A view from the Summit: changes ahead for the IR and migration landscape

By Kristopher Kunasingam and Rosemary Roach

The overarching purpose of the Albanese Government’s Jobs and Skills Summit was to bring stakeholders together to work constructively on the challenges and opportunities facing the labour market and economy. Representatives from state and federal governments, businesses, unions, industry groups, community groups and universities attended. The Government has heralded that consensus was reached on 36 initiatives, on which it will take immediate action.

In the absence of further details on some of the initiatives, the description of there being ‘consensus’ may, in hindsight, prove to be a stretch. However, it is clear that several of the 36 initiatives will be instrumental in shaping the Government’s industrial relations policy and will likely result in significant reforms to the Fair Work Act 2009 (Cth). There will also be key changes to immigration policies to address the current skill shortage and strengthen the system. We examine the key initiatives relevant to these important policy areas.

Key IR initiatives

It is fair to say that there was a general consensus leading into, during and following the Summit that there are aspects of the Fair Work Act that need to be addressed, particularly in relation to the current framework for enterprise bargaining, which is considered overly complex and a barrier to agreement making.

The Government has indicated it wishes implement changes to the Fair Work Act by the end of this year to create a simple, flexible and fair new framework. This is an ambitious timeframe. However it means that employers who are renegotiating enterprise agreements from 2023 onwards may be bargaining under an amended framework.

Here are some of the key initiatives to watch.

• Ensuring workers and businesses have flexible options for reaching agreements, including removing unnecessary limitations on access to single and multi-employer agreements, while allowing businesses and workers who already successfully negotiate enterprise-level agreements to continue doing so.
  • Multi-employer agreement making is where bargaining occurs with two or more employers. Relevantly, under the current Fair Work Act framework, employees and unions cannot take ‘protected industrial action’ in support of claims when they are bargaining for a multi-employer agreement. Employers and several industry groups have called for more clarity around these proposals. Concerns have been expressed that allowing for multi-employer bargaining will expose entire industries and sectors to industrial action and have a negative impact on productivity and innovation.
• Removing unnecessary complexity for workers and employers, including making the Better Off Overall Test (BOOT) simple, flexible and fair.
  • This initiative has been broadly welcomed by business and employer groups given the complexity associated with satisfying the Fair Work Commission that a proposed enterprise agreement passes the BOOT. However, any legislative change to the BOOT may prove difficult given the Greens have indicated they will oppose any changes which would leave workers paid less than the relevant underlying modern award. This may make several initiatives hard to achieve, unless the Albanese Government secures the support of the Coalition for any amendments to the Fair Work Act.
• Ensuring the process for the termination of enterprise agreements (that have passed their nominal expiry date) is fit for purpose and fair, and sunsets so-called ‘zombie’ agreements (being agreements which have passed their nominal expiry date many years ago, but continue in operation).
  • Several unions have advocated that employers should not be able to unilaterally apply for the termination of an enterprise agreement. It has been argued that such applications are used as an unfair bargaining tactic, given the prospect of employees falling back to minimum award conditions. Conversely, when making such applications, employers have argued that key productivity benefits have been impeded by the continuation of an expired enterprise agreement (some of which may contain clauses that have ‘rolled over’ for many years from prior agreements) and that the ongoing application of the expired agreement would impact the ongoing and future viability of their operations.
• The Government also proposes to update the Fair Work Act to provide stronger access to flexible working arrangements and unpaid parental leave to enable families to share work and caring responsibilities and provide stronger protections against adverse action, discrimination and harassment.
  • Again, there are scant details on what any reforms may look like. Some reforms will likely complement existing election commitments, such as to the commitment to implement the recommendation from the Respect@Work Report to expressly prohibit sexual harassment in the workplace.

Key migration initiatives

A key area of focus during the Summit was addressing skills shortages and improving migration settings to support higher productivity. We outline some of the key initiatives on which the Government will take immediate action.:

• Increasing the permanent visa migration cap to 195,000 from the current 160,000.
  • While below the estimated 200,000, this is still a significant increase. Further clarity is required as to how this is going to be split between the different visa categories.
• The Government has committed $36.1 million in additional funding (or approximately 500 new positions) to resolve the visa backlog.
  • This is arguably more important than the larger migration cap as it means case officers can clear the current backlog and assist with new applications. There are 900,000 applications in backlog, which prevents businesses from resolving the talent shortage as some work visa applications take up to 12 months to process. If this is not resolved, it defeats the purpose of increasing the visa migration cap.

Immigration Minister Andrew Giles has also announced that the Government will increase the income threshold for work visa. Currently, the minimum salary rate for most occupations is A$53,900 plus superannuation. This reflects the current market rate conditions for skilled roles. There has not been an indication on the new amount or when it will happen but we expected an announcement over the next couple of months.

Home Affairs Minister Clare O’Neil observed during the Summit that Australia is in a ‘war for talent’. Business leaders have been consistent with their message to Government that are many barriers in place to attract skilled talent to Australia, with skilled migrants opting for alternatives like Canada, the US and UK.

It remains to be seen what specific action will be taken, but reverting the permanent residency rules pre-2017 (where a person could be sponsored for permanent residency regardless of the type of role they were sponsored for) would be a step in the right direction as it would encourage temporary visa holders to remain in Australia. Currently, a large number of temporary workers do not have a pathway to permanent residency.

Next steps

The Government has indicated that consultation on changes to the Fair Work Act will commence immediately, with the possibility that some amendments to the Fair Work Act will be introduced by the end of this year.

The Government has otherwise committed to the development of an Employment White Paper, to shape its policies relating to the labour market. The terms of reference for the White Paper are expected to be released in late September 2022, with submissions accepted from that time.

While the Jobs and Skills Summit has concluded, there will be many developments and likely legislative reforms over the coming months. We will keep you up to date with those developments as they arise.