Econ 243 Ass 1 Lana Roelandts 2011
-
Upload
lana-roelandts -
Category
Documents
-
view
22 -
download
0
Transcript of Econ 243 Ass 1 Lana Roelandts 2011
Lana RoelandtsECON 243, 2011220032777External
ECON 243
ASSIGNMENT
2011
LANA ROELANDTS
WORD COUNT: 3174
Lana RoelandtsECON 243, 2011220032777External
Compare the Howard Government’s WorkChoices legislation for Australia’s industrial relations
with the Fair Work Australia legislation of the Rudd/Gillard Government. In your answer show
that you understand the significance of the differences.
The Howard government’s amendment to the Workplace Relations Act 1996, the Workplace
Relations Amendment (WorkChoices) Act 2005 was a substantial change to Australian industrial
relations structure and policy. The WorkChoices legislation made significant alterations to the
previous Workplace Relations Act. The most notable alterations were the reduction in the number of
awards, the introduction of Australian Workplace Agreements as a primary determinant of wages
and conditions, the elimination of the Australian Industrial Relations Commission’s role in setting
wages and conditions for employees, abolishment of the “no-disadvantage test”, and the
abolishment of unfair dismissal laws.
Under the Workplace Relations Act 1996 20 matters regarding wages and hours were included in
awards for employees. However, under the WorkChoices 2005 legislation the number of matters
that could be included in an award was reduced significantly, from 20 to just 5. This meant that
employees were required to negotiate all other working conditions through enterprise bargaining
negotiations in their Workplace Agreements.
Enterprise bargaining has slowly become more prevalent in Australian Industrial Relations over the
last twenty years. It was brought to the forefront in the Industrial Relations Reform Act 1993,
however the WorkChoices legislation made enterprise bargaining the primary determinant of wages
and conditions. This meant individuals would be required to negotiate their terms of employment.
Lana RoelandtsECON 243, 2011220032777External
AWAs were seen as detrimental industrial relations legislation, as if an individual refused to sign
their workplace agreement, then employers could simply terminate employment within the firm.
The negotiation task was made even more difficult through the changes to one of the key industrial
relations regulatory bodies, the Australian Industrial Relations Commission. “WorkChoices effectively
eliminated the AIRC-and state industrial tribunals-from wage-fixing process, and replaced the award
system as a ‘safety net’ with the Australian Pay and Conditions Standard”. (Sappey et al, 2009, p.224)
This was a significant legislative and structural change, as the key role of the AIRC set minimum
wages and conditions, and conciliation and arbitration duties in settling industrial disputes. The
Howard government introduced the Australian Fair Pay Commission to determine minimum wages
and conditions for employees, instead of the AIRC, and the arbitration and conciliation functions of
the AIRC were limited.
The abolishment of the “no-disadvantage test” became a crucial element of WorkChoices, as its
abolishment created the possibility of loss of award conditions and standards under AWAs. “It was
the no-disadvantage test that retained the relevant award as a person’s safety net. Before the
commission could approve a collective agreement, or before the Employment Advocate could
approve an AWA, they had to satisfy themselves the deal would leave the workers at no overall
disadvantage compared with the provisions of their award... Now, however, the no-disadvantage
test is to be replaced by an ‘Australian fair pay and conditions standard’. That is the collective
agreement or AWA can’t provide for pay rates lower than those set by the Fair Pay Commission or
conditions of leave and standard hours worse than those specified in the new legislation.” (Gittins,
2005)
After the Howard government lost power in November 2007, the then Rudd Labour government set
out to remove some of the injustices put in place by the WorkChoices legislation. The first important
Lana RoelandtsECON 243, 2011220032777External
thing was to abolish the Workplace Agreements and revert to a system of awards as the safety net
for workers. This was an attempt to make Australian industrial relations more equitable for more
Australian workers.
Under the Fair Work Australia legislation, the number of allowable matters was increased to 20
allowable matters to be written into every employment control for minimum conditions. “...the
National Employment Standards (NES) form part of the safety net, with ten minimum employee
entitlements covering all employees engaged by a constitutional corporation, that cannot be
bargained away with enterprise agreements (with a further ten minimum conditions for employees
covered by new, modern awards).” (Sappey et al, 2009, p.412)
Perhaps the most notable reform in industrial relations from WorkChoices to the Fair Work Australia
(FWA) legislation was the introduction of Fair Work Australia, which is a tribunal which was put in
place to replace the Australian Fair Pay Commission and the AIRC. In other words, it was put in place
to be a federal tribunal that oversees the Australian workforce, and carries out functions such as
setting wages and conditions, dispute resolution process, industrial action complaints and processes
in dealing with industrial action, and enterprise bargaining functions. FWA has become the national
regulator of industrial relations functions.
