As a basic rule, if businesses and organisations want to cripple themselves by not hiring the best talent, they shouldn’t have too.

Over the weekend the Victorian Attorney General, Rob Hulls, announced a compromise plan for his proposed amendments to the state’s Equal Opportunity Act.

Hulls’ plan is to scrap the exemptions that stop the government telling private organisations what they can do, with private money on private property.

Hulls’ original target was the exemptions that allowed private men’s clubs to exclude women members. He’s trotted out a predictable press release on the need to scrap the men’s clubs’ exemptions every slow news January since the Labor government was elected in 1999.

They’re an almost embarrassingly easy target — few people sympathise with the woes of Melbourne Club members. But in proposing to scrap all exemptions, Hulls angered more than those who enjoy exclusivity at the Paris end of Collins Street.

Currently religious organisations are allowed to freely discriminate against pagans, gays and lesbians and single mothers because they don’t conform to their faith.

And scrapping that opportunity has angered religious groups because of the prospect they’re going to be told Adam’s partner, Steve, should be allowed to teach Bible class.

So Hulls has compromised and allowed religions to discriminate against non-believers, gays and single mums, but has made sure they cannot discriminate on the basis of race, disabilities etc.

Understandably gay groups are furious. But in their outrage they’re missing a central point — religious people have rights too. And that includes freely practicing their religious faith.

And the rights of religious people aren’t being protected when they’re told who they can hire.

The biggest loser from discrimination isn’t the person who is discriminated against, it is the discriminator.

If Catholic schools are excluding the best talent from teaching their kids the biggest losers aren’t the potential employees — it’s the school for having weaker teachers, parents for paying for, and the children for receiving sub-standard education.

Few argue with the basic principle that we should have a society free of discrimination, but that is not what Hulls’ reforms will achieve.

If people really want to discriminate, they will. But in doing so they’ll sell themselves short, and should suffer the consequences.

Tim Wilson is Director of the IP and Free Trade Unit at the Institute of Public Affairs.