Wednesday, 29 May 2013

Local government referendum

Worse still, by getting his arguments so totally wrong, he has missed the real dangers lurking in the details of the proposal: dangers to local government raised by independent experts.

Saunders starts by saying ''we should think again on the terms of 'recognition' of local government'' and ''this is not a good idea''. Then she says the proposal ''undermines the authority of the states in areas of state responsibility''. Her next point is that the proposal will not only increase Commonwealth power but executive power.

She notes that Canberra funding will come with ''no limits on the conditions that can be attached to a grant''. This is a powerful point for Joyce - he reckons ''local governments know how to do local roads better than state governments and definitely better than federal governments''.

But, as Saunders warns, federal government conditions will mean that federal bureaucrats will be running the show, not councils. Joyce thinks that the federal government should not be interfering with basic council functions but he is urging voters to support more power to federal bureaucrats to do exactly that.

According to Saunders, the proposal is ''not constitutional recognition of local government''.

''Constitutional recognition is about dignity,'' she writes. ''There is nothing dignified about receiving conditional grants under these kinds of arrangements.''

My final point relates to Joyce's spectre that councils may not be able to be funded for ''mobile phone blacks pots, bridges and community infrastructure''.

Joyce says that these are ''probably unconstitutional too'' but there is no question that the Commonwealth can always make grants in areas of Commonwealth responsibility.

So if mobile phones are within the federal government's jurisdiction then Joyce's claim about mobile phones would obviously be scaremongering.

And, of course, the Commonwealth can make grants on any topic as long as it goes through the states. No wonder that the Labor government has not tried to say otherwise.

Twomey canvasses many of the same issues in a longer piece. It is one that is well worth reading.

Twomey says: ''I cannot see why the grants that are currently being given directly to local government cannot be passed on to local government through s 96 grants. It is difficult to argue that the potential unconstitutionality of such grants is the 'problem' that needs to be 'fixed' by a referendum, when there is another, clearly valid, way of giving the same amount of money to the states for the same purposes without the need for a constitutional amendment. In effect, there is no 'problem' - merely a perception of a problem - which is likely to be blown out of the water in a referendum campaign.''

And Twomey makes another point especially relevant to Joyce, who wants to represent local government in NSW.

She argues that a likely outcome of a ''direct funding'' constitutional amendment would be the establishment by the Commonwealth of a single horizontal fiscal equalisation formula to be applied to all local government areas and that this would seriously disadvantage NSW and Victoria.

Joyce should read the fine print before advocating a proposal that will mean more power to the federal bureaucracy and potentially significant disadvantage to the people he wants to represent.

Peter Reith is a former Howard government minister, chairman of the NO case in 1988, when local government recognition was last put to a referendum, and former Phillip Island Shire president.

