Lana Roelandts

220032777
ECON 243 Assessment

What is the regime of labourist-protectionism? Discuss why it was replaced by a neo-liberal

globalisation policy in the 1980s.

The regime of labourist protectionism first came to the fore before federation in Australia. However,

it is from the beginning of the 20 th Century that the larger influence that state and Federal

Governments had on the economy became more noticeable. It is during this time that the tariff

system was introduced, the Commonwealth Court of Conciliation and Arbitration was established, as

was the basic wage, statutory marketing authorities and home consumption price schemes.

The regime of labourist protectionism was a set of policies and practices that were directly centred

on protecting the living standards of working class white males in the Australian society, while

excluding others such as Aboriginals, non-British migrants and women. The way in which labourist

protectionism operated was to restrict/regulate industries in Australia in the primary sector

(agriculture, mining of natural resources, etc) and reduce the threat of foreign trade and investment.

This is known as ‘the historic compromise between capital and labour’, as the prospect of potential

gains in capital and a larger, more productive labour force that would be available due to the access

of foreign markets, was foregone in order to secure a high quality standard of living for the working

class white Australian male. It was possible for the Government to engage in this labourist

protectionism, as Australians earned high incomes due to the primary sector exports, such as wool,

wheat, gold, minerals, coal, meat and iron ore.

Labourist protectionism also ensured that the Australian standard of living was protected from any

disturbances associated with Australia’s involvement in the international economy. This ensured

that workers’ wages and standard of living were upheld and therefore ensured a good quality of life.

The main way that the Government ensured that the primary sector was regulated was through the

imposition of tariffs on imported goods, which ensured that imported goods were sold at an

elevated price, and consumers would therefore elect to purchase Australian products. Although over
Lana Roelandts
220032777
ECON 243 Assessment

the course of over half a century, there were variations of the labourist protectionism policy put in

place, during the 1980s in Australia, the country took a substantial leap forward with regards to

international involvement as it elected to deregulate markets, and open its doors to the looming

prospect of globalisation and free trade.

The main reasoning behind the bold choice of becoming a part of the trend of globalisation was to of

course move ahead with the changing times in economic context and ensure that Australia

established itself as an economically competitive nation on a global scale. To ensure that Australia

was a strong economic force, the Australian Government had to “open their minds” to the prospect

of a potential increase in efficiency of production due to the accessibility of innovative work

practices and innovative technologies in manufacturing and other industries that were available in

other overseas nations. Globalisation also exposed Australia to a large more competitive overseas

market, which, in itself, encouraged producers to seek more innovative, efficient, cost-effective

alternatives regarding production. It also created the need for a larger more expansive labour

market, which could only be met by the hiring of individuals from the overseas labour force.

Another legitimate reason for the Government to opt to embrace the concept of globalisation is also

because, as time has slowly passed, the trends in export has shifted from primary sector products to

the increasing trend of the export of services. This is partially due to the slow depletion of some of

the finite natural resources, such as gold over a considerable time. As the Australian Government

realised that they could not rely solely on the mining and other primary industries sectors to

generate wealth for the nation, the most rational solution was to expand into other industry sectors

and markets and attempt to forge a competitive advantage in other areas, and also to focus on the

renewable resources of the primary sector for exports, especially wool, beef and crops such as

wheat. In the beginning the Australian public was dubious of the switch to global competitiveness, as

there was the fear that products from overseas markets could penetrate and saturate the Australian

market and leave the Australian workers with no employment opportunities and prospects for the
Lana Roelandts
220032777
ECON 243 Assessment

future. However, this has not been the case. As the Australian Government embraced the notion of

globalisation, this allowed a more competitive stance to be taken by Australian farmers and

producers and therefore enabled for producers to offer a more competitive price for consumables.

This move towards globalisation has proved to be a most effective means of establishing an

international competitive advantage in many sectors of the Australian economy, and is crucial in

aiding in maintaining adequate wages that are required in sustaining a high standard of living for the

Australian community.

