
I could almost console myself that for all the pain being felt in our factories – there were new jobs popping up in the resources sector right across the country.
I wasn't alone.
For years, the resources sector has papered over the widening cracks in our job market.
Well, the boom is now over.
Maybe not for the resource companies, their revenues will be rolling in faster than ever.
But it’s over for Australian workers.
The construction phase in resources is ending and employment is drying up right across the sector.
There is nowhere to hide.
So as 2014 dawns, we as a nation should ask ourselves this question:
Why have we slipped down the pole to the 21st spot in the World Economic Forum's rankings on global competiveness?
Why are our key industries in the doldrums?
Why can’t we be at the top, with other wealthy nations?
Some will tell you that our industrial relations system is dragging us down.
And I won’t be popular amongst my friends in the labour movement for saying this - but I agree.
However, I don’t want to call in the lawyers so they can start pulling apart legislation.
The golden key to productivity and our competitiveness, is not another WorkChoices, or indeed another Fair Work Act.
We need to step back and recognise a pattern.
A concerning pattern.
It’s the see saw pattern of industrial relations in this country.
We’re not being dragged down by the detail of any particular raft of industrial relations legislation.
Australia is being dragged down because we’ve had far too many of them. I first became a union official in 1998.
Since then I have operated under eight significantly different industrial relations frameworks:
The NSW Industrial Relations Act of 1996.
The Federal Workplace Relations Act of 1996.
Significant changes to that act in 1999 and 2001.
WorkChoices in 2005.
WorkChoices Mark 2 in 2007.
The Fair Work Act of 2009.
And the Fair Work Amendment Act of 2012.
It's little wonder the partners at Freehills and the partners at Slater and Gordon are doing so well.
Labour market policy is a core pillar of the national economy. It’s as critical as monetary policy and trade policy.
When a company hires new employees – this is every bit as important as when it decides to borrow capital.
Yet can you imagine what would happen if other key pillars of economic policy were being knocked down and rebuilt so often?
Imagine re-regulating the interest rates regime on a three-year election cycle. Can you picture what that would do to business and household confidence?
It would create disastrous instability. We’d all be crying for it to end.
And yet we seem to accept that industrial relations can be treated like a backyard game of totem tennis.
We are always urging our local enterprises to plan for the long-term – but it’s near impossible when you don’t know what rules you’ll be playing under.
This culture of perpetual instability means business and unions believe - quite reasonably – they don't need to cooperate today - because they’ll be able to rewrite the rules tomorrow.
As a result, both sides engage in wild, overblown claims about how disastrous the legislation of the day is.
Business senses an opportunity whenever the Coalition takes office to shift all the rules in its favour.
Unions do the same when Labor gets in. And ultimately no one gets anywhere.
Little wonder then that the World Economic Forum rates us 103rd in the world when it comes to cooperation in workplace relations.
We have created a hyper-adversarial culture – industrial relations as a bloodsport.
Everything is perpetually up for grabs – and so the micro is exaggerated up to the macro.
Pragmatic issues of detail mutate into grand ideological battles.
A certain industry or sector may have an issue, say, with a specific penalty applying to a specific holiday – and suddenly we're having a bruising national debate about whether penalty rates should exist at all.
We're battling over a fundamental issue of principle that both sides should be settled on.
Instead, one side is always being egged on to overreach.
Inevitably they do, and in doing so, they alienate a big chunk of the public.
This, of course, is our cue to counter-punch.
To stand on podiums like this and say WorkChoices, WorkChoices, WorkChoices.
Then they will run some grainy black and white ads of bikies in dress shops, and footage of Craig Thomson with ominous music – and round and round we go.
It's just a little bit predictable.
Other nations have worked out how to get off the mindless seesaw.
And as we carry on, they will use their relative workplace harmony to foster greater collaboration and skip out further ahead of us.
It’s destructive, irrational and unsustainable for our future prosperity. --
And so to the hard part... what to do?
Well, for starters, we need a circuit breaker.
And again, the past offers some useful instruction.
It's become very fashionable of late to praise the Accord of thirty years ago.
Even those who railed against it at the time, now acknowledge it as the critical turning point in the nation's economic history.