Thursday, 16 May 2013

AMMA National Conference

It gives me great pleasure to officially open AMMA’s 2013 National Conference here at the Melbourne Crown Convention Centre.
My former political opponent Paul Keating once stated that, “If you are not living in Sydney, you are camping out”. He got that wrong.
In 2012 The Economist magazine rated Melbourne as the most liveable city in the world. The good news is that our new Premier Denis Napthine and his dynamic new Treasurer Michael O’Brien are in the business of supporting the growth in Melbourne’s population with record levels of new infrastructure. And, in contrast to the fiscal shambles in Canberra, they have done so whilst keeping the State’s triple A rating and a surplus. With our world class galleries and the birthplace of Australian Rules football, I am sure you will enjoy your time here in this international sporting and cultural centre.
It is my pleasure to pay tribute to the policy leadership that AMMA has provided with distinction for resource employers since 1918. This legacy of 95 years places AMMA amongst the most experienced industry groups in the land.  AMMA’s steadfast voice for industry is a valuable mainstay in the public debate and makes a significant contribution to our country. I also pay tribute to your members like the iron ore companies in WA who took up the options of individual agreements under WA law and then under the Howard governments reforms in 1996. Your industry demonstrated that harmonious relations between employers and employees can provide win/win outcomes for everyone and that AWAs worked well in your sector. Your industry demonstrated that under the Howard IR policies you could make irrelevant the unions approach of “them and us”.  And on top of those achievements you also showed how a great industry can provide real jobs for indigenous Australians. To AMMA and its members, I say you are an industry that all Australians can be proud of.
The work you do on workplace relations is more important than ever. It is at the heart of good economic policy. As Paul Krugman said famously "productivity isnt everything but in the long run it is nearly everything". And as Gary Banks (Chairman of the Productivity Commission) said at the end of 2012 "…..productivity begins in the workforce".
So that is why I can’t say I was happy with the Coalitions IR policy. But I was not surprised and the only consolation for a very limited policy is the reality that if Labor were to be re-elected then the situation would be even worse than it is today.
Abbott's policy (P4) starts with this endorsement of Julia Gillard's legislation “A Coalition Government will keep the Fair Work framework...."
In other words, Abbott’s policy is basically Labor's policy. Abbott says Fair Work has 'many positive aspects' so his policy is to deal with 'some problems'. In other words, Abbott's policy is a series of band aids.
But there are some useful band aids including a return to the right of entry provisions as originally promised by Julia Gillard and the resurrection of the Australian Building and Construction Commission. (I now note that Labor’s budget has cut funding for Labor’s paler version (FEWBC) of the ABCC by $6m pa so Joe will have to find that). The measures to tackle “strike first, talk later”, the proposals to review the Road Safety Remuneration Tribunal” and the intention to “put productivity on the agenda” are worthwhile aspirations.
The attempt to confront the pro union bias of existing greenfields agreements is also laudable although proposing more arbitral powers is unfortunate. Arbitration is a step back into the past. Under Howard, the direction of policy was for a system based on minimum standards but now both sides want to provide arbitration for some of the highest paid workers in the economy. To me, that is unacceptable.
Two other measures ; one for bullying and one for an appellate jurisdiction within the Commission have some rationale but personally I’d prefer to see a smaller Commission not a costly  burgeoning bureaucracy meddling even more.  I commend the move to tighten up union governance including penalties that are the same for companies and directors.
The proposed IFAs (Individual Flexibility Agreements) are nothing like the Australian workplace agreements that were used by over 1.4 million people in the Howard years and of course AWAs were introduced well before WorkChoices. In Western Australia, a large proportion of workers in the mining industry enjoyed high wages on individual agreements and employers found they dramatically reduced the incidence of industrial action and strikes.
And as you know better than I, the mining industry is a prime example of where a reliable supply of product is crucial to the negotiation of contracts with foreign investors – if supply can be guaranteed, a premium price may be able to be secured. AWAs worked and we need them back in your industry.
Also in the policy is the proposed paid parental leave. It is wrong in principle because it is well beyond minimum conditions and anyway we can’t afford a new tax when government policy should be to reduce tax on business. On the same theme of more costs, Labor’s massive budget tax hit on the exploration industry will be a huge blow to Australia’s future prosperity.
Australia has lost a lot of its competitive position in the last few years. We can’t afford to fall further behind. There is currently over $300 billion of investment under consideration in the Australian resource industry. Our policy makers don’t seem to realise that the $300 billion is not all guaranteed to come online. With this week’s budget deficit shambles and uncertainty remaining in the global economy, shoring up our resources investment should be a very high priority of both sides of politics to ‘future-proof’ our nation.
 According to a recent Reserve Bank paper your industry accounts for over 1.1 million Australian jobs, both directly and indirectly. That is more jobs than manufacturing, as many as in retail, and twice as many as in tourism. You are not asking for a billion dollars to keep you afloat you only ask that the government does not make you uncompetitive.
