ONE of the leading cliches of our time involves our use of the word conversation. References are made to the importance of “the conversation” on a policy issue or the need for individuals to take part in “a conversation” with a view to reaching an agreement.
Yet the evidence suggests that, after a quarter of a century of economic growth, it is becoming increasingly difficult in Australia to have a considered discussion on economic reform.
Take industrial relations, for example. Last month, the Productivity Commission released the Workplace Relations Framework draft. This was a thoughtful and considered document prepared by economists working for a public-sector organisation that had played an important role in Australia’s economic development for close to a half-century.
However, the response to the release of the Productivity Commission’s five issue papers on workplace relations was accompanied by shrill responses that made considered debate all but impossible, especially concerning the minimum wage and penalty rates.
The leading players in the ill-considered response to the Productivity Commission’s contribution to the workplace relations debate were journalists, trade union leaders and non-Coalition politicians.
On February 2, Tony Abbott delivered an address to the National Press Club. An early question came from Malcolm Farr of News.com.au. He referred to the Productivity Commission, then asked: “Are you aware of, or have you read, any credible study or research that says lowering or removing the minimum wage creates more jobs?” It was an intended “gotcha” question. Farr’s implication was clear: namely, that the Prime Minister intended, or would like, to lower or abandon the minimum wage.
Not surprisingly, Abbott replied that the Coalition government had no intention of reducing the minimum wage. But Farr’s question had the effect of closing down the debate.
Even if Abbott wanted to control wages in Australia, he has no such power. As Farr should be aware, in December 1973 the Whitlam Labor government sought, by referendum, to give the commonwealth government power to make laws with respect to incomes and prices. The proposal failed comprehensively.
If the minimum wage, set at $16.87 an hour for adults (or about $33,300 annually for a full-time employee), is to be lowered or abandoned, this can be done only by the Fair Work Commission. The FWC operates independently of government. If Farr had read the Productivity Commission’s report in its entirety, he would be aware of the argument that a higher minimum wage may increase inequality if it lowers employment in low-income households.
The author of the 2007 paper, cited by the Productivity Commission, is none other than Andrew Leigh, who has been the Labor member for Fraser in the ACT since 2010. Fancy that.
On January 29, shortly after the release of the commission’s draft report, ACTU president Ged Kearney appeared on Radio National Breakfast. Interviewer Alison Carabine raised the issue of penalty rates as they affected the tourism industry in Queensland. She mentioned that “tourism operates 24/7, it’s not Monday to Friday 9 till 5”. “Wouldn’t there be even more work for Queenslanders if some of the excesses of penalty rates were pared back?” Carabine said, and added: “Isn’t there some sensible ground that can be reached here?”
Alas, the answer was in the negative. Kearney stated that any attempt to lower penalty rates — which are high on Sundays and higher still on public holidays — would amount to a “pay cut” for “our lowest paid workers”.
Then Carabine suggested that penalty rates in the restaurant and retail industries were so high that businesses “can’t afford to be open on public holidays”, thus denying employment opportunities to Australians. Kearney dismissed the suggestion out of hand. She added “we have to sit down with small business” and ask “how else can we help you?” Kearney added that attention should be focused on “soaring energy costs (and) soaring rental costs”. This from the president of the trade union movement that supported a carbon tax that increased energy costs.
Australia has about the highest wages in the OECD. However, Kearney’s position is that no hourly or penalty rate should be reduced, ever, irrespective of the level of unemployment, including youth unemployment, and irrespective of whether a restaurant or store operates in the CBD or those parts of suburban and regional Australia where the cost of living less expensive.
Kearney’s position is endorsed by Labor leader and former trade union official Bill Shorten. Appearing on Radio National Breakfast on February 10, Shorten said that he did not believe the minimum wage “contributes to unemployment levels in this country”.
So, according to Kearney, the cost of energy contributes to unacceptable business costs. But, according to Shorten, the cost of labour does not contribute to unacceptable business costs.
On RN Breakfast, Shorten ran the line that the best way to decrease unemployment was to increase the minimum wage, which would lead to a lift in consumer demand. Bob Hawke, the ACTU president in the 1970s, used to run this line. He abandoned it when he became prime minister and was responsible for overseeing the Australian economy.
If the Shorten position is correct, it would make sense to increase wages significantly, without respect to productivity, and benefit from the resultant surging demand. One thing is for sure: such a policy would never be advocated by a Shorten-led government.
It is unlikely the Productivity Commission will recommend (when it forwards its final report to the Abbott government in November) the kind of workplace flexibility that prevailed during the time of the Howard government.
However, it makes sense for Australians to examine the issues raised by the commission across a range of issues. This is all but impossible if journalists, trade union officials and politicians attempt to turn what should be a debate into a political argument. That’s no way to have a conversation.