Comment

Paul Bongiorno
Big business attacks wages and workers

The economy roared back into view as the major focus of contention this week, with some weird developments adding extra drama to the pain and usual blame game that happens when the going gets really tough for millions of Australians.

The pain came with the Reserve Bank of Australia continuing its aggressive round of interest rate hikes, reaching a level not seen in 11 years. For the two-thirds of Australians who hold mortgages or are renters, not to mention business borrowers, life became “much harder”, as Treasurer Jim Chalmers observed.

The weird came with the nation’s biggest business and industry groups jumping at shadows. They concocted a wages policy the government has no intention of implementing and then launched a multimillion-dollar advertising campaign against it.

Employment and Workplace Relations Minister Tony Burke dismissed the huffing and puffing as “loopy”. The Australian Council of Trade Unions secretary, Sally McManus, said it was “quite crazy and bizarre”.

That didn’t deter Murdoch’s mass audience news site news.com.au. It described the campaign as the most significant multi-industry counterattack “since the mining tax fight”. That was the jihad against the Rudd government’s mining super-profits tax, led by Gina Rinehart and other resources billionaires. It presaged the toppling of the prime minister and the evisceration of the tax.

A repeat performance for a similarly stunning result is highly unlikely. For one thing, the Albanese government’s workplace relations reform is not about a multimillion-dollar tax but rather about a proposal to close a loophole that robs thousands of workers of higher pay. Its shorthand title is “same job, same pay”. Consultations have begun and behind the scenes are amicable enough, but what is obvious is there is now a government that does not shut out the unions or their concerns and this rankles business and industry.

The assault on the government from groups including the Minerals Council of Australia, Business Council of Australia, Australian Chamber of Commerce and Industry, Council of Small Business Organisations Australia and the National Farmers’ Federation coincides with Burke’s new industrial laws coming into force this week.

It seems employers learnt a lesson from last year when the parliament, thanks to support from the Greens and most of the crossbench, passed the Secure Jobs Better Pay legislation. This time, as McManus notes, the employers are trying to intimidate the government before it bowls up any new legislation they do not like.

The current senate is far more disposed to safeguard workers’ rights and end wage stagnation than its recent predecessors. It waved through multi-employer bargaining, particularly for lower-paid care workers, as well as new gender equity rules and new powers for the Fair Work Commission.

Minerals Council chief executive Tania Constable is particularly high profile among the critics. This isn’t surprising: the coalmining industry is among the most prolific users of the labour hire companies that undercut what they pay employees on enterprise bargaining agreements, a practice that often entails the setting up of a different business, not party to the EBA, but nonetheless belonging to the same corporate group. 

Another example, according to the ACTU, is Qantas. It uses 14 labour hire companies, most owned by the airline itself, to drive down the wages and rights of cabin crew. 

Constable, in an opinion piece for The Daily Telegraph headlined “Nothing fair about Government’s same pay proposal”, led with what she clearly believes is a winning question: “How is it fair that a small business is required to pay an employee with six months’ experience the same pay as an employee with six years’ experience?” The answer is they are not and the government has no such proposal.

A more honest question would be: how is it fair that two drivers delivering for a giant beverage company for 10 years, one employed directly by the company and the other through labour hire, develop a $40,000 pay gap between them over that period. The ACTU says there are plenty of such cases.

Tony Burke said he was in the Hunter Valley a couple of weeks ago “where one of the miners had worked for years as a casual, doing the exact same job side by side with the permanent workforce, but he was employed by labour hire, so even with the casual loading he was getting a lower hourly rate than the permanent workforce”. Burke says it’s not fair. “It’s a loophole, it’s indefensible and it needs to be closed.”

The Greens agree, and when the government finishes its consultations and actually comes up with legislation, it is sure to fly through the senate. Constable says the government is pandering to the unions “instead of listening to the concerns of business”. She threatens that her lobby “won’t stop until the government listens”.