Another notable reform was the inclusion of small businesses in unfair dismissal claims under the
FWA legislation, whereas small businesses were exempt from unfair dismissal claims under
WorkChoices.
Reforms put in place by the Rudd/Gillard Labor government under the FWA legislation, although not
completely abolishing all aspects of the WorkChoices legislation, it did however, correct some great
Lana RoelandtsECON 243, 2011220032777External
injustices and restore a degree of equity between employers and employees in the workplace.
Discuss the importance of national competition policy since 1995 and the role of the Australian
Competition and Consumer Commission.
Prior to 1995, competition laws and policy in Australia were administered differently than they are
now. Before 1995, competition policy was regulated by the Trade Practices Commission and the
Prices Surveillance Authority. The two pieces of legislation enforcing the rights of these regulatory
bodies were the Trade Practices Act 1974 and the Prices Surveillance Act 1983. It is the merger of
these two regulatory bodies, which occurred in 1995, that has given shape to the current national
competition policy regulation in Australia.
“In 1992 the Commonwealth Government set up a committee to inquire into a national competition
policy... The recommendations of the committee, contained in the Hilmer Report, were accepted by
COAG (Council of Australian Governments) in February 1994.” (Lewis et al, 2010, p.74) The Hilmer
Report stated “the need for a broad approach to regulation.” (Lewis et al, 2010, p.74) It also
“recognised that Australia is a single integrated market with state and territory boundaries
diminishing in importance” and that “many trade restrictions had been removed or diminished
making the traded goods sector more competitive”. (Lewis et al, 2010, p.74) Based on the Hilmer
Report, the federal parliament passed the Competition Policy Reform Act 1995. “The CPRA is an
amendment to the TPA and includes within it the Prices Surveillance Act.” (Lewis et al, 2010, p.74)
Lana RoelandtsECON 243, 2011220032777External
This legislative amendment was crucial because the Trade Practices Act (TPA) has been one of the
key pieces of legislation regarding Australian competition policy. “The TPA is concerned with the
behaviour of firms rather than prohibiting certain industry structures. Thus, a monopoly is not
actually prohibited; rather, it is the uses of monopoly power to, say, fix high prices, that is
prohibited.” (Lewis et al, 2010, p.71) The TPA legislation’s functions were to deal with elements such
as the misuse of market power, mergers and acquisitions, unconscionable conduct, anti-competitive
agreements, as well as many other areas. The amalgamation of the TPA with the Prices Surveillance
Act (PSA) under the CPRA, included the ability to investigate price rises, to monitor the prices, profits
and costs of firms, and to hold inquiries regarding the supply of goods and services to the functions
the Act was to oversee. It was agreed, that with the amalgamation of the TPA and PSA, that the
regulatory bodies entrusted in distributing the legislation should also be amalgamated, in order to
create a nationwide competition policy regulator. This is how the Australian Competition and
Consumer Commission (ACCC) came into existence in 1995.
The role of the ACCC is defined on its website as “The ACCC promotes competition and fair trade in
the market place to benefit consumers, business and the community. It also regulates national
infrastructure industries. Its primary responsibility is to ensure that individuals and businesses
comply with the Commonwealth's competition, fair trading and consumer protection laws.” The
ACCC website also states “The Australian Competition and Consumer Commission is an
independent statutory authority. It was formed in 1995 to administer the Trade Practices Act 1974
(renamed the Competition and Consumer Act 2010 on 1 January 2011) and other acts.” The ACCC
“was formed as part of the implementation of the National Competition Policy program.” (Lewis et
al, 2010, p.71)
Lana RoelandtsECON 243, 2011220032777External
A somewhat important legislative change occurred on 1st January 2011 with regards to competition
policy. The Trade Practices Act 1974 was renamed as the Competition and Consumer Act 2010 (CCA).
Although the content of the Trade Practices Act did not undergo severe legislative change, the
change in the TPA’s name must be noted when dealing with aspects of national competition policy.
This move can be seen to reflect the regulatory functions of the ACCC, by specifically highlighting the
nature of the legislation’s governance of competition and consumer welfare and policy.
Exclusively, the CCA gives the ACCC the authoritative power to deal with “unfair market practices,
industry codes, mergers and acquisitions of companies, product safety, product labelling, price
monitoring, and the regulation of industries...” This is especially important, when failing to do so
could disadvantage consumers and impede upon consumer welfare, and the welfare of other firms
in the market. For example, collusive behaviour between market leading firms, such as price-fixing
and other similar behaviours not only impact upon consumers, but they also have negative impacts
on the competing firms in the market, as this behaviour has the ability to negatively impact upon
efficiency. It is the ACCC’s role and function to limit this kind of behaviour and make competition
policy in Australia as equitable as possible, with a few exception.
Lana RoelandtsECON 243, 2011220032777External
What was the regime of labourist-protectionism? Discuss why it was replaced by a neo-liberal
globalisation policy in the 1980s.
