Tuesday, 25 September 2012

Labor dogged by the big issues

The Gillard Government seems to have a lot of trouble putting issues to bed.

John Howard and Bob Hawke on the other hand had a knack for bringing issues to a conclusion. Sometimes it took time, as it did for Howard with gun control and the controversy over Wik, and for Hawke it was means testing pensioners. But once these issues were dealt with, they stayed off the agenda.

For Prime Minister Gillard, most of her big issues seem to stick around.

The carbon tax will not go away; how can it when the increased costs have been so obvious on energy bills in the last month or so?

The mining tax is still an issue because there is real doubt about the revenues that will accrue from the deal done with the big miners. Maybe when the details of the first quarterly tax collections are announced next month, the issue might be put aside; but even then it should remain an issue all the way to the next election because the miners are under pressure from falling prices.

Peter Slipper is still being paid as Speaker despite not turning up for Question Time and Craig Thompson remains a daily embarrassment.

The boat people are also a continuing issue for Gillard and, despite the cave-in to reopen Nauru, the failure to 'turn back the boats' and reintroduce temporary protection visas will continue to dog the Government as the boats keep coming.

The Government got some exaggerated coverage last weekend as 18 Sri Lankans decided to accept free flights home at the expense of Australian taxpayers, but this does not mean the new approach is working.

Sri Lankans are in a different position to Afghanis and the arrival of more asylum seekers over the weekend only reinforced the Government's predicament. Unless Gillard can bring this issue to some conclusion, it will haunt her at next year's election.

At least Labor cast aside two issues last week; gay marriage and a referendum. Enough has been said about gay marriage - it will linger only as an issue with the Greens, but not more generally given that the parliamentary vote was overwhelming.

Labor has dropped its proposal for a referendum on the recognition of Indigenous people in the Australian Constitution. It was doomed from the start by bad process. The idea is at best tokenism or at worst an attempt to make substantial changes to the Constitution without proper disclosure of the legal consequences.

Fortunately, although the Coalition is not opposed to the principle of recognition, in practise it is opposed to the interim measure proposed by Gillard. Apparently the interim measure would be a parliamentary 'Act of recognition' (paywall). It is a typical piece of flummery from Gillard, full of hot air and a disguise of her likely real intention to permanently drop the whole idea.

Australia would be better managed if politicians more regularly decided to do nothing.

The Indigenous proposal has been linked by Labor, in their formal agreement with the Greens, to a second proposal to recognise local government in the constitution. This idea was put to the Australian people in a referendum in the past and was deservedly thrashed. It should be dropped again.

Local government is a creature of the state parliaments. Local government does not need a second master and Australia does not need another jurisdiction for contests between the states and the Commonwealth. It is bad enough for a council to have to deal with a state bureaucracy without burdening it with having to bow and scrape to distant bureaucrats in Canberra.

An additional reason for dropping both proposals is to remember that Labor has only ever put up one successful referendum, and so the prospects for success suggest more taxpayers' funds wasted on another lost venture.

On the Coalition side, one issue that has not been been put to bed is party reform. The Liberal Party is a federal organisation which provides a lot of flexibility for the state divisions to manage their own affairs. This system has many advantages, but there are times when a national approach is in the party's interest. In particular, there is a need to adopt a more uniform approach to pre-selection and to harmonise plebiscite processes for preselecting federal MPs.

The concept has been widely accepted, but not in every state. Even though the concept has had in principle support at the highest levels, the NSW party has not accepted the proposal.

Sadly, the Liberal party federal executive has failed to act as an honest broker in NSW to hammer out a way forward on plebiscites. As a result, the party was faced with a court injunction that prevented the party's scheduled meeting last weekend.

Last year Tony Abbott voted down a more activist approach to party reform and now he has to face the consequences.

In the two years since Abbott complained about the outcomes in NSW, the Federal Party has buried various reforms that could have helped avoid this latest mess. Maybe now Abbott might accept that modest party reform could help him into the Lodge.

Tuesday, 11 September 2012

Turnbull and Rinehart show the challenge for reformers

There is a lack of demand for reform now because the system seems to work well, writes Peter Reith. But that would soon change in a crisis.

Reform is often not pursued because the public do not see the need for change. Two case studies presented in speeches last week demonstrate the challenges for true reformers.

Malcolm Turnbull is one of a kind and has a lot to offer. He is a strong intellect, good on economics, respected in the commercial world, and a good speaker. So when he announced he would retire from politics before the 2010 election, I was among those who rang him and said, 'If you are not sure about leaving then stay in the Parliament, otherwise you will regret leaving prematurely'.