And despite all the reasonable compromises, hammered out between unions and business – the notable attribute of the Accord was not its conditions – but the stability that it provided where once there had been chaos.
Suddenly the economy could move forward again with confidence – because players could actually see the path ahead of them and count on it not taking an unforeseen turn.
Of course, the scene has moved on considerably since the 1980s.
An Accord anything like that would be impossible today.
But I believe we can evoke the same spirit.
I think we must draw the key industrial players together to find a new form of stability.
A Grand Compact is not just possible, it’s desperately needed.
A Grand Compact in which business, unions and government all work out a deal that we all agree to live with for the long haul.
A Grand Compact in which unions, business and government create an industrial engagement pursuant to agreed national goals.
An industrial engagement that as a key organizing imperative provides certainty not for three years – not for four or five – but on 10, 15, 20 year horizons.
A Grand Compact that generates certainty and thus confidence.
That values long term planning.
That establishes investing in a workforce as a virtue and not a cost.
Where productivity is a shared responsibility not someone else’s job.
Where on the job training and development and career planning are the norm.
Where making a concession in the name of achieving the collective goals is a sign of strength and not weakness.
And where change is used to present more opportunity than threat. Broad strokes, sure, but I’m talking about a profound attitudinal shift. And that doesn’t start with detail.
It starts with goals and with values.
And it must start with fundamentally reappraising what the role of government is on industrial relations.
I don't think I'm alone when I say I have felt decidedly uncomfortable – watching the government hectoring and lecturing some of Australia's most respected and accomplished business leaders about how they should manage.
And I've felt uncomfortable watching them lecture workers about what they should accept as a fair deal.
I'm something of a libertarian in this department – I believe politicians - most of whom have very limited experience in business – have no place prodding and advising and bullying from the sidelines.
And putting general principle aside - the fact is that this approach simply won't work.
A bitter, all-out war between labour and capital will not end with productivity gains.
The Federal Government needs to realise that its primary role is actually to take a few steps back – and to use that perspective to start fostering harmony and cooperation.
Now I don't for a second think a Grand Compact would be easy to achieve.
But the benefit would be so immense that it is worth pursuing with vigour and persistence.
This would not be the first time that all the key players sat around the table to share views on IR legislation.
That’s exactly what was attempted with the Fair Work Act.
But the difference with the Fair Work Act was that it was a direct reaction to WorkChoices.
It was borne of a mandate which had delivered Labor government for the first time in 11 years.
It was a child of the see-saw.
Don't get me wrong.
It is a fine piece of legislation that I support.
But its fair to say that although business was handed a number of key concessions, they accepted the new deal through gritted teeth.
In retrospect, it is clear that genuine consensus had not been achieved.
Business had simply accepted the reality that WorkChoices was political poison – and they had to bide their time before jumping back on the see saw.
We naively believed that everyone being a little bit unhappy with the outcome, delivered the compromise that was sought.
It turns out we were wrong.
So how could things be different with a Grand Compact? Well, obviously, we have a different climate now.
Instead of being elected with a thumping mandate to overhaul existing industrial relations laws – the current government was elected on a platform of maintaining the status quo.
This ceasefire is inherently unstable, however.
Business is already lobbying for its turn. Unions are ready to fight a fierce defence.
And through Productivity Commission reviews, heightened rhetoric, and niggling on the side – it appears to be almost certain that the government is preparing for a second term jump on the see saw.
Yet this current uncertainty may actually present a chance to get all the parties negotiating on a more balanced playing field.
On such a field, what could really get things moving are gestures of compromise from both sides.
Nothing throws a sworn enemy off their guard quicker than genuine concession.
The union side could begin by conceding that there has been a pattern of unsustainable growth in wages in some isolated parts of the economy.
The leap-frog wage outcomes in the offshore sector in particular are not going to be sustainable for the long-term – we could be pricing ourselves out of the market.
And while this is the natural outcome of a market-based wage fixing environment – we should not be stubborn about acknowledging it – and recognising that it needs to be changed.
On the flip side business could concede that on the whole, economy-wide – wages growth is at the lowest level that is has ever been - and industrial disputation is at record lows.
Perhaps they might agree – penalty rates and the minimum wage are fundamental planks of our social contract and should remain.
And look – these may or may not be the best places to start with the concessions.
