Stephen Smith (Perth, Australian Labor Party, Shadow Minister for Industry, Infrastructure and Industrial Relations) Share this | Hansard source

The government’s industrial relations changes are bad for our economy. The government’s extreme and unfair and divisive industrial changes are bad for our economy. They are bad for our workforce, but they are bad for our economy. They are bad for our economy because they are no more, no less than an attack upon wages. An attack upon wages will see nothing more, nothing less than low productivity. This is a straightforward shift from the wages section of the total factor income of the economy to the profit section of the total factor income of the economy. It is all about lowering wages. It is the easy way to a profit, relying upon lower wages and low productivity. There is no requirement, no incentive and no demand to say to the business community: ‘We want good management. We want investment in productive things.’

It is another example of the complacency of the Howard government, its massive economic complacency given the benefit of 15 years of continuous economic growth set up largely by the structural reforms of the Hawke-Keating governments, including the introduction of enterprise bargaining and a resources boom to China. The last election was front and centre all about the economy but we heard nothing about these proposals during the last election. The first time we heard about these proposals was when the government realised it had all power in the Senate and pushed through proposals that John Howard has had floating around not just since the nineties but since the eighties and seventies. This is no more or no less than an easy way to move part of the economy from wages to profit with no corresponding productivity or competitiveness gain.

Where does that attack come? That attack comes on the minimum wage and that attack comes on conditions and entitlements through the introduction of AWAs under the government’s reduced minimum standards taking away the no disadvantage test. Two of the culprits are at the table. The Minister for Industry, Tourism and Resources let the cat out of the bag a few months ago when he said, ‘Wouldn’t it be terrific if we could have New Zealand wages next week!’—as if somehow you could survive on New Zealand wages in Sydney. Take the logical extension of that view, which is proselytised by the Minister for Employment and Workplace Relations, who is at the table—and I will apologise in advance: I cannot stay for any or all of his contribution but I will read the Hansard carefully. The logical extension of the two ministers’ views and the policy approach of the government is this: if it is New Zealand wages tomorrow then it is Indonesian, Indian and Chinese wages next week. It is a view which says we can only be internationally competitive if we pull down labour input costs; that is the only way that we can be internationally competitive and that is the only way we can be competitive in the Asia-Pacific region against India and China. There is nothing about going to the next level of productivity improvements and investing in infrastructure, skills, research and development—all of the things which have traditionally made us a great trading nation and an attractive place for capital investment.

Let us see how the attack on wages goes, firstly through the minimum wage. What do we know? We know that the minimum wage is currently $25,188. We know that, if the government had had its way with its submissions to the Australian Industrial Relations Commission over the last 10 years, the minimum wage would be $60 a week lower, or $2,600 a year worse off. In other words, the minimum wage would not be $25,188; it would be $22,588. If the Australian Chamber of Commerce and Industry had had its way over the last 10 years through its submissions to the Industrial Relations Commission, the minimum wage would be $95 a week lower, or $4,940 a year worse off. In other words, it would be $20,248. That is the way the minimum wage goes under the government’s and the ACCI’s submissions. It is a straightforward attempt, which the government is now seeking to make through the back door of the low pay commission, to reduce the minimum wage in real terms. Why is that? Because the government says, ‘If we reduce the minimum wage and reduce wages at the lower end of the spectrum, a couple of things will magically occur. We will become more competitive internationally, we will become more productive and we will create more employment.’

The Leader of the Opposition asked a question precisely on that point in question time today. We have in Canberra cleaners who work in the hotel industry who are on the minimum wage. This point was put perfectly clearly by the Leader of the Opposition: if you are a cleaner on the minimum wage cleaning a hotel, the logical extension of the government’s approach is that if they reduce the minimum wage that you are on from $25,188 per year to $22,588 a year—$2,600 less—a number of things will magically occur. Firstly, the cleaner will become more efficient; secondly, our economy will become more productive; and, thirdly, somehow magically we will have two cleaners to clean the same number of hotel rooms. It is an economic nonsense.

The shadow Treasurer made the point that the most recent OECD report, its 2006 Employment Outlook, released overnight, says:

No significant direct impact of the level of the minimum wage on unemployment is identified.

And that the:

... minimum wage could encourage higher participation by helping to make work pay for the low skilled.

There goes your OECD-IMF argument, and I note that the director-general of the IMF, who was here during the week, spoke in glowing terms of the fair and flexible industrial relations system—and I was happy for that endorsement of our approach.

The second area of attack on wages comes of course with AWAs and the attack upon conditions and entitlements—the penalty rates, the shift allowances and the leave loadings. We have drawn the parliament’s attention to a couple of examples. We have had the Spotlight example. Under the government’s minimum standards, the Spotlight AWA knocks off penalty rates, shift allowances, leave loadings and the like for the princely sum of a 2c an hour increase in your pay rates. By the average rule of thumb, you are 90 bucks a week worse off. I just happen to have one of my 2c coins here.

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