Mike Kelly (Eden-Monaro, Australian Labor Party) Share this | Hansard source

I really feel privileged to be able to add my voice to that of my colleague the member for Makin in this debate, because this is a serious issue. We have seen a pattern of behaviour emerging now for some time where, when a coalition government gets confronted with rejections by the public of policy proposals such as Work Choices or the destruction of Medicare, there is always some alternative door it tries to go through—or it has a plan for death by a thousand cuts to attempt to bring down these structures that have served the purpose of providing not only universal health care for our community but protection of workers' conditions and rights. This, again, is disturbing in the context of the way we've seen policy development entered into without a substantive policy process.

There used to be a tradition in serious policymaking in this country where you would go through green and white papers, draft legislation and consultation, but this legislation is another example of the rush in which things get done now. I guess a lot of the internal dynamics of this government support that, because any proper consultation or development process, even within the party room, leaves itself open to being leaked, to being attacked, by the insurgents within the party room.

We have here a major piece of legislation, with five schedules in 80 pages, amending five other pieces of legislation. It should have been dealt with by a Senate employment committee inquiry going thoroughly through it. I am privileged to serve on the Parliamentary Joint Committee on Intelligence and Security in an extremely bipartisan way, with a good group of people from both sides of politics. Inevitably, and always as a matter of course, we are presented with legislation that is in the national security space. Every piece of legislation that ever gets submitted to that committee always emerges at the other end of that process the better for it. It is a thoroughgoing process. We have public inquiries. We have closed-door inquiries. We're open to public submissions. This results in good policy. So I have a major objection to the way policies like this are being handled in this space in particular.

There are again real concerns about the agenda, following on from what we saw with Work Choices—that this legislation is just another way to destroy the union movement. We saw that philosophy writ large under the member for Warringah's jurisdiction as the former Prime Minister, and there were effectively two strands to his attack in that space. One was to roll over on any of the free trade agreement negotiations which we were involved in. It is apparent that the Korean free trade agreement was the death knell for our car industry. It was effectively the last straw for our car manufacturers. As my colleague said, no-one in the government was interested in defending that industry, because it was a unionised workforce.

Then Prime Minister Abbott compounded that approach by destroying all of the hard work that had been done during the time of the Labor government to put us on track to become a shipbuilding nation, particularly and initially in the national security space in terms of our maritime capabilities. We had developed the Future Submarine Industry Skills Plan, which was going to set us up not only to become a shipbuilding nation in that maritime naval space but also to potentially branch that out into commercial shipbuilding. But he made some massive strategic errors in that process, and they put us behind the eight ball in having a timely delivery of our future submarines. He and his government initially attempted to go to the Japanese. Again, it looked like it was being done in the context of promoting a free trade agreement with the Japanese for a vessel that would never have suited any of the capabilities which we needed it for and that certainly wouldn't have been built in Australia. They gave away our supply vessel construction. I had advice from the Department of Defence that it not only could have been built here but should have been. I still have that advice to this day. It specifically spelled out how we would have avoided the valley of death. This saw the bleeding-out of our workforce, which, while in government, we had spent a billion dollars on rehabilitating and restoring capacity to. So those jobs were being lost. Again, it seemed that the approach of the former Prime Minister, the member for Warringah, was simply to destroy any industry that was unionised. It seemed that he had a philosophy of directing his efforts so as to create an economy that was services based, where we would no longer make anything serious.

That's not our view. Certainly I am pleased to see that the rhetoric has changed since the advent of Prime Minister Turnbull, but we are yet to see flesh on the bones of how we will deliver those workforces for our shipbuilding industry. But this bill obviously seeks to target arrangements that unions enter into with employers and that benefit employees in a range of ways. A lot of the worker entitlement funds that we are talking about here not only protect and ensure workers' entitlements but provide important services to them, such as training, safety training in particular; counselling support and suicide prevention; and the funding of OH&S officers.

At the same time—and I salute the Minister for Veterans' Affairs for doing this—these issues have been well-recognised at last in the Defence workplace in relation to the ex-Defence members. These are the sorts of measures we are trying to ensure are in place so that we can prevent Defence member and veteran suicide, and we should be no less promoting these measures in the workplace in general. So anything that attempts to undermine that should be opposed. We have deep suspicions about where this will go. We simply need to probe that more carefully and that's why this legislation needs much greater forensic examination.

We are also deeply concerned about how much discretion it places in the minister, through regulation capability. That is of deep concern because the minister does not give us any confidence in their ability to ensure that the interests of workers are looked after in this process. So, from all perspectives, it looks to us that this is another attempt to erode, to destroy, the ability of workers to negotiate for good outcomes to look after their people. Really it reflects a philosophy that workers are widgets, that they are factors in the production process, but not something to be celebrated as part of the free market process of negotiation and bargaining. That collective bargaining regime has led to enormous gains in productivity in our workforce. If you look at the statistics on productivity, labour productivity gains have been enormous. We need to look, obviously, at continuing improvements in capital productivity, which is a job for the employers, but labour productivity has been outstanding. Notwithstanding that, we've seen a record decline in wages.