But that's not too important.
Because if we are to achieve a Grand Compact it will not be the detail of the new framework that is critical – it will be the trust and good faith we breath into the new system.
We can all hammer out a terrific piece of IR legislation – but it won’t mean anything unless business, unions and the major parties make a real effort to show some faith in it.
Because our key problem is not a failure of structure – but a failure of social capital.
The absence of social capital in our industrial relations system is something of an Australian anomaly – because strong social capital is actually what drives our success in most other areas.
Our country is rightly perceived as a great place to live, to travel and to invest - not because our laws are that much better than anyone else's – but because of the faith everyone has in them.
When a customs officer stops you at Sydney Airport, it might be annoying – but you would always assume that officer is just doing their job and not seeking a bribe.
When you stop at a red light on a traffic-free street – it is primarily out of respect for the fairness of the system it represents – not the fear of getting caught.
Yet that social capital – that same trust and good faith, is completely missing from our industrial relations system.
Instead we have both sides automatically questioning each other's motives.
We have both sides refusing to accept that those sitting opposite them are really as they seem.
The point of driving a Grand Compact is to try and inject a bit of social capital back into workplace relations.
It’s a tough ask, sure.
But it’s not as tough - as the present dynamic is foolish.
Of course we could revert back to tradition and have the sort of ding-dong battle that hardens both sides and generates the contempt of the public.
Our shallow, short-term interest against their shallow short-term interest.
And the winner can do a quick victory lap, while the loser licks their wounds and prepares for next time.
And there will be a next time.
For 150 years there's always been a next time.
Australia has had 16 conservative prime ministers since Federation who thought they could destroy the union movement – and 16 have been wrong.
We could notch up another one, I guess.
But it would surely be easier to acknowledge the fact that in a modern, democratic society like ours – it is ridiculous to see the destruction of unions as some sort of ultimate endgame for the economy.
A servile and cowed workforce will not deliver economic success. Collective bargaining is a friend of productivity and an enhancer of profits.
It is far easier and more efficient to negotiate with a group than with individuals.
The richest and happiest nations on the planet prove this on a daily basis. We should learn the lesson.
But in the spirit of the Accord I just want to say, I’m here.
I’m ready to make compromises and concessions in the national interest. And my invitation to my counterparts in the business community is to join me. And together we can agree to never whinge to the umpire again.
I believe the Australian Labor Party needs to embrace the Grand Compact agenda with both hands.
Because despite the overblown rhetoric of various megaphones in our public debate – Labor is actually in a stronger position to strengthen the role of the market in our society than the conservatives are.
Labor has always been the party of the free market - because we ensure the market works for all.
We civilize capitalism.
I believe an honest, clearly-articulated vision from Labor would be destined to catch on.
We need to talk more about 'why Labor', rather than 'how Labor'
Labor's sole purpose is not to claw back the Lodge in the most expedient way and then jealously guard it for as long as possible.
It wasn't right for the last six years – and it is not right now for an Opposition to death ride the Government of Australia.
Instead Labor needs to show Australians a big picture – and they need to believe that we believe it.
And to do this we need to take business with us. We need them in our tent.
We need to convince them that what we are about is entirely consistent with their prosperity.
They should understand a lurch back to WorkChoices-style conditions – is nothing but a get-rich-quick scheme.
But a Grand Compact is a golden long-term investment.
I don't believe for a second that the Abbott Government is un-turnable on industrial relations.
Despite the more cartoonish portrayals, the Prime Minister is far more a politician than he is an ideologue.
But the point is we can't force people into this - we need to take them with us. A Grand Compact can only be driven through the art of persuasion.
We need to identify potential common ground – and push both sides to quarantine it.
We must agree that Australia is at risk if we fail to compete against nations with more harmonious industrial relations.
We must agree that the answer is not driving down wages and conditions, nor ongoing industrial warfare.
And we must agree that we all share goals and aspirations – and we will stand or fall together as a nation.
To my friends in the union movement I say this:
Every worker needs a successful company.
To the business community I say this:
No company is successful without an engaged, energised and motivated workforce.
And to the Parliament of Australia, I say this: Get us off this seesaw.
Industrial relations is not turn-based.
The national interest is too important. Give our economy the certainty it needs.