Explain the impact of deregulation on one industry of the rural sector over recent years. Include a

discussion of the role of relevant farmers’ representative organizations in your answer.

The ways in which deregulation have impacted upon the dairy industry of the rural sector of the

Australian economy in 2000 varied from farmer to farmer as each farmer’s dairy contributions

differed, mainly due to farm size and composition. However, there was a general consensus that

deregulation of the industry led to a drop in cash income for many Australian farmers. When the

dairy market in Australia was regulated, it offered a degree of financial security for farmers and

ensured a supply of fresh milk all year round, as they operated on a quota system, where farmers

were paid a certain amount for every litre of milk they produced until they reached the quota limit,

and then every litre produced over the quota limit received a drastically reduced price per litre of

milk. Therefore, under the quota system, farmers were able to earn sufficient cash income for their

milk products. However, there was, after a public survey, a discovery that farmers in the state of

Victoria were suffering, from the restriction of competition in the dairy industry, which therefore

constricted their income prospects. Therefore, Victoria was able to lift the regulations on the dairy
Lana Roelandts
220032777
ECON 243 Assessment

industry. However, other states discovered that there was a benefit from sustaining the regulation

pricing for drinking milk.

This served as a large disadvantage as other states discovered the lack of sustainability so long as

Victoria continued with the deregulation of the industry, as the free interstate trade would see many

businesses in other states opt for purchasing Victorian milk products, as the prices were cheaper and

the supply was constant. It was then that the other states opted for reforming and deregulating the

dairy industry with the aid of the Australian Government, and although the government was aware

of the instant impact of deregulation on the industry, however, if deregulation did not take place

then a substantial number of farmers may have had to permanently stop production of milk, as the

demand of dairy products from states outside of Victoria would diminish. However, the severity of

the impact of the deregulation of the dairy industry could not be predicted so it did come as quite a

large shock to many farmers, especially in NSW, who experienced quite a drastic drop in income

caused by deregulation of the industry. The Australian Government therefore introduced the Dairy

Structural Adjustment Program in an attempt to aid reform in the industry. However, dire conditions

for dairy farmers led to many opting for receiving exit payments that the adjustment program

offered as an incentive for leaving the industry.

Therefore it proved to be quite beneficial that the Australian Government provided subsidies for

dairy farmers, as without this financial support and assistance, many of the farmers would have had

a severe difficulty in acclimatizing to the new market conditions surrounding the industry. The need

for the Government provisions indicates that deregulation was a very difficult process to predict the

outcomes of and therefore, was hard to plan for with regards to reform. Now, as the dairy industry is

not a regulated industry, prices that farmers receive for milk production are determine, mainly, by

the international prices of milk. Research has indicated that Australian dairy farmers receive a low

price for milk, judged by world standards. And ‘therefore have to run very efficient production
Lana Roelandts
220032777
ECON 243 Assessment

systems’ in order to remain competitive and reduce operating costs. This is a difficult thing to do,

especially when the dairy industry is such a competitive industry to participate in.

Possibly the most relevant farmers’ representative organization in the dairy industry is the National

Farmers’ Federation. The National Farmers’ Federation (NFF), according to their web site, is ‘the

peak national body representing farmers and, more broadly, agriculture across Australia. The NFF is

dedicated to proactively generating greater understanding and better-informed awareness of

farming’s modern role, contribution and value to the entire community’. The web site also states

that the mission of the NFF is ‘to influence the Australian Government, Parliament and the broader

community through national and international representation and advocacy, to achieve a strong,

progressive and sustainable farming sector in Australia’.

Therefore the National Farmers’ Federation are responsible for aiding a collective number of farmers

in negotiating crucial aspects of difficulty within the primary sector. These aspects mainly include

industrial relations problems and disputes and problems regarding commodities markets, which is

where the dairy production industry comes into the equation. The NFF negotiates with Government

bodies and discusses pressing issues within the industry. Therefore, there would have been much

discussion regarding the deregulation of the dairy industry as the NFF’s main concern would have

been the impact of deregulation on farmers and also the impact deregulation had on Australia’s

competitive position within the international dairy industry. The NFF, is still operating in order to

continually achieve positive outcomes for both farmers and the entire agriculture market sector.

