Industrial-strength labour reforms
Anthony Albanese is storming the Bastille erected by a sclerotic government more intent on its own maintenance of power and privilege than effectively advancing the national interest.
The spectacle may not be as dramatic as that moment in French history that saw the old order swept aside in bloody revolutionary fervour, but its significance for Australia could be just as profound. The early signs are promising and already mark a real departure from the way Australia’s affairs have been managed not only over the past decade but since the arrival of the Howard government more than 25 years ago.
The prime minister put it succinctly on Monday when parliament returned. He said his jobs and skills summit, held late last week, had “changed the whole mood of politics and the way it is conducted”. The most obvious manifestation was the return of organised labour to the top table – not surprising from a Labor government, but what is remarkable is the acceptance by the captains of industry that this is a constructive development.
It leaves the Peter Dutton opposition stranded in a time warp. Dutton still sees the unions only in terms of being political allies of his opponents in the Labor Party. He persists in peddling the stereotype of the typical unionist being a militant blue collar CFMMEU “thug”, an attack mounted all week in parliament and one that ignores the fact that the typical union member these days is more likely to be a woman in the services or care sectors. Women account for 55 per cent of union membership in Australia.
The prime minister told parliament that what he has in common with the unions, including the Construction, Forestry, Maritime, Mining and Energy Union, is the belief that when there is an opportunity to engage and to contribute, “you turn up”. He said Dutton doesn’t turn up “because he has nothing positive to offer” – unlike David Littleproud, the leader of the Nationals, or a range of business leaders who attended the summit.
The new tripartite world of government, business and unions is more than a throwback to the Hawke–Keating era. Times and challenges have changed but the attempt at inclusion in the pursuit of common ground owes a lot to this successful precedent. Albanese’s task is to deliver the sort of economy-boosting reforms that will set Australia on a path of economic growth and increased productivity and real wages growth.
Albanese needs little persuading. He and his Employment and Workplace Relations minister, Tony Burke, have embarked on nothing short of a wholesale renovation of the Gillard government’s Fair Work Act. It is overdue, according to former prime minister Paul Keating and Bill Kelty, the Australian Council of Trade Unions secretary from 1983 to 2000. They were the architects of the industrial relations reforms that introduced enterprise bargaining and scrapped the rigid industry-wide wage-fixing that had featured since Federation.
They told The Australian Financial Review the “silly” no-worse-off tests and industrial relations laws Julia Gillard introduced to remedy the Howard government’s WorkChoices rampage had in fact “undermined productivity and overall wages growth”.
But this government says the Coalition’s neglect over the past 10 years is responsible, blaming its failure to address loopholes and problems as they arose with the Fair Work Act for the erosion of wage justice. The evidence is incontrovertible. There has been a record fall in real wages despite record profits, a situation that not even the collapse in labour supply due to the pandemic and closed borders could overcome. The link between near record unemployment and higher wages is broken.
One senior government adviser says it is not unusual for major pieces of legislation – for example, the tax act – to need constant amendment as clever accountants and lawyers find ways around them, or as circumstances change.
Nor has the situation been helped by the Coalition stacking the Fair Work Commission with its mates. The adviser says there’s not a lot the government can do about it, even though many of the appointees came to the task with no appropriate credentials. This is something commission president Iain Ross has had to deal with in his allocation of cases. The more complex ones are simply beyond some of the commissioners.
Tony Burke says the government will legislate to ensure workers and businesses have flexible options for reaching agreements – including removing unnecessary limitations on access to single and multi-employer agreements.
The minister says this “will open up agreement-making to workers who cannot access the benefits of agreements such as small business, women in the care and community services sectors and First Nations people”.
Any thought that the summit was a mere talkfest ignores the fact that in the lead-up to it many participants helped develop possible solutions to problems. This gives Burke something of a head start, with in-principle agreement already hammered out by business groups and unions.
Unlike at the Hawke government’s tax summit there were no preordained options, just a need to find solutions to stagnating wages and to better use the neglected talent pool of the country’s women.
Grattan Institute chief executive Danielle Wood opened the summit by lamenting that “if untapped women’s workforce participation was a massive ore deposit, we would have governments lining up to give tax concessions to get it out of the ground”.
Albanese and his treasurer, Jim Chalmers, are rising to this challenge. The government will introduce legislation next week to establish its comprehensive childcare policy, offering more generous subsidies to assist 1.2 million families. It will start next July, at a cost of $5.4 billion a year. Chalmers is resisting calls for it to be brought forward to January, mainly on budgetary grounds. Fiscal responsibility is another of Albanese’s catchcries.
The government trumpets this policy as a major contribution to helping families deal with cost-of-living pressures. This task is made no easier by the Reserve Bank continuing its round of aggressive interest rate hikes. For the fourth month in a row it lifted rates by 50 basis points, bringing the official cash rate to 2.35 per cent – the highest level in eight years.
The pain of highly leveraged borrowers can only worsen with the Reserve Bank warning “the board expects to increase interest rates further over the months ahead”. It will do this in its frantic effort to dampen demand in the economy, where inflation is running at 6.1 per cent and is forecast to reach nearly 8 per cent by the end of the year. The target range is 2 to 3 per cent.
There was firm evidence midweek that the economy has been powering along. Gross domestic product at the end of the June quarter increased by 0.9 per cent for an annualised 3.6 per cent. Driving the numbers were exports and household spending on things such as travel and restaurants.
Economist Stephen Koukoulas says the economy can be expected to slow in the current quarter, but he doubts it will be close to where the RBA wants it. A strong economy is, in the current circumstances, a very mixed blessing.
On the one hand it leads to profitable businesses paying more tax and therefore helping budget repair; but as the rate rises begin to do their job of slowing the economy, there is a danger of tipping the country into recession. Koukoulas says it is a risk but believes Reserve Bank governor Philip Lowe has learnt his lessons and would quickly adjust the rate in response to early warning signs – a confidence thousands of borrowers who took assurances of no rate rises until at least 2024 would not share.
Albanese told his party room on Tuesday that Labor needs to address cost-of-living issues, but it must be mindful of the inherited trillion dollars of debt. He told his troops they had to “be straight with Australians about the challenges before us and the difficult decisions we must take”.
Labor will be hoping the RBA’s forecast of inflation coming down in the next two years, to 3 per cent in 2024, is on the money. That’s when the next election is due – and by then the promise of a real wage rise would seem more achievable. It would certainly make Tony Burke’s job easier, given that is what his wage-setting shake-up is all about.
Two other measures were introduced into parliament this week, aimed at keeping faith on cost-of-living relief. Health Minister Mark Butler says that for the first time in its 75-year history, the “maximum cost of general scripts under the Pharmaceutical Benefits Scheme will fall”. The 30 per cent cut in costs for scripts will apply from January.
The other measure was a cut in the excise and fringe benefits tax on electric vehicles. Incredibly, the Coalition decided to oppose it. They did it in a week when the Liberals and Nationals also voted against Labor’s more ambitious emissions reduction target in the senate. It would seem they have learnt nothing from their election defeat, where climate change inaction cost them dearly, especially in the heartland seats lost to the teal independents.
One senior minister says the Liberals clearly believe voters got it wrong. The first lesson of an election defeat, he says, is to let the electorate know you have got the message loud and clear. The world is passing them by.
This article was first published in the print edition of The Saturday Paper on September 10, 2022 as "Industrial-strength labour reforms".
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