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Editorial: September 2007
Skills and collaboration, not WorkChoices, deliver economic success
If we weren’t the first to say it, we were certainly quick off the mark.
In our March 2007 editorial, we said that
compared to the prime years of economic reform and responsibility under
Bob Hawke and Paul Keating in the 1980s and early 1990s, the Howard
Government’s economic record has been patchy at best.
We also said the ALP should not shy away from a campaign fight on
economic management – first because it wouldn’t work (the electorate
would quickly sense Labor’s discomfort and penalise them for it); second
and more importantly because the courage and imagination Hawke Labor
displayed in a much more difficult economic environment than Howard ever
faced represents a positive message to put before the electorate.
Since then, we’ve been treated to Peter Costello’s damning assessment,
in the Errington-van Onselen biography published in July, of John Howard
as Malcolm Fraser’s Treasurer (‘had not been a great reformer’; ‘not a
success in terms of interest rates and inflation’) and as a profligate
spender in election campaigns (‘I have to foot the bill and that worries
me, and then I start thinking about not just footing the bill today, but
if we keep building in all these things, footing the bill in 5 and 10
and 15 years, and you know, I do worry about the sustainability of these
In this light, you have to wonder what Costello privately thinks about
Howard’s latest round of populism and pork-barrelling:
1. bailing out the Mersey Hospital in Tasmania – ‘a disaster’ that
‘should be closed’, according to the honest if indiscreet Tasmanian
Liberal Senator Stephen Parry; ‘almost certain … to result in the death
of north-west Tasmanians’ because it will ‘cement in place a system in
which adverse events will flourish’, according to
Professor Jeff Richardson,
who chaired the expert advisory group on hospitals in Tasmania
2. offering to fund plebiscites in minuscule, grossly uneconomic
Queensland local government areas threatened with amalgamation.
Both these decisions send the message to State premiers that correct and
courageous decisions to address entrenched problems, based on sound
technical and financial advice, carry too high a political price. This,
mind you, from a prime minister who never tires of berating the Labor
premiers for their ‘wastefulness’.
The most recent development in this regard has been the change of
political tune at The Australian. In a startling
editorial on 30 August,
they stated that ‘set against the microeconomic reforms of the Hawke and
Keating Labor Governments during the 1980s and ’90s, the Howard reform
legacy is thin … The great legacy of the Hawke and Keating years was the
conditions it set for sustained productivity growth. Labor has pledged
to refocus on productivity growth if it wins office. Against this, there
is little to indicate that Mr Howard and the Treasurer have used their
time in office to set the country up for the decades ahead ... [The
Howard Government] has been content to consume the fruits of the present
economic boom and take the luxury of the soft option.’
The ALP has made up some ground on the Coalition in the poll question of
which party would better manage the economy, although they still lag by
between 10 and 20 points. There are good grounds for thinking that if
the gap persists to election day, it may cost them victory.
perhaps the most compelling reason for Labor to campaign from the front
on economic management. It becomes doubly important to ensure that
shadow ministers and candidates – especially but not exclusively those
on the Left – are given no leeway to present off-key messages about, for
example, the need for expensive social programs to redress areas of
neglect and injustice.
The biggest threat to the longevity of a Rudd Labor government comes
from the likely post-election triumphalism that is already emerging in
anticipation of a sweeping Labor victory among elements of the Left and
the greens. Several commentators, including Phillip Adams, Hugh Mackay
and The Age’s Catherine Deveny, see the coming poll as the electorate
turning their backs on Howard for his ‘wedging’, authoritarianism and
dishonesty. They’re licking their lips in anticipation of his
pointedly asks, where’s the evidence that the Left’s cultural warriors,
who have been crying in the wilderness for 11 years, now suddenly have
the ear of the voter?
The danger is that these elements will gain sway in the corridors of
power – that hard Left and inexperienced ministers, egged on by their
advisers inside and beyond parliament, will pursue agendas that are
socially and culturally at odds with the views of mainstream voters, and
will chip away at the macroeconomic responsibility that Rudd continues
We saw it in 1993 – though on that occasion it was Prime
Minister Keating himself who led the triumphalist band – with
catastrophic results for Labor three years down the track.
Fortunately Rudd seems to understand this danger all too well. He told
Salusinszky several months ago that he thinks voters support him because
they grew tired of the Howard Government some time back, but wouldn’t
support in sufficient numbers either Beazley (seen as too soft) or
Latham (too volatile), whereas they see him as ‘every bit as
conservative, temperamentally cautious and safe-handed as Howard’.
There’s no joy there for those on the Left who are eagerly anticipating
a reprise of 1972.
We also said in March that WorkChoices can be presented as a detriment
not just to fairness, but also to our economic future. The Government
and its business allies are engaged in concerted advertising campaigns
that are as dishonest (the business campaign, which slyly knocks over a
straw man) as they are outrageous (how dare the government make us foot
the bill for such blatantly partisan propaganda).
