Labor states unite to mock Rudd

KEVIN Rudd talks proudly about a seamless national economic market for Australia. It is an article of faith for Rudd and Julia Gillard. It was endorsed by the 2020 Summit. It is an essential for a modern Australia. And it is mocked by state Labor.

Rudd and Gillard have an unequivocal political mandate for a national industrial relations system for the private sector. That mandate is being resisted by NSW and Queensland.

The issue in politics today is not just whether Brendan Nelson's Coalition accepts Rudd's mandate: it is whether the Labor Party accepts Rudd's mandate and, so far, it doesn't.

This is an unacceptable situation that penetrates to a pivotal issue in politics: Rudd's ability to win enough goodwill from state governments to make viable his economic and social reform agenda.

The time for a national industrial relations system arrived some years ago. It has been championed by Gough Whitlam, Neville Wran, John Howard, Peter Reith, Peter Costello, Meg Lees, Greg Combet and, in 2007, Rudd and Gillard.

It has been recognised for decades that the joint federal-state system is flawed. For Howard, one of the pillars of Work Choices was its embrace of a national system for about 85 per cent of employees.

Despite the polarisation of Work Choices, there was bipartisan federal support for the national system.

In April 2007 Labor released Forward with Fairness, containing an unequivocal declaration: "The creation of a uniform national industrial relations system for the private sector is a critical economic reform for our nation's future." The policy said that "only a Rudd Government can work with the states" to deliver a national system. It pledged that Rudd Labor "will rely upon all of the constitutional powers available to it in government to legislate national industrial relations laws" but it would also "work co-operatively with the states". In this sense it envisaged states would either refer powers or that there would be other forms of harmonisation.

What have the states done? They went to the High Court to have Howard's law declared unconstitutional and they lost. It was a rout. The national system has the Constitution on its side. Rudd's election victory might have seemed the moment for the states to accept the national system. No way.

For months the NSW Government has been searching for ways to thwart the spirit and letter of Rudd's mandate. It commissioned a report from George Williams that explored a referral of IR powers but gave the states a broad "opt out" provision according to their own discretion.

This was a pre-emptive strike against Gillard mounted by NSW frontbencher John Della Bosca to retain a strong state-based system. For Rudd and Gillard, bowing to such pressure tactics from Australia's worst government would signal to the world their political and policy weakness. It would make them easy prey and discredit their Government.

Della Bosca has been stood down pending resolution of the Iguanas restaurant affair but last week, nine months into the Rudd Government, workplace relations ministers met in Sydney and failed to reach any agreement in principle. The latest excuse from NSW and Queensland is that they won't agree to any national system until they see the final shape of the Rudd/Gillard industrial policy as passed by the Senate.

The Senate may amend the bill and NSW could use this as another excuse to deny the Rudd/Gillard shift to a national system.

If you want to grasp how NSW works, refer to the comments on August 15 by Roger Boland, President of the NSW Industrial Relations Commission. Dripping with sympathy for Della Bosca he said: "I hope Mr Della Bosca will be in a position, sooner rather than later, to resume his office and bring to bear the undoubted leadership, experience and influence that he has hitherto displayed in the negotiations with the commonwealth about the future shape of the industrial relations system. In his absence, there may be a natural tendency for the commonwealth to feel less inclined to pay regard to states' interest." A series of Rudd government ministers are learning rapidly about NSW. They have learned it is the least co-operative Government in the so-called co-operative federalism. It is the least supportive of economic reform. And Rudd's agenda cannot succeed without the biggest state.

Gillard's technique is based on patient and persistent negotiation. But her steel should not be underestimated from the row over the Australian Building and Construction Commission to the protracted delay over a national IR system.

The NSW IR system is one of the last decaying fortresses of a system of political and industrial power that gave Labor an institutional hold on the nation's largest economy. That grip is incompatible with Rudd's vision, his policy and his hopes of success.

On IR, the contrast between Victoria and NSW could not be greater. Victoria referred its industrial powers to the national government a decade ago and this referral has been validated by Liberal and Labor premiers in Melbourne. The insight this offers is that NSW resistance is not about equity or worker rights but about the hollow perpetuation of a self-justifying power structure that has run out of arguments to defend its existence. It is time to pull the plug.

Analysis by the Australian Chamber of Commerce and Industry reveals the absurdity of this struggle. It estimates that 79 per cent of employees have their pay set under federal laws compared with 12 per cent under state laws. The five remaining state IR systems cover only 700,000 private sector workers. There is no serious call for Victoria to reverse its referral. The future direction is set and the state systems are marginal. Yet Australia still tolerates expensive multiple IR systems that mock its claim to a modern economy.

Gillard realises the states might want to delay a final decision until her main industrial bill passes the Senate. But she is distinctly unimpressed by states trying to use the national system debate to extract concessions elsewhere. Remember that in April, Rudd declared the "commanding objective" from the 2020 Summit was "a seamless national economy".

He said that meant attacking state boundaries that impeded the flow of trade and markets. This is a timeless Australian mission. It is long overdue for Australia to complete its transition to a unitary industrial system.

We go to war as a nation. We compete in the Olympics as a nation. It would be nice to think after 107 years that Australia had a national economy, but it doesn't. Not in industrial relations. This task now lies totally in Labor's power arena and it should be judged accordingly.