For months federal Labor has been bouncing around in its corner, challenging the Coalition to come out and fight on the issue of industrial relations. It’s the one fight it knows it can win, after the stellar success of the ‘Your rights at work’ campaign that made WorkChoices the pivotal issue in losing John Howard the 2007 election.
So, in a way, the government’s review of the Fair Work Act is bad news for Gillard’s best prize fighters – particularly the small but scrappy Bill Shorten, who would just love to go toe-to-toe with the Coalition’s IR spokesman Eric Abetz.
The review, which is expected to be released later today, reportedly gives Labor’s IR framework a big tick. Had it found huge problems with the FWA, Labor might have eventually got a rise from angry Coalition MPs. But there’s no chance now.
Tony Abbott has made it clear that this will not be the defining issue of the next election, despite many on his side of the house believing it is a key factor holding back Australia’s productivity growth.
Young firebrands such as Jamie Briggs and Steve Ciobo have occasionally blurted out their frustration on the need for IR reform, but for the most part Coalition MPs have maintained a disciplined silence.
Reports ahead of the release of the review’s finding are that Reserve Bank board member John Edwards, Justice Michael Moore and workplace relations academic Ron McCallum were “not persuaded” that the FWA framework “accounted for this productivity slowdown”.
We hardly needed a review to discover that — both multi-factor productivity and labour productivity (the component directly linked to the FWA reforms) were flat-lining under the Coalition’s IR regime in 2005, 2006 and 2007.
Those who see a causal link between the Fair Work Act and lagging productivity growth (and Business Spectator‘s CEO Pulse survey this week shows 54% of CEOs think the Act sets up tension between wages and productivity), tend to overlook the decline in productivity in the last few of the Howard years.
The danger with that kind of selective reasoning is that it allows the FWA to be blown out of all proportion as a cause of lagging productivity. Some of its effects are important, but not as important as, say, Australia’s highly complex and incentive-sapping taxation/benefits system. There’s low-hanging fruit to be had in tax reform, and the winding back of middle-class welfare, but both sides of politics lack to guts to take that message to the electorate.
Moreover, in the past few years the mining boom has given its own spin to productivity figures — as the Australia Institute pointed out last year, when the resources sector is stripped out of the national accounts, productivity growth in the rest of the economy is pretty good.
Put another way, top-line productivity figures for the nation would increase dramatically if the two big constraints on the resources sector — skilled labour and infrastructure — were substantially eased.
New wages data out today show enterprise bargaining has produced wage rises of 4.5% in the past year. That looks very high against the latest CPI headline figure of 1.2%, but given that many of those enterprise bargaining agreements were struck last year when headline CPI was 3%, it can’t in itself be used as a sign of a wages blow-out.
Actually, Bill Shorten would prefer it was interpreted that way. Then he’d have a fight on his hands – a fight he could win out in the electorate, and one that might actually bolster Labor’s dire opinion polling.
*This story was first published at Business Spectator
Now, for those interested on the subject of wages and the economy, Adam Smith has many arguments.
In short low wages mean hicher profits and higher profits increase the amount of interest which can be paid on borrowed money.
There is too much superficial prattle about wage levels and productivity from people who should at least know enough about economics as to actually read Adam Smith.
High wages are countered, said Smith, by the application of labour saving devices.
Now what effect might that have on productivity one might ask?
Or is this productivity argument simply about low wages, high profits and high interest rates?
Smith stated that “Captitalists have an interest to deceive and oppress the public” because the increasing distribution of wealth through higher wages tended to reduce profits ( and the amont of interest thast can be paid on loans). When are going to be “Enlightened” on wages and productivity?
And Adam Smith is not Karl Marx.
While our rights at work have been used as a distraction, Labor remains lost in a fog of Carbon of its own making! Listening to Graham Richardson attempt to explain how Kevin (Heiner) Rudd may save Labor ten or fifteen seats in the Federal Parliament, after Kim Beazley published his opinion about Labor loosing. Is informative but it ignores the fact we taxpayers have had a gut full of being lied to by Labor at Local, State and Federal levels of government. Some of us are spending our own money where we can, informing taxpayers about the political sins which our elected reps are accommodating! Edward James
Apparentl Abbott said “Australia had some “serious workplace relations issues” in the areas of flexibility, militancy and productivity”
Anyone else read this as we want to restrict union influence and make employees work longer for less?
If poeple don’t think IR is going to be an importnat outcome of this election are kidding themselves,
Business Managers and Directors know what they do when being Vindictively Seditious, Talking our Economy Down, Betraying the Australian Workers, All Of Us ………… Madmen, and they Own T. Abbott et al