Labourist-protectionism has been in existence before the federation of Australia in 1901. However,
at the start of the 20th Century, the State and Federal governments began to play a larger role and
have a greater influence on the Australian economy. With regards to economic protection of
emerging Australian industries, tariffs were introduced as a mechanism to encourage the purchasing
of domestic products by placing a tax on imported goods. This effectively was a means of protecting
domestic producers and firms, especially in emerging industries in the primary sector, such as
agriculture, mining of resources etc.
An early example of a tariff legislation imposed to protect domestic firms was the Excise Tariff Act
1906. Under this legislation the Excise Tariff Act introduced tariffs for the newly emerging
manufacturing industry in Australia. Under the Excise Tariff Act “employers were granted tariff
Lana RoelandtsECON 243, 2011220032777External
protection, provided that a fair and reasonable wage was paid to their workers”. This stipulated that
firms were eligible for protection from imports only if they met the minimum fair wage requirements
set out in the Excise Tariff Act legislation.
The basic premise of labourist-protectionism was to secure the interests of the white Australian
male worker. This involved securing employment/job security, wages, and ultimately quality of life
for the white male worker. The way in which labourist-protectionism operated was to
restrict/regulate industries in Australia in the primary sector and reduce the threat of foreign trade
and investment. It was economically viable for the Australian government to engage in labourist-
protectionism as Australian workers were earning high incomes due to the primary sector exports,
such as wool, wheat, gold, minerals, coal, beef and iron ore.
Although protectionism was a way of providing protection to domestic producers in domestic
markets from the threat of international competition, over the course of the century, the Australian
government shifted away from protecting industries. “As a result of tariff protection, many other
sections of the economy suffered. Those industries that used Australian-made inputs had to pay
higher prices due to cost inefficiencies in the production of those inputs. Industries relying on
imported inputs were disadvantaged, as the tariffs placed on the imported inputs raised domestic
production costs.” (Lewis et al, 2010, p.26) Another economic burden of tariff protectionism is
“tariffs on imports raise the value of the Australian dollar, reducing incomes for exporters and
making imports more expensive.” (Lewis et al, 2010, p.26)
It is due to these factors that the protectionism policy in Australia was drastically reformed
throughout the 1970s. It was in 1973 until there was “any decisive change in public policy on tariffs.”
(Lewis et al, 2010, p.26) Under the Whitlam Labor Government, “the government reduced all tariffs
Lana RoelandtsECON 243, 2011220032777External
unilaterally by 25 percent.” It was around this time that Australia was experiencing what is referred
to as stagflation, effectively a wage/price spiral with inflation followed by high levels of
unemployment due to increases in wages and the subsequent increases in living costs. There was
also an increasing demand to make Australian markets more open to international competition.
Ultimately, deregulation of Australian markets was sought in an effort to make Australia more
globally competitive. In other words, a neo-liberal stance was taken in a quest for global
competitiveness by Australian markets. Neo-liberalism is the belief that the State should only play a
minimal role, that supply and demand should determine prices of things and the State should not be
regulating markets. This belief was strongly held by the Hawke Labor market, and ultimately led to
the floating of the Australian Dollar on the stock exchange, which meant that fluctuations in its price
were “determined by the demand and supply of Australian dollars in international currency
markets.” (Lewis et al, 2010, p.36) This occurred in December 1983. As Australian industries became
more competitive, there was also an increase in the requirement of legislation to provide protection
for consumers and firms in operation, eg the Trade Practices Act 1974 (Cth).
Through the lowering of tariffs and the opening of Australia’s economy, Australia has, over the
course of a century, slowly shifted from the labourist-protectionism past, to a more economically
efficient neo-liberalist outcome, and has embraced global competition through market deregulation
and a shift towards free trade, and positioned Australia in an advantageous competitive position
within the global marketplace.
Lana RoelandtsECON 243, 2011220032777External
Discuss the usefulness of the concept of ‘path dependency’ demonstrating its use in explaining
Australia’s history of institutional continuity and change. In your answer discuss three examples of
how the concept can be applied.
Path dependency operates on the notion that, in order to understand current systems it is important
to understand previous systems and their functions and how these systems have changed over time.
