Getting workplace relations right
getting the policy settings right for workplace relations leads to greater prosperity and productivity and encourages aspiration, says angus taylor in his keynote speech to the hr nicholls society.
I thought I would spend a few moments today talking about what I think good workplace relations look like; talking a little bit about what the current IR landscape looks like here in Australia right now; why this matters, and what the pathway forward is. I'll try to leave some time for some discussion at the end.
WHAT GOOD WORKPLACE RELATIONS LOOKS LIKE
Of course, I think the fundamental definition of good workplace relations is not complicated.
Sometimes we complicate things. It's very simple.
It's workers and employers sitting down together and working out on a local basis what's good for both.
Mutual benefits, it's a big idea. Adam Smith realised that was the heart of a good economy a long time ago. But those mutual benefits are the key to good workplace relationships, and that means higher real wages.
That means higher pay packets, but it’s meaningless unless there's more purchasing power in that pay packet.
That is at the heart of good workplace relations. It's also at the heart of productivity.
Until we recognise that productivity is the platform for aspiration and prosperity, we can forget about everything else. It just doesn't count anymore.
Now, they are simple principles. And the question is, how does the current IR landscape today in Australia line up against those principles?
THE CURRENT INDUSTRIAL RELATIONS LANDSCAPE
Well, there's really been three tranches of what this Labor government has done since they came to power with workplace relations.
The first was to re-establish the bad old days in the construction industry.
Now the construction industry is crucial to the future of this country. We need more houses. We need more transport infrastructure to get people to home and work sooner and safer.
There's lots of talk about how Australia can lead the world again in manufacturing, but if you can't build a factory, at roughly the same cost, or a processing facility at roughly the same cost as your competitors, you can give up on that idea.
The construction industry is incredibly important, but the first thing this Labor Government did when they came to power is abolish ABCC and the Registered Organisations’ Commission.
Now we've struggled with the productivity in the sector.
The truth is it’s been hard.
And if you look at a decade of productivity outcomes in the construction industry, it’s gone backwards by 18%. That’s despite removing some of the lawlessness out of the sector. There's still a lot of work to do in the sector at the same time, it’s gone backwards 18%.
Agriculture, those good old farmers. I'm a big believer in this, as someone who's come from farming stock and remains very committed and part of the sector. Productivity in agriculture improved by 29%.
So, Labor's first move is to get rid of the one thing that had been starting to address the underlying lawlessness, and truly horrific behaviour that we had seen in that industry.
The Master Builders Association has told us that the economic cost of repealing the ABCC was in the order of $47 billion to the Australian economy and of course, we've committed very clearly, we will re-establish those organisations. There's no question about that. Michaelia Cash is deeply committed to that.
The second thing Labor did, is they said that there had to be a big summit and they said we're going back to the era of Hawke-Keating industrial relations.
As I remember that was about enterprise bargaining. That was about local agreements that are good for workers and employers and making sure some of that goes to the workers and it should, and it does and we know that from history.
Instead of that, the government decided to go back even further to the bad old days of collective bargaining.
That's exactly what Labor did with the tranche of legislation that came through after the Jobs and Skills Summit.
And we’re now just starting to see the business models that are emerging in the union movement that will take advantage of that legislation, which again will move away from the capacity for local enterprise-based negotiation.
Now enterprise bargaining was not some kind of radical creation of economic lunatics. It was Hawking and Keating who recognised the importance of putting this on the table.
So, Labor moving away from that is moving back into the deep dark days of Industrial Relations back in the 1970s.
When I was growing up, I saw some of those industrial relations in the shearing sheds of Australia and frankly, that is not what any of us want to go back to.
And of course, the third tranche is the legislation – “Closing Loopholes” – that we're seeing from Labor in this area is the attack on flexible working arrangements. The attack on the platform economy, casual workers and platform workers.
You might say, “Well, we can always do things to improve conditions.”
Yes, there is. But take one example: wage theft. We took legislation to the last parliament that Labor rejected.
There are sensible proposals to deal with those issues, but what we're seeing from Labor is not that.
It is an absolute attack on flexibility in the workplace.
Now it's important to understand why we're seeing more flexibility in the workplace.
We're seeing more flexibility in the workplace because it suits employers and employees.
We've got more and more Australians in the workforce than ever before.
Participation rates have gone up and it means many two income families where flexibility really counts.
There are many people with small businesses who want to have a job as well.
Second jobs have become an important part of the economy.
And we're seeing right now that's a big part of how people are paying their mortgages and making ends meet. So that flexibility really counts.
It's good for both sides of a workplace relationship but Labor is attacking it.
You know why?
Because it doesn't suit the union officials and is not part of their business model.
And this is about Labor paying the paymaster rather than driving productivity and prosperity in the economy.
So those three significant changes, I think, are disastrous.
