Tuesday, 28 January 2014

Labor must use opposition days to reform itself

The political parties are inextricably bound together, whether they like it or not. The Labor Party is intent on stopping the Coalition from cleaning up the mess it left. Labor is doing its best to undermine the effort to stop the boats, discredit the Commission of Audit, oppose expenditure cuts and still support the carbon tax.

Labor will have some impact on what Prime Minister Tony Abbott can do and that will be no help to anyone, itself included.

Abbott will most likely win the 2016 election, so Labor has time time to dump policies that will be a problem for it later. Australia could easily be facing a flat economic performance for some years ahead. Per capita income in many households may remain stagnant. If Labor maintains its current approach, it will be harder to secure the reforms the country needs.

Australia needs a better opposition than what we have today. Labor's tactics will not only make it harder for the government to fix the problems but it will undermine its own electoral prospects. Like it or not, both sides of politics need to be doing their best in this Parliament.

Labor has enough good operators in Parliament and outside to be a better opposition. It should be more ambitious and pick up the Keating legacy left dormant since Kim Beazley's departure. People like Chris Bowen, Jason Clare, Paul Howes and Richard Marles should push for reform.

For starters, Labor should forget the carbon tax; it has lost that one. Second, Labor needs to support expenditure restraint to show it realises the scale of waste under Kevin Rudd and Julia Gillard was not acceptable.

After Labor went into opposition in the 1990s, Gareth Evans announced his intention to quit parliament. He thought opposition was a complete waste of time and he did not want to suffer ''relevance deprivation syndrome''. He held the ''winner takes all'' view. Opposition is not a waste of time; it is an essential time to regroup and reframe policy and the public debate. Labor has got it all wrong if it thinks it will return to office by mimicking Abbott.

The interaction between the parties was on display during John Hewson's 1993 Fightback election. Paul Keating promised to match John Hewson's income tax cuts. But unlike Keating's, Hewson's cuts were funded by the GST. Keating was forced to dump his cuts after the election and that broken promise became one reason he lost in 1996.

Labor's tactics now should be more like the Coalition's role in the 1980s, when the Coalition supported Hawke and Keating's reforms. That support did not disadvantage the Coalition's electoral prospects - they were shredded by disunity, not by supporting privatisation, floating the dollar or other reforms.

In the 1980s and early 1990s reformists were in the ascendancy and we need them back now.

You don't need a lot of reformers in government to make a difference; there were not many in the Howard government. Keating had only a few parliamentary reformists to back him but, to his credit, he fully utilised advice from reformers within Treasury and the Reserve Bank.

There are lots of things Labor could do to help the country and itself . It is time to reconsider the relationship with the unions and at the same time introduce wide-ranging party reform. Labor might be able to remain a political force without reform for many years, but eventually it won't be politically viable while the unions effectively run the party with only 13 per cent representation from the private sector workforce.

The Greens are another problem for Labor. They are too far to the left and irresponsible on economic policy. Greens policy on issues like boat people is out of step with public opinion. Labor should dump the Greens; they have nowhere else to go, so why should Labor let them cling on when the Greens want to displace it anyway.

Labor should immediately establish its own internal expenditure review committee. This was done under Hewson and when Labor's budget came out, the Coalition listed further cuts. Labor could start with business welfare. Government waste will not be eradicated under the Coalition.

I have no doubt the Commission of Audit will be an ''OMG'' moment for Abbott. And the bigger the cuts, the more Labor will be salivating at the thought of widespread pain.

But Labor needs to think strategically about its future. Some will say big reform is neither desirable nor possible. But it can be done, as shown by Tony Blair and New Labour in Britain. Nothing could be worse for Australia than if Labor thwarts Coalition reform and then in time returns to office no more capable to govern than under Rudd and Gillard.

Tuesday, 21 January 2014

First of the regular columns with SMH - on the economy

Abbott should be thinking not just about the next election but the one after that, as well. Even if the government knows what it wants to do, it takes a lot longer to implement policy than many realise.

Paul Keating spelt out his labour market reform after the 1993 election, but even as late as 1996 he had still not bedded down the legislation. The Coalition's 1996 legislation went through Parliament in near record time, but that was only the start. The legislation did not come into effect until July 1997 and even then the take-up was only steady.