With the Coalition now committed to delay any further consideration of major reform until after the 2016 election, we are entering a dark period of at least five years for those who want Australia to have a modern labour market suited for a modern economy. The Coalition’s decision to adopt a band aids approach for now is a purely political decision. Regardless of that decision, the need for reform remains a high priority for pursuing more jobs and higher living standards.
I say to your industry, it is vital that you keep up the pressure for change. Do not let up on the issues; individual agreements, protected industrial action, adverse action, the details on trade union right of entry and greenfield agreement making, penalty rates, unfair dismissal, paid parental leave and anything else that undermines your right to manage your business in a private sector economy. Keep up the fight for your business but also for the Australian community.
I believe the public will be looking to the business community to take the lead. In the last three years you did what was asked of you. You gave government and opposition the evidence to justify reform but they turned a blind eye. Now business needs a new more aggressive approach. You need to be campaigning from October. The unions are always campaigning – you need to do the same.
And for Tony Abbott, the more the public realise the disastrous state of the budget the more they will expect the Coalition to advocate real solutions.
So as soon as the September election is over, assuming Abbott wins, I urge you to press the government to act quickly in giving the Productivity Commission (PC) its reference on workplace reforms. A double dissolution is possible on the carbon tax and mining tax bills so the government will have many distractions in its first months but that should not delay the PCs work. Business should be offering a draft of the terms of reference to the government. In addition, it will be important that the PC report is handed to the government within 18 months so that if an early election is ever called the government will have no excuse for not having a real policy at the next election. The other point is the importance of the PC appointing the right people to conduct the review. The new head of the PC might or might not have the same enthusiasm for IR reform as his predecessor so the appointment of more than one commissioner would be reassuring as well as practical given the size of the task.
The terms of reference need to reflect the reality that Australia competes globally for skills, technology and limited investment capital – something all too clear to you as a resource industry audience. Australia cannot afford to allow complacency to let us lose our competitive edge. And we would be negligent to think that we can only win support for reform by waiting until things get so bad that only then might we address our economic inadequacies.
Good policy equals good politics. Ask Gillard or Swan – their failure as economic managers as demonstrated in this week’s budget will be the final nail in their political coffins.
The trouble with a lot of today's politics is that too many people start by worrying about the politics before they consider the merits of good policy. The better approach is to first focus on what would make good policy and then worry about how to manage the politics.
And don’t anyone tell me that reform is too difficult. Abbott’s win in the September election will be as much about getting rid of Labor as it will be about the alternative policies. But once in government, Abbott will find that the quality of his management including vital IR reform will determine his future. And in that regard the sooner he fixes the IR system the longer he will last as PM.
 What the current Coalition needs to remember is that the WorkChoices ‘bogeyman’ is nothing new. The bogeyman was alive and well in the period leading up to the '96 election but we never walked away from labour market reform.
If you have a good policy you can win the debate.
In the months leading up to the 1996 election, the Coalition was constantly taking the fight up to the Keating government on workplace reform. We won that debate because we never gave up on our small business constituency, and equally we never gave way on supporting reforms that were vital such as those in the resource industry. At no stage did John Howard announce that he would not have individual agreements. We managed the policies and won the politics. And we did the same with the GST and on the waterfront. Now the challenge for Australia on labour market reform is even greater than it was in 1995/6.
In 2013 the system has gone backwards.
Union militancy is on the rise, with strike levels at their highest since 2004. Union access to the workplace has opened right up. It was no surprise to see the re-unionisation of Bell Bay in Tasmania on the back of wholesale union recruitment drives in the workplace. The adverse action provisions make unionists a protected species and employers face often unmeritorious claims fuelled by unlimited compensation and a reverse onus of proof on employers to disprove allegations.
Agreement-making options have been reduced and the ACTU is pushing for more arbitral powers and the return of a 'them versus us' mentality. Productivity has all but been pushed off the bargaining table. And clauses can be put forward to restrict the use of contractors and other business arrangements essential for an employer’s competitiveness.
On top of all that, the Government has been stacking industrial tribunals to a level unheard of under any previous government.
But it is never too late to advocate good policy. Whether it is Labor or the Coalition, Mr Shorten or Mr Abetz – who will debate each other at this Friday’s Great Debate Luncheon – the need for genuine labour market reform is becoming more pressing every day in the national interest.
This is why organisations like AMMA play such an important role in industry and policy advocacy, and our national progress.
Workplace relations reform has been exaggerated as a bogeyman and it is time to get back to the real debate, which is not about Work Choices or any other policy of the past, but about fixing the real problems that exist now.
Our future depends on it. Remain determined, remain focussed and continue the professional contribution that your industry makes to informed debate. Australia needs to hear what you have to say more than ever and so on that note, I wish you a very successful National Conference.