It’s hard to know
whether the advertisements are working as intended – some think they’re
turning the industrial relations issue around, others that they’re just
drawing attention to the elephant in the room (why all the fuss if
there’s nothing to worry about).
In fact there’s now not much difference between the parties on
industrial relations as
Ross Gittins, for one,
points out. In a nutshell, the ALP wants to trade off a little
flexibility for a bit more fairness. The differences between the parties
boil down to these:
1. Labor would abolish (over five years, for those earning under
$100,000) Australian Workplace Agreements and restore collective
bargaining, with or without unions, for those who choose it
2. Labor would reinstate substantially watered-down unfair dismissal
provisions for employees of small businesses
3. Labor would restore a modified award system as the basic safety net,
against which all agreements (except for those earning more than
$100,000) would be tested for fairness – however, the awards would be
constrained to cover just 10 ‘allowable matters’.
Three points need to be made about these differences.
First, they bear
almost no resemblance to the nightmare scenario portrayed in the
deceitful business advertising campaign. Contrary to the picture
presented of burly union thugs storming into hapless small businesses
and shutting them down, union officials are and will continue under a Labor government to be ‘legally required to have a permit and must give
notice of their intention to enter business premises, must have valid
reasons for entering, and an employer may impose conditions on how they
carry out a visit’ (Colin
Fenwick, director of Melbourne University’s Centre for
Employment and Labour Relations Law).
As for the alleged costs of ‘scrapping workplace reform’ documented in
the EconTech report
commissioned by the Australian Chamber of Commerce and Industry for the
campaign, these are derived from a model into which ‘so-called facts’
have been fed that ‘have absolutely nothing to do with the ALP’s
industrial relations policy’ (Colin Fenwick again).
The second point is that – yes, it’s true – Labor’s modest industrial
relations reforms will come at an (even more modest) price. Other things
being equal, businesses will hire more workers if they are allowed to
sack them on a whim, and (particularly during economic downturns) if
they are given leeway to cajole, intimidate or con workers out of
hard-won entitlements in return for inadequate offsetting pay increases.
It’s an old argument: where’s the ideal balance between fairness and
flexibility; between giving relatively powerless individuals collective
rights and giving business a free hand to thrive.
The balance we reached before the introduction of WorkChoices was in
fact far closer to the United States end of the developed countries
spectrum than the Western European end. There’s substance to the charge
that Howard wants to push us right to – indeed, as far as bargaining
rights are concerned, beyond – the US extreme.
The final point to make is that WorkChoices, in its philosophy, its
message and its impact, works directly counter to the other, far more
pressing, industrial imperative: to build the workplace skills that are
critical to this country’s long-term economic competitiveness. Roughly
speaking, 80 per cent of Australian jobs have a clearly defined
educational and skills pathway (tertiary or vocational), but below 50
per cent of workers have the qualifications and/or recognised skills
that attach to these jobs.
We muddle through at present – as we have for
decades – but the skills gap (one manifestation of which is widespread
skill shortages) will continue to widen, particularly under the impact
of the ageing population and falling labour force participation rate.
In time – particularly when the current resources boom peters out –
we’ll find ourselves scarcely able to compete in the global marketplace
unless we’ve quite radically transformed our skill formation patterns.
Unions can and should be a vital partner in this process. (As we noted
in March, Australia’s robust apprenticeship system owes everything to
the past strength of our unions.) They are critical to encouraging
workers, particularly blue-collar workers, to participate in training
and skills development, and to reassuring those who understandably find
this threatening. They can and will ensure that collective agreements
adequately provide for, and appropriately recognise and reward, skills
Workers themselves need the reassurance that their employer values them
sufficiently to make skills acquisition a desirable option. Small
business overall lags sharply behind large and medium firms in its
investment in and commitment to training – this discrepancy largely
accounts for Australia’s generally poor skills profile. It is essential
that we restore the element of partnership between business, workers and
unions that was so carefully built up during the Hawke years.
Important research in the neurosciences shows that people (indeed,
animals generally) fail to learn when they are under stress, anxious
and unhappy. John Merson, a senior lecturer in the School of Science and
Technology Studies at UNSW, argues that this probably goes a long way to
explaining why low socioeconomic status correlates so closely with
inferior learning outcomes – it’s not just poverty per se; the
anxiety and unhappiness that poverty engenders are as much to blame.
draws several lessons from this research, one of which – that ‘the
“right” balance is needed in students’ emotional as well as cognitive
load’– is especially relevant in this context. ‘Optimum engagement with
learning’, he writes, ‘lies in that zone where the challenge is
demanding enough to be enticing, but not so great as to be daunting’.
This goes to the heart of the question as to what sort of workplace we
need to meet the skills challenge. An insecure, antagonistic workplace
that pits people against each other and individually against a much
better armed boss, where work is a tedious routine and two-way loyalty
is passé, is the very antithesis of what is needed.