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.

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