Tuesday, 7 May 2013

paid parental leave, IR and referendum

Tony Abbott should heed the advice of his colleagues and rethink his policies on parental leave, workplace relations and local government recognition, writes Peter Reith.

Yesterday morning one of the Coalition's younger MPs spoke out on AM radio. His name is Alex Hawke and his seat is in Sydney. He will be an MP of increasing influence in the Federal Parliament because he demonstrated that he had the guts to speak out on a matter of fundamental policy. He voiced his concerns about Tony Abbott's paid parental leave scheme. His comments were common-sense, and they were measured. He is one of a number of younger MPs in the Coalition who are both ambitious as well as being "economic rationalists".

The dying days of the Gillard Government will be especially remembered for its dreadful and costly economic mismanagement, and the Coalition will want to be known as the party that fixed the mess. To promote good solutions will require well thought out and consistent policy positions, and the young rationalists will be the ginger group that not only argue the case but will demand, by their intellectual force and predominance in the internal debates, to be the ones to implement the necessary policy changes.

This process could be difficult for Tony Abbott unless he is assiduous in working with colleagues rather than trying to shut them down.

The Hawke criticism of the paid parental leave policy was inevitable because, on its merits, it is obviously bad policy but also because it was thrust on the parliamentary party without proper discussion and without the mandate of the shadow cabinet and party room. Hawke was gutsy to speak out because when your side looks like winning, some MPs understandably keep quiet because they don't want to throw away their chances of a ministry. But at the same time, if the leader forces policy on the colleagues knowing that the closer to the election the more sway he has over them, then he must expect some will resent unilateral decision making.

The paid parental leave proposal is a unilateral policy imposed by Abbott. There are at least two other Abbott unilateral policies that are difficult.

The biggest is Abbott's decision to ban any thought of individual agreements in the Coalition's workplace relations policy. The ban was announced on ABC TV without reference to the shadow cabinet or the party room. At a time when the policy is most needed to turn around Australia's poor productivity performance, Abbott has closed that option for the foreseeable future. Abbott has acted on his perception of the politics but the only way to lift living standards is to lift productivity so avoiding workplace relations may be bad politics as well.

The second is Abbott's reported negotiations with Minister Anthony Albanese to rush through a change to the Australian Constitution; another decision without shadow cabinet or party room approval. The intention has been to hold a referendum concurrent with the September 2013 election. Recognition of local governments was opposed by the Federal Council of the Liberal Party in July 2012 and will likely be opposed by the states who all opposed the idea when it was put in 1974 by Whitlam and in 1988 by Bob Hawke's Labor. If Abbott forces the party room to support a referendum, there is no doubt he will split his Coalition premiers and organisational supporters.

Apparently the Liberal National Party in Queensland, allegedly promoted by Barnaby Joyce, are supporting the proposal because they think that local government recognition would somehow advance their standing in rural municipalities. How this would happen is not obvious.

In my experience, as a former shire president of a small rural shire, the idea of interference from Canberra bureaucrats telling the local council how to run local affairs would only annoy councillors, not encourage them to vote for the National Party. And if they think they can get more money from Canberra, they have rocks in their head because there is nothing legally stopping Canberra today from funding local government at any time.

If the proposal is meaningless then there is no reason to vote for it, but if it means more power for Canberra, which has been Labor's real intention for decades, then it should be rigorously opposed.

Local government is the responsibility of state parliaments and there is no reason or evidence to think that allowing the central government to meddle with local government will in any way improve the delivery of local services. It is much more likely that the more Canberra controls local government, the more there will be duplication and red tape, which will only increase the costs of administration of local government and clog up local decision making.

A more general cause for concern about the proposal has been eloquently advanced by the Institute of Public Affairs. Chris Berg from the institute (The Age, May 5, 2013) sees the local government ploy as part of a broader plan by the Commonwealth to expand its rights to spend taxpayers' money by neutralising the limits set out in the Constitution.

He makes a strong point; if you want the Gillard Government to continue on its spending spree, vote yes. He says:

... the real story here is how the Commonwealth is trying to erase all parliamentary, legal and constitutional impediments that limit its spending. The referendum is just a small skirmish in a larger war. (p19)

Time is running out on this issue. If Abbott is determined to press ahead then I would expect him to try and railroad his parliamentary party next week at the party room meeting in the shadow of the budget. I have no doubt that a large number of Coalition MPs, including senior members of the cabinet, are opposed to a referendum. The only question that remains is who is prepared to stand and oppose any attempts to cosy up to Labor to support its push for more central government.