Liberals risk alienating constituency

OUTGUNNED and outflanked. That is what has happened to the federal Coalition in the all-important policy area of industrial relations. In the penultimate parliamentary sitting week of the year, Labor introduced its Fair Work Bill, the replacement legislation for Work Choices. The 575-page bill was debated in the House of Representatives before being passed last week without opposition from Coalition MPs.

In the new year it will be scrutinised at the Senate committee stage, after which it will be put to an upper-house vote to become law.

What the Coalition does once the bill reaches the Senate will define the conservatives' political destiny. An unwillingness to vote against the bill in the lower house was a sure sign Liberals were worried about the ripple effects of Work Choices.

At one level it is understandable the Coalition is cautious. It lost a lot of skin at the 2007 election defending Work Choices and doesn't want to be seen to be railing against the public's verdict.

But the Fair Work Bill winds industrial relations reforms much further back than Labor promised to do at the election. It is not just Work Choices under threat. The 1993 and 1997 reforms introduced by Paul Keating and John Howard will be considerably amended if the bill becomes law.

During the second reading debate in the house, former workplace relations minister Tony Abbott summed up the Opposition's dilemma: "I accept that the Government has a mandate to, as they say, kill Work Choices, but it certainly does not have a mandate to make a great leap backwards to 1970." Abbott is rightly concerned. The bill restores union rights of entry into workplaces.

Compulsory arbitration for low-paid workers, if not workers more broadly, also is contained in the bill. Unions will be able to access employee information, raising serious privacy concerns. And there is a strong legal argument that pattern bargaining, or industry agreements in place of enterprise agreements, will again be permissible.

These changes will severely hamper Australia's economic growth in the medium to long term, right at a time governments worldwide are trying to make business dealings as easy as possible. The global financial crisis presents Australia with enormous challenges. Those challenges will be harder to overcome if this legislation is passed without amendments.

Malcolm Turnbull has indicated the Coalition is prepared to propose amendments in the Senate. That is a good thing. However, neither he nor shadow workplace relations spokesman Michael Keenan will guarantee they will block those sections of the bill that go beyond Labor's election pledges. In other words, they will engage in the theatre of suggesting amendments, but ultimately Labor is likely to get its legislation through.

Keenan told the Australian Industry Group on Tuesday that the Coalition does not intend to frustrate the bill, whatever that means. However, he called on the business community to be vigilant in voicing its concerns about the legislation. That sounds a lot like getting others to do your dirty work for you.

Some Liberals are not pleased with the approach their party is taking. A former Howard government minister told me he hoped the bill was "dissected and disembowelled" in the Senate, and the Coalition opposed those provisions that Labor didn't campaign on at the previous election.

In parliament on Monday, Abbott made his feelings apparent: "Thanks to this misguided legislation now before the house, legislation that goes much further than any conceivable mandate that the Labor Party might have had, the coming Rudd recession will be turned into long-term economic stagnation and permanent economic decline, which is the last thing that this parliament should be doing."

If it is the last thing the parliament should be doing, it is the last thing the Coalition should allow to pass unamended. Abbott likes to point out that you can't change the world from Opposition. That is true. But appeasement is no solution.

Turnbull may yet get lucky.

It is possible Labor will do its own amending of the bill in the Senate, saving the Liberals from embarrassment.

During the election campaign Labor presented industrial relations reforms in three waves. The first was on Gillard's initiative, largely unseen by Kevin Rudd or Wayne Swan. It was roundly condemned by business and commentators alike. The second and third waves were heavily amended and more favourable to flexibility in the workplace. They had Rudd's fingerprints all over them.

The Fair Work Bill reads like the first rather than the second or third waves proposed by Labor during the campaign. In Government Gillard has been left to her own devices. Rudd will be keeping a watchful eye on his deputy's portfolio during the summer months. She is far and away Labor's best parliamentary performer and remains a favourite of the media. However, four years ago she put forward the ill-fated Medicare Gold policy during Mark Latham's leadership. It was a disaster. The Fair Work Bill is not much better.

Turnbull and Keenan are pragmatists first and ideologues second. Turnbull's pragmatism was built during a lifetime in business. Keenan's comes from winning and retaining one of the nation's most marginal electorates at the past two elections.

However, now is the time for an ideological defence of industrial relations reforms Liberals have spent decades fighting for, not a pragmatic capitulation with short-term electoral considerations in mind.

The fact Turnbull promoted Keenan into industrial relations says a lot about the devaluation of the portfolio.

Keenan's promotion was a reward for his support of Turnbull's leadership ambitions. The young West Australian is described by colleagues as an up-and-comer, and he is certainly talented. But the jump to industrial relations was a surprise. Previous portfolio recipients have included Howard, Fred Chaney, Peter Reith and Abbott. All were heavy hitters with significant experience. Keenan is only in his second parliamentary term. He will have his work cut out at the next election just defending his slender 1.2 per cent margin in the seat of Stirling, much less taking the fight up to the Government.

Being saddled with a portfolio such as workplace relations is only going to bring a cashed-up union campaign into his back yard.

The heart and soul of the Liberal Party comes from the small business community. It always has. Going back to the days of Robert Menzies, the Liberal Party was built on small business people such as Howard's petrol station owning father, Lyall.

Big business, the background from which Turnbull originates, pragmatically throws its support behind the government of the day, particularly since political donation disclosure laws have become more transparent. We have seen that in recent years as big business donations have favoured Labor at state level and the Liberal Party federally.

Liberals should not sell out their small business constituency by letting Labor pass the bill without substantial amendments.

Small business support is one of the reasons Howard spent his entire time in office fighting to remove Keating's unfair dismissal laws. In the end he went too far, including businesses with up to 100 employees in the definition.

Since 1983 the Liberal Party has been the champion of reforms in the workplace. The aim has been to improve efficiencies, enhance flexibility and thereby improve productivity and competitiveness. Yet in the present political climate it is not a priority. One shadow minister close to the debate said: "The dogs will bark but ultimately we will move on to issues we can win an election on."

The irony of the Coalition's present timidity is that it is one of the few policy scripts on which Liberals and Nationals are historically united. The business and farming sectors deplore inefficiency in the workplace. It costs them money.

Whether Turnbull likes it or not, the Coalition's economic credibility is inextricably tied to support for a flexible industrial relations system. That should be the Coalition's point of difference with Labor in the economic debate.

Opposing budget deficits and pump priming to stave off a recession puts Turnbull at odds with Labor and with most economists.

There is one prominent Liberal who knows the Coalition's capitulation on industrial relations is damaging its economic credibility, but he is languishing on the backbench. Peter Costello's pre-parliamentary career included acting as junior counsel in the famous Dollar Sweets case. As treasurer he always encouraged industrial relations reform. His silence in the present debate has been deafening.

Menzies used to caution not to let your opponent choose the battlefield. Turnbull and Keenan no doubt think they are echoing Menzies' sentiments by shying away from a fight over industrial relations.

But in the context of the 21st century, Menzies wouldn't see it as the battlefield. He would see it as the homeland Liberals should be fighting to defend.

Peter van Onselen is an associate professor of politics and government at Edith Cowan University.