Professor Banks, chairman of the commission from its inception in 1998 until 2013 who oversaw multiple government inquiries, said the commission’s 2015 report on workplace relations should be revived, warning that reform had gone backwards since Australia escaped the worst of the global financial crisis.
The two-year inquiry for the Abbott government urged “major repairs” of the workplace system including widening the scope for individual flexibility through enterprise contracts, as an alternative to enterprise bargains.
The report also criticised the rigid application of the better off overall test (BOOT), which recently retired judge of the workplace tribunal Jonathan Hamberger also warned is stifling bargaining and flexible amid the recovery.
The Fair Work Commission also came under fire for being too legalistic and the commission called for it to be stripped of its wage-setting functions.
Writing in The Australian Financial Review on Monday, Professor Banks nominated industrial relations, along with regulatory impediments to innovation, as the two key items on the governor of the Reserve Bank of Australia Philip Lowe’s reform list that are critical to the recovery.
Prime Minister Scott Morrison has also flagged a pro-business investment and productivity agenda but Professor Banks warned that an overly ambitious agenda would soon fall apart and he put workplace relations at the top of his list.
“Australia’s idiosyncratic and highly prescriptive system for regulating workplaces impedes firm adjustment and job creation in ways that have become too costly to ignore,” Professor Banks writes.
Professor Banks admitted the extensive Productivity Commission inquiry and report largely “fell flat” at the time, which may have been in part due to mixed messages.
The final report refrained from advocating systemic reform and instead urged major “repairs”. Other key recommendations included removing agreement restrictions on labour hire and contractors and blocking compensation and reinstatement for procedurally unfair dismissal.
“Though (faintly) praising the system as not wholly ‘dysfunctional’, the commission’s report nevertheless identifies ‘major deficiencies’ in it that need addressing,” Professor Banks said.
“If thoroughgoing reform remains a bridge too far, the government should at least draw on those recommendations that would ameliorate the worst of the system’s flaws. If not now, then when?”
Despite Dr Lowe citing a new “co-operative spirit”, unions have already warned the government about pursuing “yesterday’s fights“, after ministers recommitted to the government’s Ensuring Integrity bill that would make it easier to deregister unions and disqualify union officials.
ACTU secretary Sally McManus said of those proposals that the government should be putting “100 per cent of their time” into focusing on the jobs crisis rather than proposals to take rights off workers.
“It is pretty insulting that they are concerned about pursuing yesterday’s fights when they are also relying on working people and the union movement to keep people safe and the economy going. They need to change their priorities,” she said.
Dr Lowe had also pointed to taxation, infrastructure and training, as well as industrial relations and the regulatory impediments, on his list of reforms to “move us out of the shadows that are going to be cast by the crisis“.
Professor Banks put regulatory impediments to innovation as another of his top two that stood out to meet the dual objective of early job creation and sustained productivity growth.
“This encompasses not just technology adoption but enabling investment and enterprise adjustment generally,” Professor Banks said.
“There is a host of specific reform proposals from public reviews over the years (including the commission’s just-released draft on resource sector regulation) that would ease undue restrictions and delays and make business recovery at this critical time much less arduous.”
The RBA has warned that total hours worked in Australia were expected to plummet a “staggering” 20 per cent in the first half of the year, with the unemployment rate to remain above 6 per cent for up to two years.
Professor Banks said the government must seize the mantle on reform before the crisis went to waste as appeared to occur after the GFC.
“The National Competition Policy, which was essentially the culmination of a microeconomic reform program inspired by Paul Keating’s banana republic imagery, passed this test, whereas its post-GFC successor, the National Reform Agenda (NRA), arguably failed. Ironically, the fact that Australians were spared much pain from the GFC may have worked against reform,” Professor Banks writes.
“From that perspective at least, prospects would have to be a lot better now,” he said. “There would be few families in Australia not touched by unemployment, or greatly concerned about their future. Many people will have lost their businesses. Many more are finding themselves dependent on welfare for the first time.”