McManus is scathing of the business campaign. She says the ad “is just based on complete falsehoods”. She suspects it has come out of some marketeer’s focus group research, trying to find some way of selling a bad idea to people. The campaign, she says, is actually about hiding the truth “by setting up a straw person”.

What this whole farrago demonstrates is how desperate the business and industry groups are to maintain the imbalance of the past 10 years or more, which have seen record profits while wages have stagnated and gone backwards. This is something not even the labour shortages of the past few years have remedied.

Perhaps the captains of industry are hoping the government is more vulnerable to their scare campaign in light of the slowing economy and the Reserve Bank’s interest rate militancy.

They are certainly right about the anxiety gripping much of the country. It manifested itself at a Brisbane conference of 100 chief financial officers on Tuesday afternoon. The anticipation in the room, ahead of the Reserve Bank’s latest interest rate decision, was intense.

All eyes were glued to the giant television screens as 2.30pm approached. An audible gasp greeted the news that the bank had ratcheted the official cash rate by 25 basis points, to 4.1 per cent, the 12th hike in a year. The bewilderment in the room turned to anger, according to economist Stephen Koukoulas.

Koukoulas says the pile-on against the RBA “is just extraordinary”. It’s coming from “the left, centre and right”. It’s not just the punters, either: “It’s coming from quality analysts.” He says it’s hard to find anyone credible defending it. The reaction leads him to conclude “respect for the RBA has never been lower”.

Certainly, the bank’s governor, Philip Lowe, has been under sustained criticism. Speculation is rife he will not have his contract renewed by Treasurer Jim Chalmers when his term is up in September. Koukoulas fears Lowe will “trash the joint” as he presides over three more rate decisions before then.

Soon after Tuesday’s announcement, a sombre Chalmers responded in Parliament House’s Blue Room. His opening comments were read by some observers as a veiled criticism of Lowe: “The Reserve Bank’s job is to squash inflation without crunching the economy. And they will have lots of opportunities of course to explain and defend the decision that they’ve taken today.”

Chalmers welcomed the governor doing that the next day. There were no apologies for the rate hike from Lowe, however. Nor was he downplaying the prospect of more, even though the national accounts for the March quarter confirmed the economy is slowing.

Lowe repeated the sentiments of his rates-day statement. High inflation makes life difficult and damages the economy. It erodes savings. It “hurts family budgets, makes it harder for businesses to plan and invest, and worsens income inequality”. His argument is it’s best to attack it before it gets completely out of hand, otherwise there will be even “higher interest rates and a larger rise in unemployment”.

In light of the economy slowing to a feeble 0.2 per cent in the March quarter, Koukoulas believes the governor has the interest rate 100 basis points, or 1 per cent, higher than is necessary or wise. It’s a worry when the governor admits that “the path to achieving a soft landing remains a narrow one”. Koukoulas is not alone in fearing the RBA’s handling of monetary policy over the past two years could make a crashlanding more likely for the economy.

There was no such talk from the treasurer. Chalmers says the quarterly results were “unsurprising and consistent with our expectations”. So far he believes the economy is behaving as forecast in his budget and that things should begin improving next year.

Before then there is the Fadden byelection on the Gold Coast, with Peter Dutton and his shadow treasurer, Angus Taylor, reprising their failed Aston campaign of blaming the government for inflation, interest rates, the slowing economy and cost-of-living pain.

Taylor tries to hang this potpourri of misery on the month-old Chalmers budget, even though most of its measures have had no chance to begin working.

This week’s Newspoll shows no gloss coming off Albanese or his team, however. Labor maintains its thumping 10-point lead. There is plenty of evidence from previous elections to show that, while governments may be blamed for the country’s economic woes, if voters don’t believe the alternative can do better, they ignore it.

This article was first published in the print edition of The Saturday Paper on June 10, 2023 as "Twelfth hike (full pay summary)".

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