That is manifest in the situation of so many workers in Eden-Monaro who are crying out to me—they seriously are. This it is not a rhetorical point. I know this deeply from my personal contact with them. Also I am never left in any doubt about what people think in Eden-Monaro because, being a bellwether seat, it is surveyed to within an inch of its life. ReachTEL polls that have been published in the media have indicated that nearly 60 per cent of my constituents are really angry about cuts to penalty rates. When you get to Queanbeyan the rate goes up to about 79 per cent. So there is no question about the attitude of my community. No wonder! The McKell Institute's study on the impact of penalty rate cuts in rural and regional Australia indicated how heavily that burden would land on them. We have seen, in particular, that the retail and hospitality sectors account for something like 18 per cent of rural and regional workers. So when penalty rates are cut in rural and regional areas it has a particularly severe impact.

We know that the average income earned by workers in retail and hospitality is the lowest of any industry. The compounding effect is that, if you partially abolish penalty rates in retail and hospitality, then rural Australia loses somewhere between $370 million and $691 million per annum, and there is a loss of disposable income of between $174 million and $343 million, as modelled by the McKell Institute. In New South Wales that figure is between $118 million and $220 million. So that loss of disposable income has been enormous. I have seen estimates that just in the Monaro region $16 million is being ripped out of our local economy.

When we were in government and were being hit by the GFC, the advice of Ken Henry and the experts was: we've learnt from previous mistakes in dealing with recessions. What you have to do is go hard, go early, go households, because household income and consumption is somewhere between 50 and 60 per cent of the whole GDP story, the economic story, in this country. When you smash the ability of households to spend, particularly in the retail sector, you are going to do the economy a massive amount of damage. This was highlighted in an open letter written to the government by 78 expert economists. In that letter they spelt out that the penalty rate cuts in those particular industries, where they don't have enterprise bargaining agreements in which these things could be traded off against some other benefit, simply would not create new jobs. It just simply would not. The letter stated:

While it is doubtful that lower penalty rates will result in any measureable increase in total employment in the retail and hospitality industries, there is no doubt that this decision will reduce incomes for some of the most insecure and poorly-paid workers in the economy. Statistical data confirm that the retail and hospitality workforce is disproportionately reliant on women, immigrants, and youth …

Just the other day, when I was at the National Museum here on a Sunday, having lunch with my wife, one of the young workers there who lives across the border, in Queanbeyan, recognised me, singled me out and said: 'Thank you so much for fighting for our penalty rates. It was the only way I was going to be able to stay at university and now I'm really struggling.' This is having a big effect on people in my community, as they raise with me directly.

Those 78 economists highlighted that. That is the expert evidence. In addition, that's been borne out by statistics that have been revealed in just the last couple of weeks. I guess it's a situation of 'I told you so' from these economists, because we had an incredibly weak retail sales result. It was described as 'a shocker'. It was almost the worst for the period of August in 4½ years. We saw a downward revision to July's numbers and a 0.2 per cent fall in expenditure in that sector. That was spread across the country, with sales in every state falling. The biggest declines were a 1.8 per cent slump in the previously booming restaurant and cafe sector and a one per cent drop in household goods sales. It coincided exactly with the introduction of these penalty rate cuts.

When you look at it from the point of view of people's ability to go and spend money on a coffee or a doughnut, or on household goods, and put it in the context of the other major issue of Australia's household-debt-to-income ratio, which hit another record of 194 per cent, with more than two-thirds tied up in home loans, you can see the double-whammy pressure that's hit these people. In my region, of course, it's exacerbated by the fact that we have a highly casualised workforce. If you're working only two or three days a week or a few hours a week, those penalty rates were putting food on the table or a roof over your head. That's just the simple mathematics of it.

In the context of wages growth continuing to flatline at 1.9 per cent, the lowest since the last recession, from 1 July thousands of retail and hospitality workers have lost their penalty rates. If you cut people's take-home pay, they'll reduce their spending on discretionary items, such as household goods and pleasurable things like going out to cafes and restaurants. So a massive hit is being delivered to the economy and a hit is being delivered to workers through an undermining of their ability to represent themselves. It is to undermine the union movement and prevent it from entering into enterprise bargaining agreements with employers where a penalty rate could be traded off in exchange for a benefit which is actually in the interests of the economy. The collective bargaining regime has always been of benefit to the economy. The Hawke-Keating government delivered us an industrial relations regime that has seen great productivity growth and benefit to the economy. Taking that equation out of the economy will only result in further recession and a downward-spiralling economy. That is the simple fact of it. That is what the economists have highlighted.

All of these measures together are not in the interests of the country, not in the interests of the economy and not in the interests of our struggling low- and middle-income workers out there, who are crying out to us to defend them against these savage attacks on their pay and conditions and their safety standards.

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