I was not alone in making the call. He stayed. But he is not now, and not about to be, a threat to Abbott.

Turnbull has not furthered his political standing within the Coalition since his defeat at the hands of Tony Abbott. Abbott, meanwhile, has cemented his position. Of course, nothing is certain in politics, but I reckon Turnbull is more likely to do "an Ian McLachlan" than enjoy the tenure of "a Philip Ruddock".

I will never forget Turnbull's Sunday TV performance before the leadership contest. Turnbull was at his best and worst; he put his case forcibly and with eloquence, but at the same time he savaged his own colleagues with a ferocity rarely seen from a leader who had hoped to continue to work with the colleagues he had just torn asunder.

His recent speech on constitutional reform is a good read. But he still does not mind giving his colleagues a burst; for example, where he says some direct electionists in the 1999 referendum were deceived by self-delusion and trickery generated by Coalition monarchist opponents. With that statement alone he killed two birds with one stone - and both from his own side.

It was interesting to note that he remains fairly opposed to the direct election model despite his view that:

In practice, if the first few directly elected presidents performed the duties of their office soberly and impartially, and eschewed populist demagoguery, then I believe the presidency could evolve into a constitutionally functional institution in line with most views of what is needed. The office would be defined by its early occupants, especially the first.

I opposed the 1999 model because, for me, it was a second-best choice compared to the direct election model that has worked so well in Ireland. I have no doubt that candidates for president would campaign on the premise that the conventions of the governor-general would continue, thus cementing Turnbull's prediction. In fact, all candidates would be under intense pressure to make a statement to that effect.

Turnbull's speech was to celebrate the work of the late constitutional expert George Winterton. He was not out to create trouble and apparently showed the speech, in advance, to Abbott's office.

I am glad Turnbull made the effort to reflect on the debate. I have no doubt the issue will be revisited simply because Australia is, in practice, a republic, and one day the country will want to align its reality with its constitutional arrangements.

There is a lack of demand for change of our monarchical system because most people feel the system works well enough, and they mix that with apathy. Apathy would soon disappear if a constitutional crisis suddenly appeared.

Similarly for the economy, if people feel that living standards are dropping and unemployment is on the rise then the support for genuine reform would rise. Australia has had over 20 years of GDP growth so naturally there has not been a lot of public pressure for economic reform. But now, as the mining boom tails off, the poor performance of the Australian economy under Labor will be increasingly laid bare.

Turnbull calls for better quality in the public discourse. That could start with ABC radio. It put up unionist Dave Oliver and John Buchanan (a supporter of Labor's workplace system) to ridicule a perfectly sensible contribution to the public debate by Gina Rinehart.

It would have been far more balanced to have an economics commentator noting that Rinehart was merely supporting a mainstream view of good economic management. Her basic message was that costs of business are running out of control and that government is not listening to the business people who know first-hand what it takes to employ a worker.

Rinehart made a number of comments that are irrefutable. Fortescue put off a thousand people last week and Xstrata announced another 600 job losses yesterday. She said Australia was becoming too uncompetitive. This is a statement of the accepted truth. It has been said by numerous business people for the past two years e.g. Jack Nasser, chair of BHP, and his CEO Marius Kloppers when announcing the deferral of Olympic Dam.

Nasser also noted the need for workplace relations reform. This is also a no-brainer as even the Government's own handpicked panel on IR admitted that the current provision for greenfield sites was a problem.

Recently the World Economic Forum ranking dropped Australia from 16 to 20 in one year - the biggest slide of any country. WEF also noted constraints on our infrastructure. BCA noted much higher labour costs in the resource sector and backed up the claim with a detailed study of comparable costs in the US. Rinehart mentioned labour rates in Africa - she did not advocate $2 wages in Australia. Her comment on statistics was immediately manipulated by the Treasurer and most of what she had to say was soon lost.

Turnbull's remarks were fitting to the Treasurer's response to Rinehart. Turnbull said:

In my view, all of this requires politicians to be especially careful to remember our responsibility to explain the big issues of our time. Dumbing down complex issues into sound bites, misrepresenting your or your opponent's policy does not respect "Struggle Street", it treats its residents with contempt.

Tuesday, 4 September 2012

Workplace relations is off limits for Labor

Former Howard-era minister Peter Reith says workplace relations should be at the heart of economic reform, but once again it's been ignored.

Successful governments have to be realistic about Australia's needs if they are to deliver needed reforms of the education system or the economy.