We've seen a whole series of people come out to oppose these reforms. And while it is welcome that there's people in the business community who are showing some real willingness to take a stand against these bad laws and fight against them, it's not a happy situation. But encouraging that some in business are taking a stand.
WHY DOES THIS MATTER? THE ECONOMIC CONTEXT
And why does all this matter?
We know if you want a pathway to prosperity, to the higher real wages as we've seen in the Pilbara amongst the very best paid people in the world, then you must get these policy settings right.
And in an extraordinarily short period of time, you're seeing the Labor Party take us in exactly the wrong direction.
Let me give you a few of the facts on this that I think need to be highlighted far more.
In five quarters, we've seen labour productivity in this country go backwards by over 6%. We have never seen that before. We've never seen anything like it before. This is completely unprecedented.
This is post-Covid.
This is post-Labor getting into power.
Over 6% collapse in labour productivity.
Now Labor likes to say, well, productivity was lacklustre before that.
Through our time in government, we raised it by a little over 1% per year - you'd prefer it was higher, but it didn't go back by 6% in five quarters.
This is something new and different here. It’s an absolute diabolical collapse.
Now, economists have long said labour productivity drives real wages.
Well, it turns out for a working family, real wages have dropped by almost the same amount.
Net disposable income of Australian households has fallen by 5.1% in the last twelve months.
It’s the worst result in the advanced world and all the countries we compare ourselves with.
It is a diabolical situation.
It is exacerbating the inflation we're seeing, and you can't beat inflation without making sure you have a productive economy.
And clearly our economy is going in exactly the wrong direction.
These are not global factors because we are absolutely at the wrong end of the league table.
So, this is why we must fix this situation. That's the short-term challenge.
The longer-term challenge is without productivity gains, you will not see the gains in prosperity, and the gains in real wages that we all want and are crucial to making sure that our country has the successful, free market democracy that I think we all want.
HOW DID WE GET HERE?
I think one of the interesting questions to spend a moment on is how did we get here?
How is it that we've seen these sorts of industrial relations changes without a massive challenge coming from those of us and those in the business community who believe in prosperity and aspiration and productivity as the bedrock of any successful economy?
And the truth is, I think there are some in the business community, and in some industry bodies who have been inclined to confuse access with influence.
I mean turning up at the Jobs and Skills Summit, well that was access but I didn't see a lot of influence.
The truth is that we all must be advocates for strong free-market capitalism if we are to succeed.
There are mutant strains of capitalism that have emerged that many in the business community and elsewhere have been inclined to jump on.
Crony capitalism: the idea that you can make up for an economy that is not functioning the way it should with special favours from the government is delusional.
But a similar attitude has taken hold in many parts of the economy and sadly in parts of the business community, encouraged by lobbyists who promised that's all possible.
But we've got to fight against it.
We saw a terrible instance of crony capitalism in the last few months in the airline industry where Labor decided that we're going to favour one player over another.
Conferring regulatory advantage upon one business, with competition the casualty.
The other mutant strain of capitalism that I think has been responsible for some of this is woke capitalism, and an adherence to an extent where customers, shareholders, and employees have been forgotten.
We know through history that a business that:
does a great job for its customers;
that sells competitive high-quality products; and
creates value for its customers, for its employees, and its investors
is the bedrock of a good economy.
But as soon as you decide that those things are secondary to a whole lot of other woke priorities, you have an economy that's heading in the wrong direction.
We have seen that over the past year, and I think it's important that our business community gets back to basics.
Back to a traditional agenda of delivering a great product and service to customers.
And in that process, delivering great outcomes to workers and to communities as well.
That focus on the basics I think is something that we all need to continue to emphasise, to ensure we get the right public policy debates in areas like industrial relations.
That’s certainly something that I will continue to do in my role.
CONCLUSION
Let me finish by again, thanking you for giving me this opportunity today and I congratulate you for starting to get this agenda at the table.
There's a lot of work to do.
There's a lot of work to do to re-establish for the modern context those very core principles that I think everyone in this room really believes in.
We must make sure we're building that thought leadership in Australia and connecting to those around the world who are like-minded.
Making sure that we have friends in the business community and elsewhere who will work with us to make sure this agenda is successful.
We will not win without fighting.
We've shown I think, in the Coalition over the last few months that we are prepared to fight hard.
Even this week, this is a Coalition which I said right from the start when we went into opposition, we will not succeed without differentiating, without being prepared to fight on basic values and basic principles.
And it will be hard because at times we'll feel like public opinion is against us.
But I'm convinced that the sorts of principles we're talking about here today can bring the Australian people with us and can win and ultimately deliver a more prosperous aspirational Australia.
So thank you very much for being here.
This is an edited transcript of an address given by Shadow Treasurer Angus Taylor to the 2023 HR Nicholls Society Conference.