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Published: 16 September 2011

Vic Govt. vs the unions. Is this what fair bargaining amounts to?

The private correspondence between the Minister for All Things and the Labour Lawyer reveals the real agenda.


Dear Minister for All Things,

Victorian Government Wages Policy

I am puzzled by the Victorian Government's stance on negotiations with public sector unions covering police, teachers, principals and assistant principals, public servants and nurses.

The Government's proposed wage increase for all these public sector employees is limited to 2.5% per annum. Any increase above 2.5% is to be paid for by money taken back from the employees. Accordingly, the real money increase is limited to 2.5% per annum.

Any number of issues arise but they include:

  • On what basis can it be seriously contended that all public sector employees are entitled to the same wage increase?
  • As the rate of inflation exceeds 2.5% and given the long established industrial fact that a real wage reduction will neither be agreed to in negotiations nor awarded by an arbitral tribunal, what is the public purpose underpinning this wages policy?
  • How can the Victorian Government seriously contend it is bargaining in good faith in circumstances where it has already issued inflexible instructions to limit increases to 2.5%?
  • On what basis does the Government confine the notion of productivity increases to reductions in money paid to employees? As the RBA Governor recently observed "productivity per hour, which is what counts, is not improved by adding any more hours, but by ways of making the hours that are already being contributed more effective."

Yours bewilderedly,

The Labour Lawyer

Dear Labour Lawyer,

Victorian Government Wages Policy

The Victorian Government's Public Sector Wages Policy of limiting increases to 2.5% must be seen in context:

  • The Premier's decision to enter Parliament was partly prompted by his desire to fix up unions arising from his experience as an architect;
  • The Kennett Liberal Government decided to transfer its industrial relations powers to the Commonwealth. The Government is entitled to, and will, use the full range of options available under the Commonwealths Fair Work Act against Public Sector Unions;
  • Unlike the New South Wales Government, Victoria cannot legislate to limit public sector wage increases to 2.5% but it can decline to agree to such increases;
  • Good faith bargaining does not require the Government to agree to Union wages claims, just to listen to them;
  • As the Government has recently made clear in its submission in the Social and Community Services Case in Fair Work Australia, wage outcomes in the public sector are a product of Government funding levels and bargaining outcomes. In respect of public sector employees the Government controls both funding and bargaining; and
  • The rules for arbitration by Fair Work Australia following the ending of bargaining are not limited to the merits of the case, and so the Government can use arbitration as a means of restricting wage increases and avoiding improved conditions.

See you in Court.


Yours satisfiedly,

The Minister for All Things

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