Plagued with a labour market highly regulated by legislation and judicial interventionism, Australia's Liberal Prime Minister Howard is using his first upper house majority to effect an alleged "historic modernisation".

But wage rates will remain subject to minima determined by a new Fair Pay Commission modelled on UK arrangements. FPC appointees won't be allowed to reduce any wage and must make "reasonable and sustainable increases" in the employment-deterring minimum of 58 percent of the median.

Two million (mainly unskilled) Australians want work, but can't legally offer a wage lower than the minimum of $24,000 pa. Getting themselves a job will be hard - but getting themselves social benefits of $10-13,000 pa. will keep welfare spending at record highs. The much-touted welfare to work program will not increase workforce participation.

Employment agreements still have to comply with many legislative requirements, although the unfair dismissals regime will apply to fewer businesses. The "right to strike" is (inexplicably) retained, though it will require a secret ballot. The economically-ignorant industrial tribunal is also retained, with (unclear) jurisdiction over industrial disputes.

All this continued extensive regulation indicates the "modernising" Howard government has lost its way.

Des Moore is Director of the Institute for Private Enterprise.