Path dependency is a useful notion for explaining Australia’s history of institutional continuity and
change, as it specifies how the tradition of concepts and ideas that have been long withstanding can,
in some cases be difficult to break away from. “Economic behaviour and policy are heavily influenced
Lana RoelandtsECON 243, 2011220032777External
by this historically-derived and existing structure of institutions and the choices they allow.” (Kellett,
2011, p.4) A practical example of this is the industrial relations system in Australia. The Conciliation
and Arbitration Act 1904, was the first major development of industrial relations institution in
Australia, and it put in place and industrial relations structure that would remain relatively
unchanged for over 50 years. This structure is that of government regulation regarding the
determining of employee wages and conditions through an award system and the setting of a
minimum wage standard. This function remained comparatively unchanged until the Howard
government’s WorkChoices legislation in 2005. Using path dependency, it can be said that the
WorkChoices legislation was an inefficient and ineffective reform to the industrial relations system
as, the highly centralised wage setting system that had been in place in Australia, was a long
standing and effective institution at ensuring workers received a fair minimum wage, and the
WorkChoices legislation shifted this institution and replaced it with a decentralised wage
determination system. The Howard government failed to realise that the path dependency with
regards to the previous industrial relations system was strong and much of the Australian
population, particularly the working population did not want to reform this institution. This is
because if institutions are successful in delivery desirable social outcomes, then there is no need to
change them. WorkChoices did not deliver desirable social outcomes, therefore reverting to the
previous system was necessary.
Another example of this path dependency can be seen with regards to large economic institutions.
Historically, for example, the Commonwealth Bank of Australia was owned by the Commonwealth
government. Historically, the Commonwealth Bank was Australia’s central bank, and was responsible
for setting interest rates, etc, until 1960. As the Australian economy continued to flourish after the
Second World War, it was seen that, in order to be more competitive within the industry it would be
a suitable solution for the Commonwealth Bank to be privatised. Although the history of the
Lana RoelandtsECON 243, 2011220032777External
Commonwealth Bank was that it was government-owned, the developments of rapid global
expansion of markets was an indicator that privatisation was the suitable alternative to encourage
competition, and therefore create better social outcomes for individuals through the increase in
choices and the lowering of banking rates and fees.
Vertical fiscal imbalance and horizontal fiscal imbalance are examples of explaining Australia’s
institutional history, highlighting the Australian Constitution. Vertical fiscal imbalance occurs when
the Federal Government generates more tax revenue than the state governments. Historically this
was not the case, as state governments traditionally had significant power over taxation and
development of public infrastructure. The “imbalance between States’ spending needs and revenue
powers (known as vertical fiscal imbalance) has largely arisen from the Commonwealth’s takeover of
income taxes in World War II and the High Court’s striking down of many State taxes on the basis
that they are “excises” (which are reserved to the Commonwealth under the Constitution).”
(Scherini, 2006, p.1) This shift in power enforced by the institution of the Constitution, has had a
mixed reaction, however, provision of revenue to states by the federal government was undertaken
as a means to better social outcomes for all Australians. The provision of state grants to state
governments is an effective means of correcting vertical fiscal imbalance. These grants are generally
used for the building and upkeep of public infrastructure, required to improve social outcomes for
Australian citizens.
Horizontal fiscal imbalance “arise because there are differences between states in the costs per head
of providing public services.” (Lewis et al, 2010, p.48) This can be remedied by the federal
government provision of required grants, based on requirement and urgency for funds.
The decision by the High Court of Australia to remove many state taxes, on the grounds of them
being “excises”, which, under the Constitution, are reserved for the right of the Commonwealth
Lana RoelandtsECON 243, 2011220032777External
government was very crucial as it displaced state funding, and significantly increased federal
government funding. This caused a significant change to the Australian financial institutions that had
previously been in place, and the concept of path dependency has allowed for this decision to be
compared to the previous method of revenue raising that had been put in place.
References
Sappey, R., Burgess, J., Lyons, M., Buultjens, J, 2009, Industrial Relatrions in Australia: Work
and Workplaces, Pearson Australia, 2nd Ed.
Gittins, R, 2005, ‘The end of the wage-setting world as we know it’, The Sydney
Morning Herald, 28 May, < http://www.smh.com.au/news/National/The-end-of-the-
Lana RoelandtsECON 243, 2011220032777External
wagesetting-world-as-we-know-it/2005/05/27/1117129901079.html?
oneclick=true#>, accessed 09/09/2011
Lewis, P., Garnett, A., Treadgold, M., Hawtrey, K., 2010, The Australian Economy:
Your Guide, Pearson Australia, 5th Ed.
http://www.abs.gov.au/ausstats/[email protected]/2f762f95845417aeca25706c00834efa/ b384b6437deeb1ceca256f4e00783f85!OpenDocument Labour Price Index: Concepts, Sources and Methods, 2004, accessed 09/09/2011
Lloyd,C., Ramsay, T. , 2009, The Transformations of Australia’s Labor Market Since 1983: From Social Democracy to Regulatory Capitalism?, University of New England
http://www.accc.gov.au/content/index.phtml/itemId/54137 accessed, 09/09/2011 Scherini, A., 2006, Reforming Specific Purpose Payments to achieve the best outcomes for the
community: A practitioner’s perspective, http://www.business.curtin.edu.au/files/scherini.pdf , last accessed, 09/09/2011