Change can be more like turning round an oil tanker - a long and laborious process. It is certainly not the equivalent of one zip around a racetrack in a Ferrari before catching the winner's flag.

The simple political point is that if the benefit of reform is not felt at the coalface then it is no more than just a promise. Reform is all about practical change on the ground.

So, for the government to win in 2016 it needs to do more for jobs, and that means more than the few labour market changes now proposed. Those changes to union governance and combating bad behaviour in the building industry are worthwhile but are not, of themselves, enough to confront today's economic challenges.

On workplace relations, Abbott proposes a Productivity Commission inquiry before the election and implementation after the election. He is too relaxed; he has not even started the commission process.

Even if the PM accepts a good reform package from the commission, he will be under pressure to get legislation through in 2016-17, implementation in 2018 and then bask in widespread improved labour outcomes before the 2019 election. If the benefits are not discernible by 2019, a third term could be a big question mark. Abbott might be seen as no better an economic manager than Labor.

Last week's labour market statistics spell out the challenge and the threat to the government's claim to be a good economic manager. The latest unemployment number was basically steady at 5.8 per cent. The worrying number is that the labour market participation rate has dropped in the past three years (covering the main period so far of Labor's re-regulation of the labour market) from 63.2 per cent in December 2010 to 61.8 per cent.

This means fewer people are working and paying taxes, and more people are on benefits. Des Moore of the H.R.Nicholls Society and formerly of Treasury says the real consequence of the fall-off is that 345,000 capable workers have either dropped out of the workforce (212,000) or are unemployed (133,000). This is a trend Australia cannot, and should not, accept.

Abbott will not walk away from his promise to defer structural reforms until his second term, but that does not mean he should be so paralysed in the meantime that he cannot look at obvious changes that would help thousands of workers and businesses.

The Australian Financial Review says even Employment Minister Eric Abetz is keen for reform, by opening "a confidential submissions' process, calling for input into existing appeal mechanisms and how they could be improved".

Two further examples demonstrate that there are other reforms that should be given priority now.

The recent decision by the Fair Work Commission to prevent Toyota workers from participating in a ballot that might help them save their jobs is clearly contrary to the interests of those workers.

Abbott should bring in legislation immediately to overturn that decision. It would be good policy, and good politics, to force Labor leader Bill Shorten to make a choice between union bosses and workers. Supporting workers would not be a breach of the PM's promises on labour market reform.

In 2010, three young people lost their jobs in rural Victoria because they were working for less than the three hours minimum dictated by the shopworkers' union. Their plight highlighted the need for reform - even Julia Gillard said the problem should be fixed - and yet the current weak compromise is still costing jobs. Youth unemployment is on the rise, so why not legislate to save their jobs?

If Labor opposes these practical reforms, put the bills in for a double dissolution. With that policy the government would be on the front foot and no one would doubt that its policy is jobs, jobs, jobs.

Sunday, 19 January 2014

H R Nicholls Press release on Labour Force stats December 2013

H R Nicholls Press Release 16th January 2014

The HR Nicholls Society, 16 January 2014
The small increase in the unemployment rate in December (up 0.1 percentage point to 5.8 per cent seas adj) understates the continued deterioration in the labour market. That employment fell by over 22,000 (sa) is of serious concern.
The deterioration is reflected in the proportion of those of working age who are employed. Since December 2010 the proportion employed has dropped from 63.2 percent to 61.8 per cent. This means that over the three years about 345,000 people of working age have ceased to be employed and have either become unemployed or dropped out of the workforce altogether. In fact, as the number unemployed has increased by 133,000 the remaining 212,000 are drop outs.
That period covers the effective introduction of the Fair Work legislation and administration. The regulations applied under this system (sic) have hardly given these erstwhile workers a fair go.
Over the Christmas period many commentators have emphasised the need for early action to effect a major reduction in the regulation of employer/employee relations. The main beneficiaries of the regulations are trade union leaders.
It is absurd that no substantive reform by the Abbott government is envisaged until 2017-18. The ABBC and other minor reforms are welcome but will not change the behaviour of militant unions.
Publicity Officer: Des Moore (9867 1235)