Chapter 8. ‘The Politics of Partnership’: The Evolution of Public Sector Industrial Relations in Victoria

The Australian Labor Party (‘ALP’) unexpectedly won the Victorian State election in October 1999. The election win followed an extended period of conservative government in which the Victorian public service — and the public sector more generally — had undergone a dramatic transformation and restructure.^[1] In many areas of government, the outcome of the process of reform, informed by the ideas associated with ‘new public management’, had challenged both the rationale for public ownership of certain assets and the delivery of services by public sector employees. Like many governments across the globe, Victoria had discovered ‘privatisation’, ‘corporatisation’, and ‘public-private partnerships’.

Consistent with these developments, public sector industrial relations in Victoria also shifted significantly during the 1990s. These changes were to occur at both the peak level between central agencies and unions, as well as the workplace level, involving union representatives’ dealings with management. At the peak level of government, unions found it increasingly difficult to engage central agencies in policy and workforce issues, and wage setting was decentralised to the Department/agency level. At the workplace level, unions were excluded from workplace change processes and management was encouraged to introduce individualised employment agreements as a substitute for collective agreements and awards. In the wider public sector, the Kennett government also sought to direct public sector organisations to introduce individual agreements and, following the passage of the federal Workplace Relations Act 1996 (Cth), Australian Workplace Agreements (‘AWAs’). Unions, not surprisingly, took on a more adversarial approach to dealing with both government and Department or agency-level management, using industrial muscle where it could be exercised. Inevitably these changes were associated with increasingly differentiated outcomes between Departments/agencies, both in terms of wages, approaches to industrial relations and human resource/employment practices. By the end of the 1990s, the relationship between public sector unions in Victoria and government was hostile and non-cooperative.

On gaining office, the Bracks Labor government stated its commitment to overturning the approach taken by the previous Kennett government. It immediately convened a summit (‘Growing Victoria Together’) which was intended to indicate, as many of its pre-election policy documents had done, the ways in which it would seek to distinguish itself from its conservative predecessors. The government remained committed to a strong focus on financial management and the maintenance of budget surpluses, but sought to differentiate itself in terms of its key policy priorities and initiatives designed to create an invigorated capacity for government to deliver value to citizens. This involved a commitment to creating a new public sector organisation and management.

As was the case for the Kennett government, the priorities were focussed on growth through improving the regulatory environment for business and investment attraction, but in contrast, the process of developing and implementing policy would be consultative, although not necessary consensual. This has led to an ongoing insistence that any policy proposals must not only go through a process of assessment for its economic impact, an ‘Economic Impact Statement’, but should also involve a period of ‘community consultation’ before the presentation of any actual proposals as bills before Parliament.

This ‘consultative but not consensual approach’ was also intended to be a hallmark of public sector industrial relations under a Labor government. Its purpose was to embark on a ‘partnership’ with unions to improve the delivery of services and, at the same time, build a strong relationship with public sector unions and employees through cooperation and consultation. The government moved quickly to reinstate a collectivist approach to industrial relations, directing Departments/agencies to discontinue the practice of engaging employees on individual agreements (AWAs). Proceedings before the Australian Industrial Relations Commission (‘AIRC’) were terminated and the government sought to negotiate a Partnership Agreement with the Victorian Branch of the Community and Public Sector Union (the ‘CPSU’). This agreement, which was negotiated in a relatively short period of time, articulated an approach which sought to bring unions back into the process of reshaping public sector employment practices.

For all intents and purposes, the election of the Bracks government appeared to represent a counter-revolution against the ‘new public management’ and the general direction of industrial relations reform in Australia. Within the first 12 to 18 months, however, the government was required to negotiate a number of agreements on wages and conditions for significant groups of public sector employees. This process proved to be challenging for both government and unions and posed problems for any commitment to the ‘partnership approach’ of its own rhetoric. For government, it immediately brought into focus the tension between its fiscal objectives and public sector wages policy. For unions, it required a significant adjustment of their high expectations of a new Labor government following a long period of State government hostility towards unions.

The purpose of this chapter is to review the nature of this counter-revolution of public sector industrial relations in Victoria and assess the extent to which it generated a transformation of public sector industrial relations and workplace practices. This analysis will take account of a number of significant shifts in the context in which this new approach to public sector industrial relations has been implemented which have influenced the implementation of policy. These include:

The chapter provides a brief outline of the concept of ‘new public management’, which has informed key changes in public sector organisation and management practice over the last decade. Then there is an overview of the political and industrial context faced by the incoming Bracks government following its shock election win in 1999. The next section of the chapter outlines the key reforms in unions and wages policy that had occurred prior to 1999. The section ‘Instituting a Partnership Approach’ summarises the key elements of the Bracks government’s public sector industrial relations policy that was introduced after the October 1999 election, most notably the idea of developing a partnership with public sector unions. The section ‘Challenges to Partnership’ considers challenges for the partnership approach posed by subsequent industrial relations outcomes and dynamics. ‘Reforming the System’ outlines the state of public sector industrial relations in Victoria generally in the period 2002-2006, while the concluding section provides an assessment of changes since 1999.

The overall assessment is that whereas the shifts in approach were significant, they represented an evolutionary development rather than a fundamental counter-revolution against the more radical ideas associated with new public management. While seeking to take a cooperative approach to wage negotiations, the government’s policy framework provided for agreements to be negotiated within the same funding parameters applied by the previous government. The initial changes can also be judged to have met with mixed success, both industrially and in terms of creating a workforce to deliver government service priorities. The incrementalist approach reflected both the terms on which the government was elected and the subsequent challenges it has faced. By 2003, this (partial) transformation had emerged as a coherent alternative to the more extreme model to meet the emerging challenges in public sector industrial relations and workforce planning.