Tuesday, 19 June 2012

Economic posturing favoured over real reform

Julia Gillard is off on another overseas trip to try to boost her political standing at home. As a political ploy, her efforts have so far yielded no dividends at home, and abroad, our PM seems oblivious to the likely reaction of many Europeans to her simplistic commentary on economic issues.

Only a year or so ago she said she wasn't even interested in foreign affairs, and now on this occasion she started lecturing the Europeans even before her arrival at the meeting of the G20 in Mexico.

It is fair enough to tell the Europeans to get their act together, but she is the wrong person to deliver the message. Europe's problems include debt and poor economic management and notoriously rigid labour markets. Gillard has yet to deliver a surplus and she has reregulated the Australian labour market, so she is hardly in a position to be lecturing others.

But worse, she is championing major changes to Europe's political system. Her statement jointly authored by the South Korean president (widely reported in last Sunday's papers e.g. The Sunday Age, page 1) stated:

A crucial element of restoring confidence in Europe is agreement on a road map for the eurozone to underpin its monetary union by a fiscal union and a banking union.

This might be true, but Australia should not be telling citizens in Europe that they should cede more of their sovereignty to bureaucrats in Brussels. New Zealand is not about to go broke but hypothetically, if they were, then it would not be smart politics for outsiders to tell the Kiwis that they had to cede economic control of their country to Australia.

In the same way, many Europeans cherish their freedom, and the thought that they should now be forced to give up control of their own budgets, mainly to the Germans, must give many people cause for thought. Nothing Gillard says will make any difference to what happens in Europe, so why go round giving gratuitous advice?

The same simplistic approach was on show at last week's economic forum. The Gillard talkfest was a classic example of everything that is wrong with Labor's handling of the economy. The whole affair was just a stunt. A lot of top business people refused to go while a bevy of union leaders were all given top billing.

Why would anyone serious about economic reform invite Paddy Crumlin from the MUA or the populist protectionist Paul Howes from the AWU to a meeting to discuss economic reform?

The MUA is one of the main reasons that the competitiveness of the offshore gas industry is so poor that future billion-dollar developments are under threat. Howes wants more subsidies for industry, more protection, and he is opposed to government policy to facilitate the needs of big resource projects for skilled labour.

And then there was Joe de Bruyn from the shoppies union. Joe is supposed to be the moderate face of unionism in Australia, but he opposes reform in the retail sector even though the Productivity Commission's report on the industry made it crystal clear that without reform, the industry will suffer from growing online competition and thus fewer jobs. He was also responsible for stopping young people from working after school hours.

The only reason for indulging the union bosses is because they put Gillard in power and she wants them to keep on supporting her. The fact that they are a slowly fading minority group is irrelevant to Gillard. Her problem now is that the business people who run the economy will certainly not want to turn up next time Gillard calls an economic forum.

The model forum from last weekend was the HR Nicholls Society conference in Melbourne. Unlike the Gillard forum, the conference doors were open at all times, there were no constraints on what could be said, and it tackled issues that Gillard steadfastly pretends do not exist.

Doug Williams, the last industrial registrar before the establishment of Fair Work Australia, called for registered unions and employer associations to be supervised by ASIC. As registrar, Williams was well regarded for his impartiality; there is no question about his independence, and he obviously knows more about the issues than anyone.

His call for reform was a challenge for both the Opposition and the Government. The Government is intent on having as little reform as it can get away with. The Coalition wants to pass the supervisory function to the Fair Work ombudsman and thereby merely change the venue rather than tackle the underlying cultural problems of Fair Work Australia.

Under the Coalition, the same people running the show now will remain in place, whereas a shift to ASIC would force real change. In my view, the Coalition needs to take some advice from Williams and they need to push this issue a lot harder.

Another presentation at the HR Nicholls conference provided a case study which showed how Gillard's Fair Work legislation has encouraged higher levels of militancy and days lost to strikes and thus reduced productivity in the resources sector.

Respected pollster Mark Textor outlined how political parties need to better explain the need for reform. He emphasised the importance of demonstrating that reform must be aimed at work flexibility that allows people to earn more or better meet their needs such as balancing the pressures of work and family. He noted that the quality of relationships at work and the opportunities that can be provided through work also need to be important aspects of the reform agenda.

The HR Nicholls conference showed what a few volunteers can do to promote real debate; perhaps Ms Gillard might be wise to scrap phoney summits in the future and instead start with a realistic assessment of Australia's circumstances, rather than hosting a political gimmick to ask business leaders to give her a pat on the back.

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