Australian Fair Work Commission: Independence versus accountability

Australian Fair Work Commission: Independence versus accountability, by Dean Smith

There is little doubt we are living in a time where distrust of institutions is high, whether that be parliaments and governments, churches or our legal system.

There are a variety of factors driving this disenchantment, but at its core, it’s driven by a belief that these institutions are not doing their jobs.

In the case of Parliament, this perception has not been aided by a seemingly inexorable trend towards relying on independent bodies to make decisions.

“Independence” is a somewhat double-edged sword in this context. It’s generally sold to the public as a virtue, because “independent” means politicians aren’t interfering, and therefore the outcomes or decisions are not political.

It sounds wonderful, in theory.

However, the problem is that “independent” is also means “unelected”, and therefore “unaccountable”. Worse still, it doesn’t always mean the outcomes are non-political.

The Fair Work Commission is unelected but sets many wages in Australia:

The Fair Work Commission has been around in various guises since 1904, but the Rudd/Gillard Labor government turned it into a behemoth.

It has the ability to determine minimum wages, decide who should be paid penalty rates and at what rate, approve or limit the contents of awards, resolve workplace disputes, approve or not approve enterprise agreements, allow or disallow strikes, grant right of entry permits to workplaces and regulate trade unions and employer organisations.

Its rigid structure is ruled over by a top-heavy establishment of deputy presidents and commissioners, all of whom are entitled to “the same protection and immunity as a justice of the High Court”. Once appointed, they are entitled to remain on the commission until the age of 65 – and their decisions about minimum standards are final, and not subject to review.

In other words, our democratically elected Parliament has virtually surrendered its legislative powers in critical policy matters to an unelected, unaccountable, little-known group of enormously privileged individuals who have guaranteed job tenure, and are subject to little scrutiny.

This is why Labor’s caterwauling about last week’s penalty rates decision is a bit rich. The commission operates according to rules Labor wrote, and its bench is heavily stacked with its appointees. Perhaps Labor is finally conceding that Julia Gillard’s massive re-regulation of Australia’s workplace relations system in 2009 was poorly conceived.

The other main “independent” body of price-fixing bureaucrats is the central bank, the Reserve Bank of Australia, which sets interest rates. Their mismanagement (and that of their unelected brethren at the US Fed, Bank of England, etc.) led to the artificial boom from the 1980s to 2008, the GFC, stagnation, and now ridiculously low and non-market interest rates that have made many retiree’s life savings unable to earn a decent income. And there are those who want bureaucrats to run even more of the economy, instead of the market!

Independence is supposed to guard against corruption, not to deprive the public of control and deliver outcomes for which there is no direct accountability. It’s now time we examined some of our “independent” bodies through that lens.

Hear hear!