Split FWC into two bodies, urges Productivity Commission


Split FWC into two bodies, urges Productivity Commission

The Fair Work Commission should be split into two bodies – one focused on dispute resolution and acting as a tribunal, the other on awards modernisation and setting the minimum wage. So says Peter Harris, the chair of the Productivity Commission,


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A wide variety of workplace reforms could be implanted in Australia which would have “much in it for both major parties,” according to the chair of the Productivity Commission, Peter Harris.

Pursuing reforms could lead to the area of workplace relations becoming, again, “an arena in which all the major participants accepted that the reform direction was settled,” unlike the “last decade of hyperactivity, created by Workchoices.” 

Mr Harris also argued that labour market reform could lead to productivity gains. He set out to indemnify, in his view, some “obvious candidates” for reforms that could be made with bipartisan support. 

Breaking up isn’t hard to do… 

Firstly, Mr Harris urged the division of the Fair Work Commission into two bodies – one focused on dispute resolution, arbitration-hosting and acting as a tribunal. The other body, a “Workplace Standards Commission,” engaged in two economy-wide decision-making processes – being awards modernisation and setting of the national minimum wage.

Mr Harris criticised the current set-up that, while appropriate for dispute resolution, fosters a “building on precedent” approach rather than looking taking a fresh view of the economy. 

He also argued that that the expert evidence presented to and accepted by the Fair Work Commission is, owing to the nature of the process, “partisan, almost inevitably”.

He admonished the tribunal members for acting like the judicial counterparts in the court system in not investigating evidence themselves. 

Mr Harris also criticised the current award modernisation process which does not seek to bring in independent expert advice. 

“Since it is cost‑free to a participating party not to agree to a variation, a lowest common denominator change process is inevitably locked in. Those imbued with the spirit of the system as it is today do not find this exceptional. Those who work in the field of good public policy design find it quite shocking. There will inevitably be costs imposed and flexibilities lost, as well as inequities perpetuated. 

“Creating a WSC would allow a shift from the legal culture of not overturning precedent to a whole‑of‑economy view – a view of the kind that has otherwise prevailed for some decades in this economy and given us this 25 years of uninterrupted growth,” he said.

Greenfields and modern awards

Greenfields enterprise agreements on new major projects ought to match the life of that project and there should be mechanisms and incentives that discourage parties to draw out negotiations, he said.

Mr Harris also urged the end of the four-year modern award review process, instead allowing any future Workplace Standards Commission to carry out independent research into clear areas of contention “where benefits of change may be high.” 
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