February 14th 2015

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Articles from this issue:

QUEENSLAND STATE ELECTION Governments want belt-tightening, but voters want jobs

CANBERRA OBSERVED The Coalition government's self-inflicted troubles

SOCIETY Joblessness drives the retreat from marriage

EDITORIAL IPCC pushes for new binding climate treaty

NATIONAL AFFAIRS What's behind the Australian Liberty Alliance?

ISLAM Middle East's bishops urge Christians to work with Muslims

NATIONAL AFFAIRS Productivity Commission's IR inquiry doomed before it starts

POLITICAL PARTIES Why Victoria's Liberals are perennial losers

INTERNATIONAL AFFAIRS Greece launches diplomatic offensive against EU austerity program

INTERNATIONAL AFFAIRS UK-US special relationship 'hanging by a thread'

CULTURE Further inquiries into the case of Sherlock Holmes


BOOK REVIEW Chronicle of a world we have lost

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Productivity Commission's IR inquiry doomed before it starts

by Peter Westmore

News Weekly, February 14, 2015

Whatever the theoretical benefits of an inquiry into Australia’s labour laws, the Productivity Commission inquiry commissioned last December by federal Treasurer Joe Hockey, but whose terms of reference were released early in February, is doomed because of the stalemate in the Senate, and the legacy of the Howard government’s ill-fated WorkChoices legislation.

Peter Harris

The Productivity Commission exists to give independent advice to governments, but its policy remit ensures that its conclusions are based only on narrow economic reasoning, ignoring all other factors, including the social, regional, employment and political consequences of its recommendations.

As a result, its recommendations are invariably based on free-market principles, for example, in relation to the sale of water entitlements in the Murray-Darling Basin, and withdrawal of supports for Australian manufacturing industry, including the car industry.

In the present inquiry, there are other problems.

One of the causes of the collapse of Australia’s manufacturing base, particularly in contrast with successful economies such as those of Germany, Taiwan and Japan, is that Australia has cut technical education, while all these other countries have highly-developed technical education facilities, including technical schools, advanced training institutes and technical universities.

Australia has no such system, and the Productivity Commission inquiry into Australia’s labour laws will not consider it.

A further difficulty for the present inquiry is that its terms of reference are narrowly drawn, in such a way that the outcome is largely pre-determined.

The Productivity Commission will assess the impact of the workplace relations law in relation to issues such as the minimum wage, labour market flexibility, barriers to bargaining between workers and employers, “red tape and the compliance burden for employers”, and other matters.

However much the Productivity Commission chairman, Peter Harris, might suggest that the inquiry is merely gathering “facts” about “workplace relations”, everyone knows otherwise.

The free-market think-tank, the Institute of Public Affairs, has been quite clear about this.

In a media statement welcoming the establishment of the inquiry, headed “IPA welcomes minimum wage inquiry”, the IPA said: “In a free and prosperous country, the government should not be fixing any price in the economy — and that includes the price at which we choose to sell our labour.”

The statement added: “Minimum wages presume that workers are incapable of judging whether the compensation offered is sufficient for their work.

“Excluding low-productivity workers from the employment market, minimum wages prevent those workers
from getting the foothold necessary to gain experience and skills.

“In other words, the minimum wage is a key driver of Australia’s poverty trap.

“The statutory minimum wage should be abolished. This is the advice the Institute of Public Affairs shall be providing to the Productivity Commission review.”

Any recommendation by the Productivity Commission to reduce or abolish minimum wages, restrict the operation of awards, reduce penalty rates, restrict the operation of the Fair Work Commission, or otherwise tilt the balance towards employers, will be fiercely resisted by the Labor Party, the trade unions, the Greens and at least some of the independents in the Senate.

Together, they comprise a clear majority. 

The failure of the Senate to pass key elements of Joe Hockey’s 2014 Budget — including the Medicare co-payment, the deregulation of tertiary education and other unpopular measures — has contributed to the collapse in support for the Abbott government in recent months.

There is no prospect that a majority in the Senate will look favourably on moves to change the goal posts in the industrial relations system. Thus, in pushing for changes in the law, the Coalition government is making a rod for its own back.

There will invariably be a sustained grass-roots campaign against the federal Coalition government on any changes to industrial law, just as there were similar effective campaigns which contributed to the recent rebuffs of the Napthine Liberal-National coalition in Victoria, the Newman government in Queensland, and the Howard government back in 2007.

There is no doubt that the Commonwealth government is under immense pressure from the business sector — including traditional financial supporters of the Coalition — to wind back laws which are seen as being too favourable to trade unions or generous to employees.

However, corporations don’t vote; people do. And a campaign directed at protecting low-income and working-class voters will undoubtedly succeed. The Abbott government must firmly resist corporate pressures if it is going to survive.

If the Commonwealth government wants to address employment issues, there are mechanisms in place, including the Fair Work Commission, the Council of Australian Governments and the Commonwealth Parliament, to deal with them. 

The Productivity Commission report will be a nail in the government’s coffin.

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