Compare the Howard Government’s WorkChoices legislation for Australia’s industrial relations

with the Fair Work Australia legislation of the Rudd Government. In your answer show that you

understand the significance of the differences.

Lana Roelandts
220032777
ECON 243 Assessment

In 2006, The Howard Liberal Government introduced the ‘WorkChoices’ legislation, which was a

reform of the ‘Workplace Relations Act 1996’. This ‘WorkChoices’ legislation aimed at regulating

industrial relations within Australia, and at the same time, aimed at minimising unemployment and

increasing efficiency and productivity in the workplace through reform concerning the setting of a

new minimum wage and working conditions, reducing the scope of unfair dismissal laws, and most

notably, through the introduction of individual contracts, also known as Australian Workplace

Agreements (AWAs).

The ‘WorkChoices’ legislation introduced radical reform and served as political ammunition for the

Rudd Labor Government in the 2007 election campaign. The main areas of reform were centred

around reducing the effectiveness and power of trade unions and industrial tribunals such as the

AIRC, introduction of the Australian Fair Pay Commission (AFPC), which was an independent tribunal

which had the main objective of the setting of minimum wages and conditions for workers, the

outlawing of the use of pattern bargaining, which by definition is the use of trade unions in

negotiations who negotiate with agencies and bodies for an improvement in working conditions

based on precedent. It also outlawed industry-wide industrial action, such as strikes. Most notably

was the exemptions of some firms from unfair dismissal laws and the introduction of individual

workers contracts (AWAs), which brought to the fore, the requirement of enterprise bargaining

between employers and employees regarding working conditions and wages. This was seen as a

drastic and detrimental aspect of industrial relations legislation as it was made apparent that if

employees refused to sign individual contracts regarding their working conditions then it was quite

simple for employers to terminate employment within a firm. It was also detrimental in the sense

that employees with relatively no negotiation skills were therefore disadvantaged in negotiating

their working conditions and wages. This legislation demonstrably made it quite easy for employers

to construct, alter and/or terminate an employment contract. This therefore made a large majority
Lana Roelandts
220032777
ECON 243 Assessment

of the Australian workforce fearful and insecure in their work as there was always a possibility of

retrenchment.

When the Rudd Labor Government was elected into office in 2007, many of the aspects of the

WorkChoices legislation were abolished, including the AWAs, in an attempt to make Australian

industrial relations more equitable for more Australian workers. The Rudd Governments

introduction of the ‘Fair Work Australia’ legislation was implemented to do just that. The most

notable reform in industrial relations from WorkChoices to the Fair Work Australia legislation was

the introduction of Fair Work Australia, which is a tribunal which was put in place to replace the

Australian Fair Pay Commission and the Australian Industrial Relations Commission (AIRC). Fair Work

Australia has the role of carrying out functions such as setting minimum wages and employment

conditions, dispute resolution processes, processes regarding the termination of employment,

industrial action complaints and processes in dealing with industrial action and, enterprise

bargaining functions.

Fair Work Australia is also regulating industrial relations within Australia, but attempting to do so on

a much larger and more national scale, and also attempting to create equality for both employer and

employee, as the common view of the WorkChoices legislation was that it was developed to benefit

employers and greatly disadvantaged employees.

The main difference between the WorkChoices legislation and the Fair Work Australia legislation is

that WorkChoices implemented the Australian Fair Pay Commission, which as stated previously, is a

third party, independent body that was put in place to handle the setting of work conditions and also

the setting of wages, whereas the Fair Work Australia legislation implemented the Fair Work

Australia tribunal to deal with not only the handling of work conditions and setting of wages, as well

as termination of employment procedures, dispute resolution, processes in dealing with industrial

action, and aiding in enterprise bargaining processes.

