Public and political debate on the Albanese Government’s new Secure Jobs, Better Pay Bill (2022) has intensified with the Senate Standing Committee on Employment and Education handing down its review of the draft legislation on 22 November (see Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 [Provisions] (aph.gov.au).
While all stakeholders had hoped for the Senate review process to be an opportunity for stakeholders to present their views on the merits and risks of the legislation – with a view to the Senate Committee reaching consensus on the way forward – those hopes were dashed by the delivery of three reports in one. The first report, advanced by Labor senators, recommended that the legislation be approved by the Australian Senate with minimal amendments. The second ‘Dissenting Report’, produced by Coalition Senators, recommended that the legislation be rejected outright. The Third report, prepared by independent senator David Pocock, recommended that the Bill be split with the more contentious elements set aside for future debate.
The mere fact that three separate reports – with opposing recommendations – were delivered from the deliberations of the single Senate Committee provides testimony to both: (a) the openly partisan nature in which the hearings were conducted, and (b) the fact that insufficient time was afforded for the reasonable interrogation of what are likely to be the most significant reforms to Australia’s IR landscape in more than 30 years.
After two weeks of deliberations, which included consideration of 96 submissions and five days of verbal hearings, the Senate report failed to provide any consensus about the best way forward. That fact, of itself, is a clear signal of the need for considerable caution to be exercised in the progression of the draft reforms.
“One of the most disappointing aspects of the Senate Report was the absence of any discussion of the obvious risk to market competition that is inherent in the compulsory multi-employer bargaining mechanisms proposed under the new laws”, said ACAPMA CEO Mark McKenzie.
The varied nature of the business models advanced by fuel enterprises has created a deeply competitive industry in most Capital City markets, where the gap between the highest market price and lowest market price is typically in the order of 15 to 20 cents – and markets such as independent grocery and pharmacy exhibit similar market architectures. If businesses that operate with the discount models are forced into workplace arrangements (i.e. resource levels, rostering arrangements, and other practices) that are the same as the premium providers, then the typical range in fuel prices will narrow and the average fuel price will be higher than it might otherwise be.
In the case of Canberra, for example, the entry of discounters such as Costco and Metro in recent years has introduced a competitive tension that delivers lower priced fuel to price sensitive motorists. (On the day of penning this article, the price of Regular Unleaded Petrol varied from a low of 179.7cpl to a high of 193.9cpl – a difference of more than 14cpl). A quick back of the envelope estimate suggests that forcing the current low-cost operators in the Canberra market to operate with the same resourcing arrangements as their larger competitors would likely reduce the price range by increasing the low price point by around 5cpl).
In its’ submission to the Senate Standing Committee ACAPMA estimated that, without appropriate competition safeguards, multi-employer bargaining could increase the nation’s fuel bill by more than $800 million per year.
“ACAPMA has been, and continues to, work intensely with all side of politics (and the cross benches), to ensure that the proposed reforms deliver on the Albanese Government’s goal of lifting employee wages – but in a way that can be funded by tangible productivity improvements for business and in a manner that does not distort market competition”, said Mark.
In the meantime, however, ACAPMA notes that the polarised nature of the public debate appears to have created a disproportionate level of angst amongst business owners about the likely real-world impact of the reforms. Claims and counter claims advanced by some stakeholders about the likely impact of the new laws on business have canvassed potential scenarios that are unlikely to occur in practice.
So, while the Bill still presents significant risks for fuel businesses (of all sizes) with regard to compulsory multi-employer bargaining, it is worth noting the following facts:
- The new laws propose changes to the test used for acceptance of new enterprise agreements – the Better Off Overall Test (or BOOT) – that will make it easier to strike a single enterprise agreement that delivers productivity improvements for the business and then shares these benefits with staff in the form of higher wages.
- The law proposes the exclusion of smaller businesses from forced multi-employer bargaining, with a small business currently defined as one with 15 employees or less (i.e. full-time, part-time and casuals). ACAPMA has been arguing that this threshold is inadequate and should be increased to a minimum of 30 Full Time Equivalents (or FTEs).
- The draft law already provides for businesses above the small business threshold to argue their case – in front of the Fair Work Commission (FWC) – as to why they differ from businesses that may have initiated a multi-employer bargaining process with a Union. Contrary to public statements being made in the media, businesses operating in different industries but located in the same geographic location are highly unlikely to be deemed eligible for multi-employer bargaining. The laws are more aimed at businesses operating in franchise networks within the same industry.
- The original draft law has been amended to provide a grace period (likely 12 months) for individual businesses to strike new single enterprise agreements in line with the positive changes to the Better Off Overall Test. Businesses that have a single enterprise agreement in place at the end of the grace period – as long as it is not simply a ‘mirror’ of the existing Award – will be excluded from Multi Employer bargaining.
- ACAPMA continues to push for the explicit inclusion of a competition test to be formally applied by the Fair Work Commission before requiring businesses in a given market (e.g. fuel retail) to participate in multi-employer bargaining. In the event that formal advice from bodies like the ACCC and the parties themselves are able to argue about the erosion – or likely erosion of competition – as a result, the Commission will instead encourage single enterprise bargaining.
On a final note, ACAPMA remains opposed to compulsory multi-employer bargaining but will continue to work with the Federal Government and the opposition and the senate cross benches to ensure that there are appropriate safeguards to preserve market competition and allow individual businesses (and their employees) to share in the benefits of innovative business practices.
ACAPMA
Source: https://acapmag.com.au/2022/11/ir-reforms-must-preserve-competition/.
