That’s not an Accord – now, this is an Accord!

Prime Minister Scott Morrison, on the back of some successful Covid19 crisis leadership, recently proposed that employer groups and the Australian Council of Trade Unions (ACTU) sit down together to negotiate a new Industrial Relations (IR) framework for the post Covid19 labour market under the guidance of IR Minister Christian Porter.

He did this having already worked closely with ACTU Secretary Sally McManus on the details of the Government’s wage subsidy programme JobKeeper.

Commentators immediately jumped on the idea that this was a proposal for a new ‘Accord’ like the successful Prices and Incomes Accord of the Hawke-Keating era, that lasted for 13 years between 1983 and 1996 after it had been expected to last a year or two when first announced ahead of the 1983 Federal Election that swept Bob Hawke to power.

But as we used to say in the ‘80s (with apologies to Paul Hogan’s famous character of the era Crocodile Dundee): “That’s not an Accord – now, this is an Accord”. So, when looking at what Morrison is proposing in 2020, it’s important to look at what the Accord of 1983 was, and what it was not.

First of all, it didn’t involve business or employer lobby groups. It was an ALP-ACTU document. The ALP wasn’t yet in government in response to the Coalition Government of Prime Minister Malcolm Fraser and the 1982-3 recession, when Australia was experiencing double digit inflation and unemployment and an Olympic gold medal standard of working days lost due to industrial action. The Accord had been developed by the ACTU Research team of Bill Kelty, Jan Marsh and Rob Jolly when Bill Hayden was Opposition Leader and Ralph Willis (also a former ACTU Research Officer) Shadow Treasurer. But when former ACTU President Bob Hawke became Labor leader he swept to power by promising to ‘Bring Australia Together’ with the Accord, as opposed to the industrial division of the Fraser years.

But the Accord in many ways owes as much to the previous Whitlam Government, as much as an alternative to Fraserism. The Whitlam Government had been hampered by poor economic management particularly in wages policy where the Prime Minister Gough Whitlam often clashed with the then ACTU President Bob Hawke.

When I interviewed him, Bob Hawke said:

“What Gough knows about economics you could write on the back of a postage stamp and still have room to spare.”

But later on, Whitlam said as retort: “Bob Hawke’s greatest advantage as Prime Minister was that he didn’t have to deal with Bob Hawke as ACTU President.”

The Whitlam Government was considered by the union movement to be a lost opportunity, so when they got another chance with the election Hawke Government they didn’t want to blow it.

As ACTU Secretary Bill Kelty said: “As we left the unions rally for Gough at the South Melbourne Town Hall towards the end the 1975 election campaign, Laurie Carmichael turned to me and said ‘You know they deserved better’. And I never forgot those words until we won again in 1983.”

Second of all, it wasn’t just about wages and IR. It included provisions for ‘the social wage’ including Employment, Medicare, Superannuation, Child Care, Job Protection and Security, Taxation reform, Occupational Health and Safety, Education and Training and Family Payments with unions at the forefront of negotiations over social security and pensions.

Thirdly, it wasn’t a static document, it evolved as economic circumstances changed. The original Accord (‘Accord Mark 1’ ) was concerned with restoring high employment and restoring the wages system after the recession . But after severe Terms of Trade collapse in 1985 the second (‘Accord Mark 2’) was brought in to discount nominal wage increases to ensure that the impact of the devaluation (the lower dollar meant higher import prices) wouldn’t feed into price inflation. The adjustment was compensated by tax cuts and a deferred wage increase (taken as superannuation). This occurred right through the Accord process to enhance the social wage, improve superannuation, tie wages closely to productivity improvement and introduce tax reform.

Finally, it got broad support after being debated and negotiated across the union movement. Just as Bob Hawke brought Australia together, ACTU Secretary Bill Kelty brought the trade union movement together. He brought together the likes of left of centre together such as Laurie Carmichael, Tas Bull, Tom McDonald, Anna Booth, Wendy Caird, Jennie George (later ACTU President) and Marilyn Beaumont representing metal workers, wharfies, building workers, clothing workers in the rag trade, public servants, teachers and nurses together with the centre right like Joe de Bruyn, John Maynes and Greg Sword representing shop assistants, clerks and storeman and packers. It was all about social solidarity, where the strong helped the weak, for the good of the community. It was about unity not identity politics.

The Accord also won over converts over time. None other than Paul Keating. Originally carrying suspicion of the efficacy of incomes policies from the Treasury he inherited, as Treasurer he developed a strong working relationship with Bill Kelty that continued onto the Prime Ministership. In fact, he ended up describing himself as an ‘Accord Warrior’ and was presented with a t-shirt emblazoned with “I’m an Accord Warrior” on the front at the ACTU Executive by Anna Booth.

So, can Scott Morrison emulate Bob Hawke? I am sure he won’t event try. Firstly, he spoke very respectively of Bob Hawke at the latter’s funeral noting his strong economic legacy. Secondly, it’s a different time and he has the dual challenge of both a public health and an economic crisis to tackle. He has had to, as his economic and public health advisors advocated: “Go big, act early and keep the lights on” and so far it has worked reasonably well as Australia has ‘flattened the curve’ and minimised infections and deaths compared to other economies beyond our shores. The Job Keeper has been an essential way to keep the lights on by keeping workers attached to their employers even if they are temporarily stood down.

But can a Liberal-National Government work with the trade unions? Of course, they can. In fact, at one stage Bill Kelty said Malcolm Fraser, in 1982, was talking with the ACTU about a possible deal on wages but the then Treasurer John Howard wouldn’t have a bar of it. In the end the Fraser Government imposed a 6-month wage freeze of its own, the recession got worse and Fraser lost the early election he called to Bob Hawke. So now if Scott Morrison’s party room is uncomfortable with him talking to the ACTU he should remind them that Australia’s longest serving Prime Minister and Liberal Party founder Robert Menzies used to say to his MPs: “To those of you who don’t like me talking to trade unionists remember half of them voted for us.” That’s a good message to remember in this time of Coronanomics.

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Tim Harcourt is the J.W. Nevile Fellow in Economics at UNSW Business School and host of The Airport Economist TV series www.theairporteconomist.coma and The Airport Economist Podcast

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