Institute for Private Enterprise

Home page Newsletters

More on labour market reform

30 October 1998

The updating of my report on The Case For Further Deregulation of the Labour Market for the Council of Federal and State Labour Ministers has been completed. Minister Reith has indicated that it will be published shortly. Subscribers will receive a copy promptly. The proposal by five economists to reduce unemployment to 5 per cent by freezing wage for the low-paid will help the debate.

Meantime, the ground is being prepared with articles on aspects of labour market regulation (see attached). In addition, early in the month I presented a preliminary version of the report at the Economists Conference in Sydney, where I was given five minutes in the main forum (producing an irate response on one point from prominent left-winger Prof John Quiggin) and twenty minutes at one of the side sessions. I have also had accepted by the Australian Bulletin of Labour an article on the US labour market. This is in part a critique of the attempt by Prof Bob Gregory to disparage the US' performance. He is being given the opportunity to comment.

One particularly interesting point from the update comes from a recently published analysis by the Reserve Bank of New Zealand. Hitherto the perceived wisdom has been that little improvement in productivity growth has occurred since the deregulation of the NZ labour market in 1991 and other micro reforms. However, this analysis suggests a significant pick-up — and it is not cyclical (see attached graph).

I have also been trying to inject some sense into the debate about the 'fairness' of the Government's tax package. This issue has gone quiet temporarily but will re-emerge during the Senate inquiry into the GST. The Government has not handled this aspect well. It has missed a key point, viz, that even after the package takes effect, higher income earners will be paying a higher proportion of their incomes in tax than after Labor's 1993-94 tax cuts. Letters also argue against excluding food from the GST, which would surely undermine a major purpose of the tax.

I was invited to present a paper on Competing for the Welfare Dollar at a public meeting called to discuss assistance to the disabled. Copies of the paper are available on request.

The Victorian police's policy regarding the handling of pickets and demonstrations is continuing to be pursued. Contact with an off-duty police officer (at a wine tasting!) again confirmed the very considerable unhappiness within police ranks at their inability properly to perform their function because of constraints under which they operate. Intriguingly, an existing police commissioner and an ex-commissioner have now published a book (Days of Violence) on the 1926 police strike. Chief Commissioner Comrie includes the following comment on the back:

"Brinkmanship is a feature of police industrial relations in the last years of the millennium. Days of Violence contains powerful lessons for all parties — the Government, the police administration, the police association and the members".

It will be recalled that, during the waterfront dispute, the police threatened industrial action if they did not secure the employment conditions being sought and the Secretary of the VTHC, Leigh Hubbard, has claimed that a strike was only just averted.

Environmentalists continue to defy common sense. Jabiluka is a current prime target and I have attacked the visit by a UNESCO inspection team (see attached). Incidentally, I have purchased a copy of the excellent RDF(UK) television series Against Nature. This exposes in a clever way the wrong-headedness of most of the environmental lobby groups and the very serious adverse effects their policies are having on poor people in less developed countries. If any subscriber would like to borrow this, it is available.

Home page Newsletters