Lana Roelandts
220032777
ECON 243 Assessment

Another major difference was that WorkChoices implemented individual work contracts which were

constructed by employers, stipulating the working conditions that the employee would be subjected

to, whereas, the Fair Work Australia legislation abolished individual agreements and put in place a

national standard for workers, which made working conditions a bit more just for all workers, but

also removed exemptions of some firms for unfair dismissal laws, which also ensured job security for

workers.

Discuss the usefulness of the concept of ‘path dependency’ for explaining Australia’s history of

institutional continuity and change. In your answer discuss three examples of how the concept

could be useful.

Path dependency is a useful notion for explaining Australia’s history of institutional continuity and

change, as it stipulates how tradition of concepts and ideas is hard to break away from, and it also

highlights, in the event of major reform in an aspect of institution, how crucial a role institution plays

in the shaping of events leading up to reform. Path dependency is strong in Australia as the

Australian economy’s history is one of stable ongoing institutional development and has not been

stalled or interrupted by elements such as revolutions, changes to the constitution or foreign

invasions. This has therefore allowed Australia to continually build of old institutions, and for that

reason, many of the traditions in place within Australia are so powerful and at times can be seen as

being quite rigid. ‘Economic behaviour and policy are heavily influenced by the historically- derived

and existing structure of institutions and the choices they allow’.

The best way to understand path dependency is to recognise that all of the current rules, regulation,

laws and institutions put in place within Australia are all products of history- meaning that they all
Lana Roelandts
220032777
ECON 243 Assessment

developed from institutions of the past. It should also be noted that the implementation of

institutions and policies result in the formation of organization of regulation and/or authority that

continue for extensive periods of time. Therefore, it indicates that the older the institutions, the

more difficult it is to break free from.

Path dependency could be useful when reforming institutions that appear to be ineffective, as the

history of the institution can be traced and is therefore evident, but can then be assessed in the

current environment and a decision can be made as to whether the institution is working as

effectively as expected. Studying the Economic History of Australia would therefore indicate how

changes in the economy have affected people and institutions and how the policies put in place

affect economies. For example, the Australian industrial relations system was reformed after the

WorkChoices reform, as it became apparent that, although a similar policy had been put in place

previously in history, it was unreasonable to implement it again, as the economic environment

within Australia demonstrated a general consensus that the Australian community would not benefit

from this reform. Therefore, path dependency would serve as an indicator that radical reform is

uncalled for and unsubstantiated.

Path dependency could also be useful with microeconomic reform. Like reform regarding industrial

relations policy, path dependency can establish grounds for further and future developments

regarding economic competitiveness. An example is the reform regarding the agriculture sector. As

the agriculture sector has, for a time, been under pressure from the many competitive forces of

international markets, reform was required to ensure that the agriculture sector continued to strive

as it is a crucial element of the export market for Australia. One main reform that took place was the

subsidising of some elements of the agriculture sector to ensure that agriculture in Australia is still a

strong viable force. Another way in which reform took place in the agriculture sector is through

deregulation. Deregulation ensured that competitiveness was the most crucial aspect in succeeding

in a global marketplace.
Lana Roelandts
220032777
ECON 243 Assessment

Perhaps a very notable institution within the Australian history is that of the Constitution. Since the

federation of Australia in 1901, the constitution has remained unchanged and therefore one of the

oldest institutions in place in Australia. Path dependency would be a useful concept with regards to

the prospect of potentially changing the constitution as the history surrounding the Constitution

indicates, that although in itself, the Constitution is old and quite rigid and certainly very powerful,

path dependency would also indicate that reform regarding the Constitution would not be required

or recommended, as it is working very effectively and therefore would be unwise to change.

Lana Roelandts
220032777
ECON 243 Assessment

Reference List

 ‘National Farmers’ Federation Website, objectives’

http://www.nff.org.au/strategic-plan.html,

Last accessed on the 21/09/2010

 ‘National Farmers’ Federation Website, About Us’

http://www.nff.org.au/aboutus.html

Last accessed 21/09/2010

 Class topic notes, University of New England, Armidale,

Publication date unknown