Business backlash over 'dangerous' union era

THE Rudd Government faces growing business condemnation of its plan to allow a return to industry-wide union bargaining and an umpire's decision at the end of negotiations that fail.

Workplace Relations Minister Julia Gillard is highly sensitive to the employers' concerns, dismissing claims that Labor's Fair Work legislation unveiled last week would revive the practice of "pattern bargaining".

But Ms Gillard is confronting protests from business groups led by the Australian Chamber of Commerce and Industry, which argue a resurgence of union power would be inappropriate, especially during the global economic crisis.

Malcolm Turnbull has said Work Choices is dead and the Coalition accepts Labor's mandate to abolish the Howard government's regime.

But Liberal MP Alby Schultz said yesterday he would break party ranks and vote against the bill, unless the Government agreed to amendments.

Mr Schultz said his main concern about the bill was its green light for unions to enter workplaces and inspect non-union employees' wage records.

Business groups are concerned about Ms Gillard's proposal for a new multi-employer bargaining stream to help low-paid workers without bargaining muscle negotiate as one group across a range of companies or an industry.

She flatly denies this system would see a return to old-style pattern bargaining in which unions lodge a log of claims and use their muscle to win common agreements.

The difference, argues Ms Gillard, is that unions would be prevented from taking strike action to back such claims, and Labor's new umpire Fair Work Australia could impose wage settlements only as a last resort.

A briefing paper on Labor's legislation by law firm Freehills raises doubts about the system, stressing Ms Gillard has not defined "low-paid" and has created uncertainty by leaving the decision to Fair Work Australia.

The Freehills paper, prepared by senior lawyers including Melbourne-based partner Tony Wood, says Fair Work Australia would have a "hands-on role" with the power to arbitrate if negotiations broke down.

Freehills says "true non-union agreements" would be possible under Labor's system only where there were no union members, or where a union chose not to be covered by the agreement.

The report by Freehills, whose lawyers helped draft the Coalition's Work Choices laws, also predicts a revival of union demarcation disputes as they squabble over representation rights.

"Employers will no longer be able to bargain with one union in preference to another," says the report.

A spokeswoman for Ms Gillard last night played down the potential for difficulty, saying Fair Work Australia could make "representation orders" in the rare cases of demarcation disputes. "These orders can limit a union's rights to represent employees in an industry or workplace where competing for members is causing disruption," she said.

ACCI chief executive Peter Anderson claims Labor's overhaul of the Coalition's Work Choices laws will, in effect, re-introduce pattern bargaining because it creates a new form of multi-employer bargaining with industry-wide arbitration.

"We think what Labor is proposing is dangerous and a form of pattern bargaining," Mr Anderson said.

All approved agreements will have to pass a "better off overall" test.

Mr Anderson said low-paid workers would already be protected by Labor's safety net of 10 legislated minimum conditions and a further 10 award conditions. Yet Ms Gillard was proposing that Labor's umpire could arbitrate over-award payments not related to productivity or the needs of a particular business.

"It would still apply to tens of thousands of employees if 'low-paid' was defined as below average weekly earnings," Mr Anderson said.

Full-time adult ordinary earnings in Australia are $1145 a week.

The ACCI and other business groups will escalate their push for changes by lobbying independents Nick Xenophon and Family First's Steve Fielding in the Senate, where Labor lacks a majority. The federal Opposition is privately urging business to be more vocal to give Coalition arguments against Labor's bill more force.

Henry Ergas, chairman of consultancy group Concept Economics, warned that the Rudd Government's changes during a time of economic crisis were foolish and could be disastrous.