A single federal IR system: what are the chances?


A single federal IR system: what are the chances?

The current federal IR system, because it is based on the corporations power, has a lot of shortcomings relating to coverage and legal complexity.


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The current federal IR system, because it is based on the corporations power, has a lot of shortcomings relating to coverage and legal complexity. Some of these could take decades for the courts to sort out and in the meantime be lucrative for lawyers. But are there ways we can move on from the current situation? A session at a major industrial relations conference in Sydney last week explored some possible options.

The conference was the 16th annual Labour Law Conference, held by the Workplace Research Centre. Professor George Williams from the University of New South Wales, who has also chaired a recent enquiry commissioned by the NSW Government into federal versus state industrial relations arrangements, favours a single federal system overall, but backed by local (ie state) enforcement, because it is simpler and more consistent.

He added that the constitutional basis of industrial relations law should be invisible in practice, but in Australia it has a much higher profile than elsewhere, and there is far too much reliance on lawyers and 'test cases'.

What’s wrong with the current system, and what’s likely to happen next

A major limitation of using the corporations power is that it can never cover all organisations. Williams estimated that it covers about 75%, lower than the estimates made when WorkChoices was first introduced.

The test of what is a 'constitutional corporation' is very fuzzy and complicated, and he predicts that many cases will be referred to courts. 'Grey areas' at present include local government, universities, not-for-profit organisations and some areas of the public sector. All of these have been subject to decisions in lower courts, but none has yet been referred to the High Court.

Williams predicted that the High Court will gradually reduce the scope of the definition of 'constitutional corporation', but if the current system continues it will take decades to sort it out properly.

The excessive legal complexity of WorkChoices will be largely continued by Forward with Fairness, said Williams. Both have moved away from independent umpires towards micromanagement, and they are drafted for lawyers rather than employees and employers. Therefore, jurisdictional disputes will continue to dominate (mainly who’s in versus who’s out) rather than real issues of industrial relations law. He described the situation as a tug-of-war for marginal employee groups.

Three options for moving on

Williams described three alternative ways to move on from the current system:

  1. Commonwealth attempts to dominate

  2. referendum to change the Constitutional industrial relations powers

  3. composite more harmonised system.

He strongly advocated option 3.

Option 1: Commonwealth attempts to dominate

This option requires all the states to refer their powers to the Commonwealth. Williams referred to WorkChoices as an attempt to dominate by bullying. For this option to work, the states would need to cave in very quickly (eg before the next round of state elections commences in 2009), otherwise it will not be possible until the next change of Federal Government.

Williams suggested, however, that federal dominance may have already reached its highest point. No further extension of it is likely and it may recede slightly if the case decisions predicted above occur.

Option 2: Referendum to change the Constitutional industrial relations powers

Williams saw little hope for this option. Five previous attempts to change the system this way have failed, and 'States’ rights' is still a strongly-held view.

Option 3: Composite more harmonised system

This is the option Williams recommended. Firstly, it is pragmatic - it is constitutionally almost impossible to abolish the states, so both need to be involved in whatever system evolves. Also, if only federal governments had responsibility for industrial relations, it is likely that the ideological pendulum would continue to swing.

The ways a composite system could operate include the following:

  • Binding inter-governmental agreements. These would not be legally enforceable, so the principles of such agreements would first need to be inserted into the federal legislation.

  • Mirror/uniform legislation in each state,so the same provisions apply, but the constitutional limitations are overcome. This would require each state Act to be amended each time the federal Act was amended.

  • Text-based referrals. This means that only specified state powers would be referred to the federal system, and the states would have to agree to any amendments to the federal legislation. The states would also be able to specify particular exclusions from federal referral, eg workers compensation.

  • Division of responsibilities. For example, inspection and enforcement matters could be handled at state level.

Williams added that a cooperative approach would allow state system initiatives to reach the federal system as well, otherwise they might disappear altogether. Recent examples include pay equity decisions in some states, as well as extensions to parental leave entitlements.

Further information

Further information about the conference is available from the Workplace Research Centre.

The NSW Government enquiry report referred to above can be downloaded from the Office of Industrial Relations webpage.


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