Productivity Commission Review of the Workplace Relations Framework

The Government has today released the Terms of Reference for the inquiry into Australia’s workplace relations framework to be conducted by the Productivity Commission.

The Fair Work Act has now been in place for over five years. This inquiry will be a timely assessment of the operation of the Fair Work framework and an opportunity for independent consideration of options for improvement.

“This inquiry will ensure that the laws are meeting their objectives and contributing to productive, rewarding, competitive and harmonious workplaces,” Minister Abetz said today.

“I encourage all interested parties to make submissions on what has worked well and what needs to be improved.”

The Terms of Reference will require the Commission to assess the impact of the workplace relations framework and consider improvements, taking into account certain key interests, including:

• Job creation;
• Fair and equitable conditions for employees;
• The maintenance of a relevant safety net of conditions for employees;
• Productivity, competitiveness and business investment; and
• The needs of small business.

“The inquiry needs to hear from the smallest and largest businesses, from the individual employee to the largest trade union,” Minister Abetz said.

This inquiry will be an open and transparent process in which all interested parties will have an equal opportunity to participate and make submissions. The terms require consideration of evidence from all interested parties, including employers, academics, unions and any other relevant interest groups.

The Productivity Commission is well-placed to conduct this inquiry. It is both economically rigorous and socially sensitive. Its previous work has led to major economic and social reforms, such as the National Disability Insurance Scheme.

The Productivity Commission will also be asked to make recommendations about how the laws can be improved, bearing in mind the need to ensure workers are protected and the need for business to be able to grow, prosper and employ.

The Government will carefully consider the recommendations and findings of the Productivity Commission. If there is a good case for sensible and fair changes then the government will seek a mandate for those particular changes at the next election before they are implemented.

Higher living standards, better pay and more jobs all depend on having fair, productive, and effective workplaces. The prosperity of tomorrow is driven by what happens in our workplaces today. This is why it is in our national interest to make sure that the Fair Work laws are balanced and effective.

Submissions can be made to the Productivity Commission at: www.pc.gov.au/inquiries/current/workplace-relations/

The terms of reference are attached.

Productivity Commission Review of the Workplace Relations Framework

TERMS OF REFERENCE

I, Joseph Benedict Hockey, Treasurer, pursuant to Parts 2 and 3 of the Productivity Commission Act 1998, hereby request that the Productivity Commission undertake an inquiry into the workplace relations framework.

Background

The Australian Government believes that it is fundamentally important to make sure that the Fair Work laws work for everyone.

Workplaces are important to our economy and society. Higher living standards, better pay and more jobs all depend on having fair, productive, and effective workplaces. The prosperity of tomorrow is driven by what happens in our workplaces today and this is why it is in our national interest to make sure that the Fair Work laws are balanced and effective.

The Australian Government’s objectives in commissioning this Inquiry are to examine the current operation of the Fair Work Laws and identify future options to improve the laws bearing in mind the need to ensure workers are protected and the need for business to be able to grow, prosper and employ.

Scope of the Inquiry

The Productivity Commission will assess the performance of the workplace relations framework, including the Fair Work Act 2009, focussing on key social and economic indicators important to the wellbeing, productivity and competitiveness of Australia and its people. A key consideration will be the capacity for the workplace relations framework to adapt over the longer term to issues arising due to structural adjustments and changes in the global economy.

In particular, the review will assess the impact of the workplace relations framework on matters including:

• unemployment, underemployment and job creation
• fair and equitable pay and conditions for employees, including the maintenance of a relevant safety net
• small businesses
• productivity, competitiveness and business investment
• the ability of business and the labour market to respond appropriately to changing economic conditions
• patterns of engagement in the labour market
• the ability for employers to flexibly manage and engage with their employees
• barriers to bargaining
• red tape and the compliance burden for employers
• industrial conflict and days lost due to industrial action
• appropriate scope for independent contracting.

In addition to assessing the overall impact of the workplace relations framework on these matters, the review should consider the Act’s performance against its stated aims and objects, and the impact on jobs, incomes and the economy. The review should examine the impact of the framework according to business size, region, and industry sector. It should also examine the experience of countries in the Organisation for Economic Co-operation and Development.

The workplace relations framework encompasses the Fair Work Act 2009, including the institutions and instruments that operate under the Act; and the Independent Contractors Act 2006

The review will make recommendations about how the laws can be improved to maximise outcomes for Australian employers, employees and the economy, bearing in mind the need to ensure workers are protected, the need for business to be able to grow, prosper and employ, and the need to reduce unnecessary and excessive regulation.

The Productivity Commission will identify and quantify, as far as possible, the full costs and benefits of its recommendations.

An overarching principle for any recommendations should be the need to ensure a framework to serve the country in the long term, given the level of legislative change in this area in recent years.

In conducting the review the Productivity Commission will draw on the full spectrum of evidence sources including, but not limited to:

• Australian Bureau of Statistics data and publications
• data sources maintained by other relevant Government bodies, including but not limited to the Department of Employment, Fair Work Commission and Fair Work Ombudsman
• employers or their representatives
• employees or their representatives
• academia
• special interest groups.

The review should also identify gaps in the evidence base where further collection may assist in the analysis of the overall performance and impact of the system.

Process

The Commission is to undertake an appropriate public consultation process including holding hearings, inviting public submissions and releasing a draft report to the public.

The final report should be provided to the Government in November 2015.

J. B. HOCKEY
Treasurer