By David Hughes

First published in the MRC’s Watercooler newsletter. Sign up to our mailing list to receive Watercooler directly in your inbox.

Bob Hawke was many things: pragmatic, charismatic, popular. But above all, he was a reformer.

He understood that real leadership sometimes means confronting your own side of politics. That lasting reform involves complexity and controversy. And that the national interest must come before factional convenience.

That’s what makes today’s Labor leadership so jarringly different.

Australia once led the world in modernising its workplace laws. Now, we are regressing.

In the decade from 1983, the Hawke Government — working closely with the union movement — took deliberate steps to fix the industrial chaos of the 1970s and early ’80s.

In 1982, unemployment reached 9.4%, inflation hit 12.4%, and more than two million working days were lost to strikes.

The centrepiece of Hawke’s early economic strategy was the Prices and Incomes Accord, a formal agreement with the ACTU to keep wages restrained in the national interest. At the time, wages were largely set by ‘awards’ — legal documents that applied standard pay and conditions across whole industries, regardless of the performance of individual workplaces.

The Accord started a process of reform. Awards were gradually modernised, and bargaining began shifting from entire industries to the workplace level, where employers and employees could negotiate directly.

As then-ACTU Secretary Bill Kelty put it in 1992: “We had a long-term strategy: first step, wage restraint; second step, award restructuring; third step, implementing it on an enterprise level.”

That final step—enterprise bargaining—became the foundation of modern industrial relations in Australia. It meant pay rises were tied to productivity and business performance, not one-size-fits-all deals imposed across a sector.

The Keating Government reinforced this approach through the 1993 Industrial Relations Reform Act, which moved Australia from a centralised system to one based on workplace-level negotiation and far less arbitration.

The Howard Government followed with further legislation, making clear that the system should allow each workplace to choose the agreement structure that suited its circumstances.

Even the Rudd and Gillard Governments, though less ambitious on reform, upheld these principles. As Julia Gillard said in 2008: “The wage outcomes that happen in each enterprise will be a function of the productivity gains in those enterprises.”

She also made it clear that pattern bargaining—imposing the same conditions across different employers—would not be legal under Labor’s laws.

That consensus has now collapsed. Labor has made more changes to Industrial Relations policy than any other area.

Since 2022, the Albanese Government has introduced sweeping changes that shift power away from the workplace and back to unions and centralised control. New laws allow unions to push for industry-wide agreements, even where businesses and employees object.

It brings back arbitration, complexity, and inflexible mandates that don’t reflect individual circumstances.

In policy terms, it reverses four decades of progress. In principle, it undermines the link between productivity and wages. In tone, it marks a clear departure from the leadership shown by the union movement during the Hawke and Keating years. And in effect, it means a less dynamic economy.

When asked in 2023 whether the ACTU had made a mistake in supporting enterprise bargaining during the reform era, Secretary Sally McManus replied: “We think neoliberalism has run its course.”

Employment Minister Tony Burke echoed that sentiment in 2022:“We don’t want businesses competing on wages.”

And earlier this year, Senator Murray Watt stated: I don’t think it’s correct to say you can’t have real wage growth without stronger productivity growth.”

These aren’t throwaway lines. They reflect a deeper shift in philosophy, where wages are seen less as the outcome of performance and more as a political entitlement.

Unions have become Australia's most powerful, wealthy and influential lobby group. As we showed in our recent Unions Inc. report, much of today’s union income comes not from membership fees but from financial vehicles:

$344 million from worker entitlement funds
$124 million from superannuation
$60 million from training funds

That’s more than half a billion dollars in additional income each year. Meanwhile, union membership continues to fall—down to just 12.5% of the workforce.

With less workplace reach and fewer workers to represent, unions have turned to the Parliament, not the shop floor, as the vehicle for influence. Where once they negotiated, today they legislate.

It’s political extortion.

The Albanese Government has already made a record number of regressive changes to workplace laws—and more are coming when Parliament returns.

A productive Accord no longer exists. The only agreement in place is a transactional one. Labor receives union funding to get elected, and unions get to write laws in return.

That’s not reform. It’s a political deal dressed up as policy.

Bob Hawke led the unions towards reform in the national interest. Today, Anthony Albanese is being led by them—and the country will pay the price.

The Menzies Research Centre is currently preparing a detailed report on the consequences of Labor’s industrial relations agenda. If you believe the public deserves to see what’s really at stake, support our work.

Hawke led. Albanese follows.