From the perspective of an economist, capital and labour are the engines of economic performance. From the point of view of a parent, a good teacher can make a huge difference to school children. From the perspective of a business that needs premises in the CBD, the higher cost of buildings in Melbourne (around 30 per cent compared to most other states) makes a big difference to their bottom line.

All three perspectives shed light on the impact of the labour market. Australia has a reasonably efficient market for allocating capital, but we have a poor system for managing our people. In other words, money is not the be all and end all to better performance.

The way we manage our most important resource, namely our people, is absolutely fundamental. This is why workplace relations must be at the heart of the debate on economic policy. It is why this is an area of reform that can't be ignored by either side of politics.

And yet, reform of workplace relations was ignored yesterday by Julia Gillard when discussing improvements to education, and it was ignored by Minister Bill Shorten last week while the CFMEU was defying an order of the Victorian Supreme Court.

In Victoria in two days' time, the teachers union will run a statewide strike. According to the union, it will be the biggest strike in the state's history. The union wants more money, and it opposes performance pay and other Baillieu Government reforms, but it ignores the reality that the former state Labor government, supported strongly by the union, left Victorian finances in a parlous state.

The Gillard statement on the Gonski proposals failed to explain where the money was coming from. The statement yesterday was not only cynical but also every bit as empty as when Bob Hawke promised that no child would live in poverty by 1990 (or thereabouts; of course, it never happened).

PM Gillard is the same person who wasted billions on school halls, nearly finished the cattle industry in northern Australia, endorsed pink batts, and promised not to introduce a carbon tax. Her main achievement in education is to introduce a webpage, and now she is going to revolutionise the education system with money she does not have.

In addition, the Commonwealth is going to reform a system which is run by the states, not the Commonwealth. And after all the hyperbole, the PM failed to mention that spending more money on education does not necessarily improve standards, and also failed to mention the need for reform of workplace relations.

The failure to mention IR reform was no surprise because the PM is indebted to the unions who supported her campaign to knife Kevin Rudd, and as a result, reform in education is off limits because the Australian Education Union opposes reform.

Meanwhile, one of Australia's most aggressive unions, the CFMEU, is trying to cripple Grocon, one of Australia's most successful building companies.

The CFMEU wants even more control over the company's operations. Union tactics have resorted to the bad old days of the BLF; infamous for stopping the construction of lights at the MCG. The Builders Labourers Federation was finally deregistered by Labor governments, but it took many years at massive cost to the community before reality finally dawned on Labor to confront the BLF.

The CFMEU is flexing its muscles and defying orders of the Victorian Supreme Court. The union wants to be able to nominate its own safety inspectors. It is a claim built on the phoney proposition that the union will do a better job on safety than Grocon, which has won awards for the high standards of its safety record.

The real purpose of the CFMEU is motivated by the legal requirement that a union can't strike during the term of an agreement. Grocon and the CFMEU signed their latest agreement in recent months. If the CFMEU can control the safety inspectors, then the union will have the right to close building sites under the guise of phoney safety issues and regardless of their agreements. It is a pathway to even more strikes.

Once there were times when the unions were fair dinkum about safety; now they see safety issues as an opportunity to circumvent the law. The employers have the legal responsibility for safety and cannot give it away - and nor should they. Safety should be the subject of collaboration, but that is virtually impossible when the union culture is "them and us".

Of course, none of this is new; it was the problem on the waterfront until the 1997 dispute. The outcome of that dispute was that half the workforce was made redundant and new workplace arrangements allowed the remaining workers to increase productivity from around 15 crane lifts per hour to about 25 per hour; an increase in overall productivity of three or four times the previous practice.

The employer Chris Corrigan insisted that employees adopt the attitude that they work for the company, not the union. Unfortunately, since Corrigan left, the new owners have allowed the union to resume the old culture. No wonder productivity is, once again, a problem on the wharves and some stevedores want to replace workers with robotic machines. Those workers are about to be mugged by reality.

Labor has encouraged the CFMEU by abolishing "the policeman on the beat", the ABCC. It is an invitation to the building industry unions to intensify practices of intimidation and bastardry. The outcome is higher costs, declines in productivity, and encouragement to other militants.

The Gillard Government needs to be a lot more realistic about its circumstances if it wants to remain in government. There was a whiff of realism when it announced last week a change to the carbon tax, although there are grave doubts about the detail.

Paul Keating became much more realistic about the unions after he had been in office for 10 years. PM Gillard is running out of time; in fact, I think the public has already made up their mind about the Gillard Government. But the next election is still a year away and anything can happen, especially if political leaders are realistic about the challenges to be faced.