Julian Leeser (Berowra, Liberal Party) Share this | Link to this | Hansard source

My question is to the Attorney-General and Minister for Industrial Relations. Will the Attorney please update the House on how the Morrison government is working to make the progress for parties entering into enterprise agreements simpler and how this will enhance prospects of jobs growth, economic growth and wage growth?

Christian Porter (Pearce, Liberal Party, Attorney-General) Share this | Link to this | Hansard source

I thank the member for his question. The member is very aware that enterprise bargaining has been a central part of the industrial relations system in Australia for 25 years and that, when it works well, it can definitely be to the mutual benefit of employees in the form of higher-than-award wages; it works well for employers in terms of more productive, more efficient businesses; and, of course, the overall economy and everyone who wants a job can benefit as the economy gets stronger and there is more job growth. So we are focusing on this area as one of our working groups as part of our JobMaker program in the task before us to rebuild the Australian economy.

When you have a look at the mutual benefit that can arise from enterprise agreements, you see that 38 per cent of working Australians are at the moment covered by collective agreements, including enterprise agreements, and 21 per cent are covered by awards. The average weekly earnings under the awards, part time and full time, are $778.80, and under agreement that figure is $1,331.20. So the agreements lead to higher wages. This, of course, was Paul Keating's vision. In 1993 he described his vision for the system. He said:

For most employees and most businesses, wages and conditions of work would be determined by agreements worked out by the employer, the employees and their union. These agreements would predominantly be based on improving the productive performance of enterprises, because both employers and employees are coming to understand that only productivity improvements can guarantee sustainable real wage increases.

He went on to say:

It is a model under which compulsorily arbitrated awards and arbitrated wage increases would be there only as a safety net. … Over time the safety net would inevitably become simpler. We would have fewer awards, with fewer clauses.

The difficulty, of course, has been that the number of enterprise agreements has, sadly, declined. It reached a peak in December 2010, when 2.6 million employees were covered. That figure is now about 2.2 million. And why has that happened? The Fair Work Commission in a 2019 report cited things like increasingly technical requirements arising from commission decisions themselves; delayed processing; inadequate education, explanation and guidance; and substandard communications processes. In the example of the Wesley Mission in Queensland, there was an enterprise agreement exercise commenced in 2016. It resulted in a positive vote in September 2018. Then it was approved a year later, but then many years later, in March 2020, it was overturned due to a technical error. So those sorts of failures stand as a disincentive for others to get into that system.

The third working group that we've commissioned is going to focus squarely on enterprise agreements, because they've been proven to be a means that we can leverage to regrow our economy after the COVID-19 pandemic in a way that can put upward pressure on wage growth. When we look at the agreements approved in the December quarter of 2019, they delivered an annualised wage increase of 2.7 per cent, which was higher than the economy-wide wage increases and higher than inflation. If we fix this system with cooperation and consultation, we can help grow the economy. (Time expired)