The inside story of our COVID detente

With the economy collapsing, Christian Porter realised that he needed to talk to the unions. But how does a Tory talk to a trade union boss?

The only meetings that the Minister for Industrial Relations had had with the secretary of the ACTU, Sally McManus, had been formal confrontations on opposite sides of the conference table, six advisers to a side.

"The unions thought I was some flashy private schoolboy descended from a long line of British lords with a silver spoon up my arse," as he later put it to a colleague. For the record, Porter isn't descended from British lords. But he is third-generation Liberal Party aristocracy.

The situation was dire by mid-March. Porter was getting frantic calls from business owners. Gatherings of more than 500 people had just been banned. The media was reporting that a ban on gatherings over 100 was imminent.

One big pub and restaurant owner told him that he'd need to sack 90 per cent of his staff the following week, for instance. The dilemma: it'd be illegal for him to fire staff under the Fair Work Act, but he'd go broke if he didn't. There was no pandemic provision.

Porter knew he had to act but he wanted to work with the unions, not against them. He went to the Prime Minister and asked to engage an adviser to act as his bridge to the unions. He proposed a man he'd never met but respected, Greg Combet, former ACTU secretary and former minister in the Rudd and Gillard governments. Scott Morrison told Porter that he'd been thinking along the same lines.

Combet had a day job as chair of Industry Super Australia but agreed to advise Porter also: "I'm a Labor person but that's not relevant at the moment," Combet has since said.

His first advice to Porter: "The priority has to be to keep workers on the job. If they're sacked, you'll unleash multiple crises and Centrelink won't be able to cope. You need to vary key awards to allow employers to reduce hours. Even to zero hours if necessary."

It was critical to keep a relationship between the employer and the worker. As for dealing with the unions, Combet's advice was dead simple. Call Sally McManus.

So Porter did. "Let's start a dialogue," the minister said. "Let's try to talk every couple of days and try to figure out what's going on" amid the tremendous confusion of the time. Within days he and McManus were in daily discussions.

Decades of distrust and entrenched ideologies were set aside. The grandson of a Liberal minister and the daughter of a railway worker, one a former Crown prosecutor and the other a committed gamer, found common cause in crisis.

There were some preliminaries but the first crunch meeting was when Porter convened the unions and employers by Zoom on the morning of Friday, March 20. The spread and speed of the pandemic worldwide weighed on everyone as shocking infection figures were reported from Italy overnight – 627 dead in a day, more cases than China.

Sally McManus told the meeting there were horrific numbers of workers stood down without warning. One of the key bosses' representatives, employment lawyer Tamsin Lawrence, of the Australian Chamber of Commerce and Industry, said businesses were in a terrible crisis. Both looked to the federal government for some sort of intervention. The two women were together in a room in Melbourne. They looked to the screen to see the minister's reaction from Sydney.

Porter's response was "no". He told the two sides to come together to agree on changing some key industrial awards to create flexibility for the whole system. The priority would be to salvage as many businesses as possible in order to save as many jobs as possible. "Are you interested?"

The two sides agreed. But McManus turned to the employer reps in the room and stressed that they must only ask for what they absolutely needed, not merely what they wanted. Once the meeting had broken up and the screens went dark, McManus approached Lawrence. She was insistent, even angry, in repeating her point: "Don't you dare ask for anything more than you need."

"I totally get it," replied Lawrence, "but we are both in the same boat – I need to keep businesses alive and you need to save jobs."

They agreed that Lawrence would get her a shortlist of the priority industry awards – of the 122 awards in total – by the end of the day. As the participants made their various ways home, they found Christian Porter on the phone. "You need to make this work," he hammered home. "If you need help from the Commonwealth, you will have it."

The two sides quickly agreed to concentrate on three awards; hospitality, restaurants and, biggest of all, the clerks award. They were the most stressed sectors. Collectively they covered some 10 million workers.

So the emergency surgery on the awards system was already under way when the crisis hit home. It was three days later, on Monday, March 23, that the news was dominated by pictures of enormous queues, people lining up at Centrelink offices around the country to apply for the dole.

"That day was the turning point, when we saw lines at Centrelink like scenes from the Great Depression," Porter has said. "It was clear to all of us that it was colossal what we were potentially facing."

Innes Willox of the Australian Industry Group, the second of the major employer bodies, says: "It was essentially that Armageddon had hit."

It took a change of mindset from all sides to get beyond making ambit claims for 100 per cent when they'd be prepared to settle for 60. The president of the ACTU, Michele O'Neill, who led the detailed negotiating groups for the unions, says: "Some employers were ridiculously opportunistic and thought it was their opportunity to strip away long-fought-for worker protections."

A red line for the unions was penalty rates. The union negotiators reported that ACCI and COSBOA – the Council of Small Business Organisations Australia – were being unrealistic.

Porter struck the same problem. He discovered that he needed to offer more counselling and cajoling to the business side rather than the unions. And he did.

And the irreducible demands of the employer side? "Our members needed to be able to change workers' hours, to be able to direct workers to other duties, to allow employers to have more control over workers' rosters," says Willox. "We were putting forward proposals, the unions were reacting. We served, they returned."

The tin-tacks negotiators worked at breakneck speed, aided by many back-channel conversations. The two sides first struck agreement on the hospitality award. They lodged an application with the Fair Work Commission on March 24 to vary the award. The commission president, Iain Ross, approved it two days later. It had been four days since the first crunch meeting. The other awards followed swiftly.

Porter later hailed the speed and goodwill of the two sides: "It probably is fair to say that there has been the type of change in three weeks inside the award system that you might otherwise wait 30 years to see." He's described McManus as his "new BFF" – best friend forever.

The head of ACCI, James Pearson, says "for so many businesses – and for jobs – this was existential".

For the Industrial Relations Minister, there was a political bonus. The Labor Party had been shut out of the entire process. Porter mapped the terms of these arrangements onto the JobKeeper program that followed soon afterwards.

As the Morrison government looked to the recovery phase a few weeks ago, it aired ambitions for economic reform. Including workplace reform. Greg Combet asked Porter what the government meant.

"If a conservative government goes that way, you will end up with a 'Your Rights at Work' campaign against you," a reference to the devastatingly effective ACTU campaign against the Howard government's WorkChoices plan. "You will get outside opposition, and you will get legislative uncertainty," with Labor opposing government legislation in the Parliament.

You'll inevitably bugger it up, in other words. Combet advised dialogue with the unions. Again.

Porter talked to Morrison about how to fix the many problems in the industrial relations system. "We can either go the normal way, or try and repeat a recently successful process," he later recounted to colleagues. "We are not inventing fire here – it's people sitting down and talking to each other."

Normal now perhaps, but unthinkable three months ago. And so the Prime Minister told the National Press Club on Tuesday that he was launching a co-operative consultation to achieve a new wave of workplace reform: "The purpose is simple and honest, to explore, and hopefully find, a pathway to sensible, long-lasting reform with just one goal – make jobs."

From job-saving to job-making. Can Tories, employers and union bosses keep talking the same language in the phase to come?