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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.

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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 things’).

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.

This is 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 humiliation.

But as Imre Salusinszky 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 to display.

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 acquisition.

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.

Merson 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.

 TNC  22 September 2007                 Like to respond?                                   Top