Solving problems that don't existSydney Morning HeraldNovember 18, 2005New laws for labour and security aren't necessary. They're political, writes Peter Hartcher.
YOU can't object to John Howard's stated aim with the two big measures he now has before Parliament - keeping the economy strong and national security tight. You can wonder, however, whether these bills are sufficient - or even necessary - to achieving those aims.
Howard is right to lampoon some of the silly Labor fearmongering over the industrial relations changes. Kim Beazley's claim, for instance, that "this has gone beyond Americanisation of workplaces, perhaps the South Americanisation of workplaces".
The new Fair Pay Commission that would set minimum wages is prohibited by its charter from cutting wages in nominal, or dollar, terms. But it will have the power, at the extreme, to hold nominal wages unchanged. This means that, as inflation rises and wages stay the same, inflation could gradually eat into the real value of the minimum wage.
So, at most, the real - that is, inflation-adjusted - minimum wage could fall by the rate of inflation, which is about 2 per cent to 3 per cent a year. This would not be pleasant for workers who depend on the minimum wage. Whether this happens is up to the new commission. But it is hardly the South Americanisation of workplaces.
Lower real wages would probably help create new low-paying jobs, and help cut the unemployment rate, so long as the economy remains buoyant.
But what does Australia need for its strong economy to continue, for its 15-year-old economic expansion to be extended? Does it need the changes that Howard is promoting?
The central problem with the Australian labour market is not that wages are out of control; it is that there is a severe shortage of skilled labour. The Reserve Bank's wage-price index shows average wages rising at an annual rate of 4 per cent, which is brisk but within normal, tolerable ranges.
The national wages bill, as a proportion of the total economy as measured by gross domestic product, is 54.2 per cent, unchanged from a year earlier and at a historic low. When Bob Hawke took power, it was 61.7 per cent. When Howard assumed office a decade ago, it was 55.8 per cent.
Capital and labour in Australia agree that there is not a wages crisis; there is a skills crisis. The Business Council of Australia has been campaigning on this for three years.
"You had not only the long-term issue of skilling up an ageing population, you also had the issue of skilling up for short-term pressures, especially in construction and building and resources and mining," says the council's policy director, Maria Tarrant. "Then with the Financial Services Act and the move to international accounting standards, you also saw shortages in professional services like accounting."
The federal Department of Employment lists alphabetically the job categories where there is such a shortage that Australia is seeking skilled migrants. It lists 31 professions, starting with accountant and anaesthetist and ending with sonographer and surgeon. Plus it lists 26 trades, starting with automotive electrician and bricklayer and ending with vehicle painter and welder.
The national secretary of the Australian Workers Union, Bill Shorten, points out that the Bass Strait oil platform was shut down five times last winter because of the shortage of skilled operators. "Australia is training the same number of people in traditional trades as we were in the early 1990s. We have a steel industry that employs 20,000 people but it is employing only 120 apprentices."
In its statement on monetary policy 11 days ago, the Reserve Bank described the shortage of skilled workers as "acute". It talked not of a shortage of workers or a general wages break-out, but of a shortage of "suitable" workers. It warned that it might have to increase interest rates if there were any acceleration in inflation. And the likely sources of inflation? Any further increase in oil prices, and any further pinch in the shortfall of skilled workers.
In other words, business, labour and the authorities concur that we are in the grip of a serious crisis. What will Howard's workplace changes do to address the skills shortfall? Nothing.
The proposals supply a solution to a problem that Australia does not have. And the Government is not adequately addressing the real limitations on future growth. The workplace reforms are neither necessary nor sufficient.
What about the anti-terrorism legislation that crimps traditional rights and freedoms such as the presumption of innocence and the freedom of speech?
Is it necessary? The apparent success of the police and authorities in swooping on alleged cells of terrorists in Sydney and Melbourne suggests that existing laws are adequate to allow pre-emptive action against terrorists.
All of the action so far has been done under the existing laws, not the proposed law. This strongly suggests that the authorities have all the powers they need.
And the Federal Government, beyond simple assertions, still has not made any serious effort to explain that the anti-terrorism bill is necessary. All the experts here and abroad warn us that one of the most important ways of defeating the danger of home-grown Islamicist terrorists is to make sure that the authorities work closely with moderate Muslims, the first line of defence against the emergence of extremists.
Leading Muslim leaders in Australia have said that the anti-terrorism bill, by granting unnecessary and unexplained powers to the police, implies a lack of trust in Muslims in Australia and creates the potential for victimisation and alienation.
The anti-terrorism bill, like the industrial relations bill, seems to be both unnecessary and insufficient, and perhaps even counterproductive.
So if these changes are not based in sound policy, what are they based on? The inescapable conclusion is that they are political, and only political.
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