STONE the crows! Why ask the Productivity Commission about productivity?

What a crook start to the new year. It turns out, 2011 was the worst year for job creation since 1992.[i] And productivity has fallen to a level last seen in the mid 1990s.[ii]

But at least there is a bipartisan response to what government should do about restoring productivity growth – nothing sensible. The Opposition says get rid of the carbon tax. On Thursday, Mr Abbott managed to make it a key part of his decision to cap the billions he will give to car manufactures. [iii]

And the government is less interested in learning what it can do to expand employment than keeping the ACTU, if not happy, then at least less aggrieved than usual. This is demonstrated by the terms of reference for the panel now reviewing the Fair Work Act.

The unions know what they want as in this report:

ACTU secretary Jeff Lawrence cautioned the panel not to allow the review to become a platform for employers to “push for the return of a WorkChoices system. It is important that the review panel strikes the right balance between how the act has strengthened rights and fairness at work, and economic issues.” [iv]

Is it just the Crows or does the reference to “economic issues” sound like an after-thought?

If it was, Bill Shorten appears anxious to assist in ensuring their irrelevance to the review. As the Employment minister said in announcing the FWA Review by John Edwards, Ron McCallum and Michael Moore, “Real economic prosperity and growth requires fairness and security in the workplace. This review reaffirms the Gillard Government’s fundamental commitment to these aims.” [v]

Thus, the terms of reference require the review to examine how Section 3 of the Act is operating. The review team point out “the terms of reference encompass consideration of economic goals such as economic growth, productivity and economic prosperity along with the range of policy objectives set out in Section 3.” [vi]

Indeed they do, but Section 3 mentions productivity in the context of a bunch of IR requirements that have nothing to do with economic efficiency.

Requirement like, “providing workplace relations laws that are fair to working Australians” and “enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association …” and “achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action” and so forth and so on. [vii]

Politically astute all. Australians loathed the Howard Government’s Work Choices system so much voters may happily sacrifice improved productivity, and the jobs growth it brings over time, for regulation of employment conditions.

But it would be good if we all knew the cost of a kinder, gentler IR system, which coincidentally just happens to generate work for union officials. The way to do this is to examine FWA’s impact on productivity to date and project what will happen on the basis of existing evidence. Given its resources and terms of reference this will be impossible for the review in the five months it has.

Gosh is there nobody who can help, an organisation that could have started on the necessary groundwork before Dr John Edwards et al got cracking?

Well what about, and it’s just a stab in the dark you understand, the Productivity Commission?

Oddly enough, the Commission was ignored when the review was established and, entirely understandably, knows when it is not wanted. Minister Shorten’s officials say they have not asked for a submission from the Commission and the PC says it will accordingly get on with its work. [viii]

Admittedly, the PC moves at a stately pace and would take a while to produce a briefing document for Dr Edwards and his colleagues. But this review is referred to in the draft FWA legislation, dating from 2008 – giving the government plenty of time to get the PC underway. In any case being, well productive, they could surely sort something out before the end of autumn.

And yet the Commission was ignored. Just as the prime minister’s predecessor excluded it from reviewing the car makers back in 2008, without ever explaining why a committee headed by Steve Bracks, a former premier of Victoria and applauder of protection for the auto industry, would do a better job. [ix]

But, even in that case, the PC was asked to model the economic impact of assistance options. Perhaps it was a cynical stunt to stop suggestions that the protectionists would not even consider policy but at least it put objective information on the table[x]

The PC could have done, should be doing, the same thing for the FWA review. But it wasn’t asked so it isn’t.

Understandably so. No agency enjoys being attacked by ministers for doing its job, such as occurred when the Commission upset then industry minister Kim Carr by commenting on the green car innovation fund in Estimates:

It did so without any modeling, without any advice from my department, from me. It has not had any advice from the Government: how that fund will operate. It said to the estimates committee just last night that these were questions that it raised, speculations that it raised and in that context, their positions will be considered along with all others, Senator Carr said at the time.[xi]

In other words piss off pointy-heads.

It was dumb then and it is dumber now. To deal the PC out of policy may save political pain but to exclude an agency charged with giving us the economic facts and nothing but, plus options base on them, is not in the national interest.

That the PC pointed out that retail employment conditions under FWA are bad for productivity explains why it needs to be involved, and why it isn’t.[xii]

And so the FWA panel will have to rely on their own not inconsiderable economic nous in working out what the legislation has and will do to productivity and whether the impact is all that important. But they could have made good use of a PC report.

The Crows are not the brightest of birds and perhaps spent too much time in the sun over the summer but they struggle to see the point of the inquiry at all. There is an election next year and the Prime Minister and her pals (who include Minister Shorten) need all the friends they can get.

With the ACTU’s mind made up it is hard to imagine the government paying any attention to what the panel proposes. Unless it includes the lyrics of The Internationale.


[i] Adam Creighton, “Data masks darkest result since 1992,” The Australian, January 20

[ii] Pip Freebairn and Mathew Dunckley, “Show us the productivity proof Australian Financial Review, January 19

[iii] James Massola, “Tony Abbott quells Party revolt over $500 million cut in car subsidies, ” The Australian January 18

[iv] Milanda Rout, “Win for business in FWA review,” The Australian, January 19

[v] Bill Shorten, “Fair Work Review Announced,” December 20 2010 recovered on January 21

[vi] Fair Work Act Review, Background Paper, January 2012 recovered on January 21

[vii] Commonwealth of Australia, An act relating to workplace relations, and for related purposes, 2009” (Fair Work Act) @ recovered on January 21

[viii] Emily Parkinson, “IR discussions a closed door affair,” Australian Financial Review, January 12

[ix] Sid Marris, “Bracks promises auto objectivity,” The Australian, February 15 2008

[x] Productivity Commission, Modelling Economy-effects of Future Automotive Assistance, (Productivity Commission, May 2008) @ recovered on January 21

[xi] Kim Carr, interviewed by Kathy Bowlen, Victoria Stateline, July 6 2008, @ recovered on January 21

[xii] Michael Stutchbury, “Panel sinks Labor claim on productivity,” The Australian, August 5 2011