Bloomberg News

Australia’s Gillard Taps Shorten to Mend Union-Business Ties

December 12, 2011

(Updates with Shorten’s comment in eighth paragraph.)

Dec. 12 (Bloomberg) -- Prime Minister Julia Gillard promoted Bill Shorten to workplace relations minister, tasking the former union official with helping manage employment disputes amid criticism by business of government labor laws.

Announcing her first Cabinet reshuffle, Gillard also added the industry department to Climate Change Minister Greg Combet’s responsibilities, named Tanya Plibersek as health minister and moved Nicola Roxon from the health portfolio to become the nation’s first female attorney-general.

“With this new Cabinet in place we will see an important mix of new energy and talent, as well as wise heads and experienced heads,” Gillard told reporters in Canberra as she increased the size of her Cabinet. She said the government now has “focus and firepower” to pursue its priorities.

Australia’s first female prime minister is making changes to her ministerial line-up as her personal standing jumped in a Newspoll published Dec. 5 to the highest level since May. The promotion of Shorten, a lawmaker who helped Gillard depose former Prime Minister Kevin Rudd in June 2010, comes as businesses such as BHP Billiton Ltd. step up criticism of national labor rules they say make companies less competitive.

“Employers have a winner in Shorten,” said Rick Kuhn, a political analyst at the Australian National University in Canberra. “He has a background as a leader of the largest right-wing union in Australia, he’s been in favor of collaboration and deals with employers and is someone who will be prepared to hose down, and if necessary, smash workers who take industrial action.”

Shorten’s Successor

Shorten takes on the new ministry after serving as assistant treasurer, a role to be taken by Mark Arbib. Shorten started work as a solicitor before joining the Australian Workers’ Union as an organizer in 1994. He was national secretary from 2001 to 2007 and was elected to parliament in November of that year.

The AWU was founded in 1886 and represents more than 130,000 workers in agriculture, mining, aviation, construction and steel industries, according to its website.

Shorten told reporters in Canberra today that his approach to industrial relations is to seek “a fair balance” between worker and employer rights. Gillard has maintained Shorten’s responsibilities for financial services and the nation’s pension system, also known as superannuation.

Labor Laws

Business leaders have intensified criticism in recent weeks of the Fair Work Act, which was shepherded through parliament two years ago by then-Employment Minister Gillard, fulfilling one of the Labor Party’s key pledges in the 2007 election. The legislation overturned defeated-Prime Minister John Howard’s “workchoices” policy that favored individual contracts over group agreements.

Days lost to industrial disputes in the three months ended Sept. 30 jumped 53 percent from the previous quarter, according to government data published Dec. 1, as unions pushed for pay rises and job-security measures.

“Australian industrial relations may be deteriorating,” Mike Smith, chief executive officer of Australia & New Zealand Banking Group Ltd., the nation’s fourth-largest lender, said in an interview with Bloomberg News last month. “Policy for all sorts of reasons has not necessarily gone the right way.”

BHP CEO Marius Kloppers said in an interview with the Australian Financial Review last week that the current system makes it easier for workers to strike.

Qantas Grounding

Criticism of the 2009 labor law has increased since Qantas Airways Ltd. grounded its main fleet on Oct. 29 to force a resolution of a dispute with workers. Chief Executive Officer Alan Joyce said that weeks of sporadic stoppages by workers demanding higher wages and job security guarantees had allowed a “slow bake” of the carrier.

BHP, the nation’s biggest miner, and Toyota Motor Corp.’s local unit have also been hit by strikes in recent months.

Outgoing workplace minister Chris Evans becomes minister for tertiary education, skills, science and research, while new Health Minister Plibersek’s previous responsibility for social inclusion goes to Mark Butler, Gillard said. Departing Attorney- General Robert McClelland takes on the ministries of housing and homelessness. Julie Collins takes community services, indigenous employment and the status of women.

Gillard said she will ask Governor-General Quentin Bryce to swear-in the new ministry on Dec. 14.

The reorganized Cabinet follows a decision by the Minister for Small Business Nick Sherry to resign from the position. Sherry cited his length of service as a minister and the challenge of holding such a job with a young family. He will remain as a senator for Tasmania.

--With assistance from Robert Fenner in Melbourne and Michael Heath in Sydney. Editors: Edward Johnson, Brendan Murray

To contact the reporter on this story: Jacob Greber in Sydney at jgreber@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net


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