Labor's pledge to abolish the Australian Industrial Relations Commission (AIRC) along with several other federal agencies and replace them with a new body, Fair Work Australia, has generated significant debate and media attention.

Much of this discussion has focused upon three aspects. First, the “surprise element” of Labor’s move, which involved turning its back on the AIRC after supporting the institution in the face of more than a decade of government attacks. Secondly, the rationale for this policy shift, most likely emanating from a desire to start again with new appointees given the perception that the government has “stacked” the tribunal with employer representatives. And thirdly, the constitutional validity of the proposal, with concern in some quarters about the combining of enforcement/prosecution functions and judicial/determination functions within the same body.

But there has been very little discussion of the implications of Labor’s announcement for workplace dispute resolution. Before addressing that issue, what has been the experience with dispute resolution in the first year or so of Work Choices?

Work Choices effected a fundamental shift from the century-long tradition of compulsory conciliation and arbitration of industrial disputes in the AIRC to a framework of voluntary dispute resolution. Parties to workplace disputes now have the option of having them resolved in the AIRC, or using private alternative dispute resolution (ADR) providers such as mediators and arbitrators.

The AIRC’s dispute resolution powers are now very limited. It can no longer require parties to attend proceedings, nor can it exercise other powers that are conducive to effective dispute settlement (such as summonsing witnesses or ordering the production of documents). Proceedings are now conducted in private, with strict confidentiality obligations attaching to information disclosed in those proceedings. And given that the commission cannot make enforceable orders, it is unclear how any outcomes it forges can be enforced.

If the parties wish to use a private ADR provider then the outcomes are subject to and enforceable under the general law of contract; where they involve arbitration, state commercial arbitration legislation might also apply. While dispute resolution in the AIRC is free of charge, the parties have to meet the costs of private ADR. But the government has established the Alternative Dispute Resolution Assistance Scheme, which enables parties to obtain up to $1500 for each eligible dispute, to partially offset the costs of utilising a private ADR provider.

These new arrangements have not led employers, employees and unions to “flee” from the AIRC as a dispute resolution forum in favour of the new private ADR option. Federal Budget figures in May revealed that only $74,000 was expended on the assistance scheme in its first year of operation, which equates to around 50 disputes. Anecdotal evidence also suggests that the take-up rate of private ADR has been very low, although the government does not currently make available information regarding the operation of the assistance scheme or private ADR.

Employers, employees and unions still seem to prefer using the AIRC in matters where it has jurisdiction. Work Choices cut a huge swathe through the commission’s jurisdiction, however, primarily with its new exemptions on unfair dismissal claims and the removal of the AIRC’s minimum-wage setting and agreement approval functions.

On the first anniversary of Work Choices at the end of March, the AIRC president, Justice Giudice, released figures showing that these changes have led to a dramatic reduction in the commission’s workload. Total dispute resolution matters notified to the AIRC fell from 2420 in the year March 2005-March 2006 to 1344 in the year to March 2007. The commission’s overall workload (measured by total lodgement numbers) was cut by two thirds in the same period, from 29,246 to 10,138. These figures paint a starkly illuminating picture of the extent to which the AIRC - the once impregnable institution at the apex of Australia’s industrial relations system - has been marginalised by Work Choices.

Coming back, then, to Labor’s proposal to establish Fair Work Australia. Dispute resolution has been designated as one of the many functions that the new organisation would perform, and Labor leader Kevin Rudd has also indicated that Labor would retain the current voluntary dispute settlement framework. But this still leaves many questions unanswered. For example, would the parties still have the option of private ADR, or would all disputes be channelled through Fair Work Australia?

In my view, Labor should abolish the private ADR stream and the Alternative Dispute Resolution Assistance Scheme, which are being largely ignored in practice. Instead, all workplace dispute resolution should be brought within the realm of the public agency, Fair Work Australia, and should be fully publicly funded. Within that framework, parties could continue to be given a range of options for having disputes resolved. For example, as well as traditional forms of dispute settlement such as conciliation, mediation and arbitration, newer methods such as conferencing, case appraisal and assisted negotiation could continue to be made available. The parties could choose the form of dispute resolution they want for their particular dispute, and which member of Fair Work Australia they want to assist them.

However, parties should be required to have some form of ADR before a matter could be heard and finally determined by Fair Work Australia (as is the case in the Victorian equal opportunity jurisdiction, and is now common practice in many courts). Further, the new organisation must have strong powers to ensure effective dispute resolution for a wide range of employment grievances and workplace relations disputes. It must also have the powers necessary to command the authority and respect of the parties.

Finally, what are the prospects for dispute resolution if the federal government is re-elected? Clearly, Labor’s new policy position makes it very easy for the government to do what it has probably wanted to do for some time - abolish the AIRC. But what dispute resolution arrangements would the government put in its place? Conceivably, the government might opt for a system based entirely on private ADR. But the experience under Work Choices suggests that this would not meet the needs of the parties.

Whatever the outcome of this year’s election, there must be some form of public dispute resolution body in place to ensure that employers, employees and unions are able to access efficient, practical and cost-effective dispute resolution services.