Matt O'Sullivan (WA, Liberal Party) Share this | Hansard source

When the Reserve Bank paused its interest rate hikes last week, long-suffering Australian families across the country breathed a sigh of relief. However, no-one was more relieved than the Treasurer, whose high-wire act with the Australian economy has been an abysmal failure. As always, the devil is in the detail, and any reading of the RBA's recent decision to hold interest rates can only conclude that more pain is likely on the way. In its decision the RBA said:

Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe … The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.

The board also reiterated:

Wages growth has picked up in response to the tight labour market and high inflation. At the aggregate level, wages growth is still consistent with the inflation target, provided that productivity growth picks up.

That's the key point. Yet despite the RBA saying that its forecast for CPI inflation won't be back to within target band until late 2025, here we are on the eve of the government's latest round of Whitlamesque intervention in the economy.

Rather than growing labour productivity, the government wants to grow union membership. Rather than addressing the real areas in the economy that need macroeconomic reform, the government seeks to address how to strengthen unfettered trade union involvement in the workplace. These pending new industrial relations laws are not warranted, nor are they supported by the facts. The government has not adequately proven its economic rationale for introducing these radical new IR laws, beyond its hyperfixation, its obsession, with ensuring its traditional owners are appeased—not forgetting, of course, the upcoming ALP National Conference. In short, this bill will be a solution looking for a problem. It doesn't address how to grow productivity. It's just utopian ideology on how to grow one lever of the economy, which, when isolated from productivity gains, will have a pernicious impact on the wider economy.

If anything, some key stakeholders are claiming that the proposed provisions of the bill are in fact antiproductive. Last week, during his address to the National Press Club, the CEO of the Australian Industry Group, Innes Willox, said:

The link with productivity is the key—the more productive we are the more we can be substantially compensated.

That clear link to productivity is what is missing in these latest workplace proposals and in the consultations around them. No real, demonstrated productivity benefit is ever given.

The Productivity Commission has flagged how to improve and grow labour productivity: through education, digital technology, infrastructure, skills and training, and taxation reform, just to name a few. With the services sector increasingly dominating our economy, this sector also provides the greatest opportunity for productivity improvement, and the Productivity Commission in its Advancing prosperity report has identified several key pillars to delivering this.

If the Albanese government is serious about tackling high inflation, it cannot continue to ignore the importance of productivity in our economy. We know that if productivity improvement is left unaddressed the pain caused by high inflation will become normalised. Worse, it will eat away at any wage gains that can be made. Put simply, families will never feel like they're getting ahead, and they're certainly feeling that now. Even the RBA acknowledged this in their recent decision, when they said:

… if high inflation were to become entrenched in people's expectations, it would be very costly to reduce later, involving even higher interest rates and a larger rise in unemployment.

The Minister for Employment and Workplace Relations is very fond of using slogans, one-liners and 10-second sound bytes; however, to benefit the national interest, he needs to begin talking about labour productivity. You don't hear those words come from his mouth. He needs to talk about that and about how his government has a plan to fix it, not impede it, and how they plan to pivot in the direction where the national prosperity is shared by all and not just by the barrackers of the narrow sectional interests of his political party's traditional owners, the trade union movement.