Wednesday, 9 February 2011

Speech to CEDA Feb 2011

It is nearly 10 years since I left the Australian Parliament and a lot has changed.

Having spent 6 years in London as a banker, I have had the opportunity to not only better understand Europe but also to better gauge Australia’s position in the world. Clearly in terms of economic performance, we have done much better than even we had hoped back in 1990 when John Hewson and I started writing Fightback. And some of the proposals we advocated then have materialised e.g. the GST which I first publicly advocated as part of my leadership campaign after the 1990 election. Over the time from when Hawke’s ALP was elected and then Howard, and generally in the first half of those 2 Governments, Australia had been pro-reform. Unlike the ALP, even when in opposition, the Coalition supported reform pursued by our political opponents.


However we cannot rest on our laurels. The task of reform is relentless.
We cannot afford to fall behind.  More generally, the world is still an uneasy place as our most powerful friends are enduring difficult times. The leaders of the free world, the US and the UK, are both mired in debt and suffering an economic malaise that will be with them for some time yet. Europe has not been in good shape for over 20 years; its socialist outlook and its rigid labour market are major drags on performance. Australia is far more dependent on China than in the past and its growth has been a bonus for the cause of capitalism but its authoritarianism is a worry we do not want to think about. India is also a future power house and its democratic tradition makes its continuing success fundamental to the future.

Compared to the countries, we normally compare ourselves with; we are better off now than we were 20 years ago but the reality is that, lately, in a number of key respects, we have regressed. Most noticeably, our slip back into debt, the waste of public funds on a massive scale, the reintroduction of government as a provider of services (the NBN), loss of control over our borders and the undermining of support for our immigration programme have all weakened our overall position. Worse still, no-one seems to want to champion the way ahead. Populism has been rife.

The current federal Government is a big part of the problem. Julia Gillard is completely out of her depth, the Treasurer is lack lustre and the faceless union types are largely in control subject to whatever the Greens want and what the pollsters report.

The brightest stars on the immediate horizon are the State premiers; Barnett who has done an excellent job for WA, Ted Baillieu in Victoria and the prospect that one of the worst ever State government’s ever, the NSW government, will soon be thrown out of office. In Queensland, Anna Bligh did a good job with the floods and, earlier, she moved on privatisation which, whilst unpopular, was necessary. The problem is that despite better governance at the State level, the Federal government has a big influence on economic management, its key responsibility.

An early election is unlikely. Governments only go for an early election if they think they might win sooner rather than later. Gillard will stay in office as long as possible because she must know by now that her chances of staying in the Lodge look dismal even if the Greens and independents let her hang on for their personal advantage.


The public through this year will become increasingly frustrated at the thought that we are probably saddled with the current Government until the second half of 2013.  On policy, it is hard to see what she might do this year. She would have no idea what she wants to do on tax and so I will be surprised if she does anything except try to raise more revenue. (politicians should know that you never set up a committee – or a summit- unless you know what you want to achieve)  The main driver for raising revenue will be the inability to put a cap on spending. The Greens might also get edgy because Gillard will never give them what they really want ( because higher electricity bills will cost her votes) and the Greens cant be seen as compromising their approach otherwise their ‘tree hugging’ constituents will abandon them at the next election. This tension is the best prospect of a split with the Greens but the Greens are more left than many in the ALP so they will only abandon Gillard if their own political hide is at risk. This is possible but Gillard will string them along for quite a while yet, most likely through 2011.

These reflections lead me to turn my mind to the policies that the country needs to pursue its long term progress and the politics necessary to ensure our policy objectives can be fulfilled. For me the biggest issue by a wide margin is labour market reform. It is the worst of the policy regression since Labour’s election in 2007 and the costs of the ALP’s framework are going to become more obvious as 2011 progresses. It is amazing that a modern country like Australia has a system that must be one of the most backward of any in the developed world. This has little to do with ‘Work Choices”. The abolition of individual agreements, a key element of the 1996 reforms was always going to be opposed by the unions and hence the ALP.

I correctly predicted the abolition on individual agreements in 2003, well before the Howard government won control of the Senate in 2004. I said at an AMMA conference

‘There is also another significant prospective problem – when and if the ALP is next elected they will be able to turn back the clock. We have not abolished compulsory arbitration and the ALP have a proven record at the state level in overturning sensible reform as a pay-back to their union masters. In WA and Queensland, individual agreements have been neutered or effectively abolished and Victoria is in the process of re-regulating the labour market. The same would happen federally if and when the political cycle turns’

The abolition of AWAs had nothing to do with “work Choices’. The ALP was never able to attack AWAs because people liked them. They provided more pay, they allowed individuals to work when it suited them, it allowed people to work hours that provided them the time to mange the lifestyle they wanted; to pick up the kids from school. They let young people work at the local coop for an hour and half after school even though the award specified a minimum of 3 hours. Throughout the resources industry workers found that a direct relationship with the boss was good for the workers. No wonder the union bosses hate individual agreements. They just cant compete if the employer needs skilled labour then the worker has the upper hand and can negotiate a deal to suit him or herself. AWAs had been too successful for workers and upset the privileges of the union movements.

The ACTU were always going to insist that an incoming ALP Government abolish AWAs. Their campaign against ‘WorkChoices” had nothing to do with workers being worse off. The campaign was just affront for the ACTU’s objective of maintaining its power base at the expense of workers and at the even greater cost of the unemployed and workers in marginal work.

But because labour won the election, they were able to spook the Coalition into giving up on workplace relations.

It amazes me that since AWAs were abolished no-one in the coalition has stood up and said that individual agreements are a good idea. What are they frightened of?  They have been told to not speak about industrial relations. I missed all the drama with ‘Work Choices”. Sorry I was not there. Even though I was not there I know that it was an attempt to improve the lot of the ‘battlers’. And of course at that time and even more so now, we needed to continue the process of reform. I said that myself in 2003. Quoting from my AMMA speech, I said

By these bench marks Australia has done very well. But is it good enough?
My answer is a resounding NO.

‘Partly because some of the reforms have been negated by court and tribunal decisions, partly because in the negotiations in 1996 we never got all that we wanted, partly because some of the reforms have been subverted by a failure to implement and mainly because the 1996 reforms were never intended to be the end of the process. They were meant to be the start to a better system not the end of reform.’



 I think everybody should be talking about how they work, when they work, what suits them at work, what is a fair day’s pay. This should not be the exclusive domain of a union official who has never even heard of your business let alone care about whether it is a success or not.

Of course I understand the political tactic of not making ir an issue in the last election. It was an exceptional situation because no-one has ever won the first election after a new government has been returned to office from Opposition. Abbott’s view seemed to be like the GST position of John Howard in 1996; ‘I will do nothing in the first term but that allows me the opportunity to revisit the issue before the next election’. That was then. The situation now is different. The costs of Labour’s system are really going to start to build up in the next 2 years. Even if the Coalition were elected at the next election it will take time to stop the rot and turn the system around.

Some in the Coalition will say we cant afford to let the ALP run a scare campaign. If we had set that about the gST in 1993 then we would never have introduced the GST in 1998. the GST was amuch more difficult issue than the AWAs. GST was an unknown whereas AWAs have been enjoyed by tens of thousands of Australians who were better off. Under the Coalition’s ir reforms the whole country was better off.

I say we cant afford not to fight this issue. We cannot abandon issues that we know must be addressed. Australia will be a lot of worse off if we sit mute, frightened to do the right thing. MPs are not in parliament to avoid issues; their job is to tackle the real issues, the difficult issues.

No comments:

Post a Comment