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• An Opportunity To Respond To Terrorism
• Labor: "Australia All Over"? Why Liberals Are Losing
• Katter Resigns - But Farmers Thrive
• Reith Resigns - But Australia"s Loss
• OECD Figs: Employment Could Be Increased By 600,000
• Judicial Intervention: The Crisis Within The Legal System
• Costello Reveals: Coalition Increased The Tax Burden
• Globalisation: The Chinese Threat
• The Bats Are Winning
• Privatisation Declines: Only $US100 BN Last Year
• "Hurrah For The New Tory Government"
• The IT Recession We Missed - As The Central Bankers Did Too
• Australian Strategic Policy Institute
• Norway - The Place To Be

AN OPPORTUNITY TO RESPOND TO TERRORISM

The ghastly terrorist attacks in the US are much more than an attack on the US itself. The US has been and continues to be the world’s leader in promoting the liberal ideals that are anathema to those who operate hierarchical societies and deeply resent the challenge to their power that liberalism provides. The opportunity to make a substantive response should not be let pass and should be pursued not simply as helping America: action to protect common values would be helping ourselves. We should not be deterred by the usual warnings that punishment may worsen relations with some countries and/or produce more hostile reactions.

LABOR: AUSTRALIA ALL OVER? WHY LIBERALS ARE LOSING

With Beazley continuing to show poor leadership abilities (highlighted in the debacle over the Knowledge Nation nonsense), the Coalition’s win in the Aston by-election and its "strategic" move on immigration have stirred hopes in some Coalition breasts. Perhaps the continuing economic recovery since the December quarter "blip", and the continuing stream of vote-catching expenditure, are starting to work?

However, the odds still favour an "Australia all-over" Labor win – that is, in addition to winning federally Labor looks like soon being in government in all states and territories as well. The main reasons are basically simple: Labor has moved sufficiently far into the centre to persuade swinging voters it will not allow a repetition of past absurd socialist policies while the Coalition has not moved sufficiently far away from the centre to differentiate itself, has offended some swingers with its handling of the GST and has not adequately explained the benefits of its economic and other reforms (and those of the preceding Labor Governments that it should have been praising).

Nor has the Coalition done enough to bring out the serious potential problems in the main area where the two parties differ – industrial relations. Incredibly, Morgan polling in Aston on who is better at handling industrial relations showed Labor 13 percentage points ahead, with an even split on who is best at reducing unemployment. The myriad problems with Labor’s proposed re-regulation of employer-employee relations should by now have put the Coalition well ahead in this area.

More generally, the Coalition should be promulgating further reforms such as:

1. The conversion of the AIRC into a mediator, its replacement by a body charged with ensuring competition in the labour market (as the ACCC does elsewhere), and a change to social welfare policies so that those on low wages and also living in low income households (half of low wage earners live in higher income households) have their living standards protected in the less regulated situation.
2. A reduction in welfare dependency and an encouragement of self-reliance by a marked reduction in the access of middle and higher income groups to social security and health benefits. Unless this is done, the ageing of the population will require a major increase in taxation to fund the increasingly large assistance that existing policies will require.
3. Subject to 2 and in conjunction with it, a reduction in taxation with a phased introduction to a single flat rate of income tax as close as possible to the 30 per cent company tax rate. This would help compensate those who will have to provide more of their own health and social security costs.
4. Further privatization of government authorities/enterprises (including Telstra), and financial encouragement to the States to extend such privatisation to the education and health sectors (as Blair has started in the UK).
5. A reduction in the duplication of provision of government services as between the Commonwealth and the States, with the States becoming predominantly responsible for education and health services. Ironically, Prime Minister Howard responded to one recent criticism of the performance of the public health sector by pointing out that the States are responsible for delivering this service.
6. A firm confirmation of the reductions in protection, particularly motor vehicle protection, already scheduled.

7. An increase in defence expenditure from the pre World War 11 levels (as a proportion of GDP) to which it has been allowed to fall.

 

KATTER RESIGNS – BUT FARMERS THRIVE

One example of the Coalition’s failure to get across the benefits from the reforms of the past 20 years or so has been provided by the decision of Queensland National Party member, Bob Katter, to stand as an independent. Katter is a long standing protectionist but the irony of the timing is that it comes just as the media has caught up – that is, there is less concentration on the problems of life in the rural sector and more of a realization that, in recent years, things have been pretty good after all. A start has been made to overcoming the "recognition lag".

The attached article by my brother, to which I contributed, brings out some of the favourable developments in rural sector. The large improvement in agricultural productivity has been fundamental in allowing the sector to combat the vicious protectionism it still faces in overseas markets – and to overcome the futile attempts by Australian politicians to respond with our own domestic version. The sale of the last bale of wool accumulated under the disastrous reserve price scheme is an important symbol. But none of the authors/promoters of that scheme have acknowledged they were wrong.

REITH RESIGNS – BUT AUSTRALIA’S LOSS

While understandable, the decision by Peter Reith to resign with effect from the next election is a blow to Australian politics. My article in the AFR (attached) details some of the reasons but does not spell out the appalling treatment given Reith in the media. It’s failure to support him (and Corrigan) in breaking down restrictive practices on the waterfront, and it’s making of a mountain-over-a-mole-hill over the subsequent misuse of his phone, will in due course be seen as one of the disgraceful episodes in our history.

Unfortunately, his departure is another sign of the centrist move by the Coalition and it’s failure to really push the reform agenda and its benefits.

OECD FIGS: EMPLOYMENT COULD BE INCREASED BY 600,000

This year’s OECD report on the Australian economy provided a textbook endorsement of the economic reforms that have been implemented while at the same time emphasizing the need for further progress. While it’s call for further easing in the regulation of employer-employee relations was diplomatically expressed, it included the significant revelation that comprehensive agreements determining all work conditions and pay requirements - "thus completely replacing awards" - possibly extend to only about 12 per cent of employees covered by federal awards.

The proportion of the working age population employed (EPR) is an important indicator that receives little attention in Australia but is used by the OECD as a major comparative measure of labour market performance. It is probably more important than unemployment because many governments use social welfare systems to disguise the real rate of unemployment for political reasons. This is particularly true of certain European countries although Australia has also "enticed" many people on to social welfare who would otherwise be unemployed. In a sense the expansion in social welfare has substituted for labour market reform.The annual OECD Employment Outlook published in June 2001 includes EPR measures for the15-64 age group for the 2000 calendar year. This shows a marked improvement in Australia's EPR - from 67.7 per cent in 1999 to 69.1 per cent in 2000. In 1996 the Australian proportion was 67.3 per cent.

However, for Australia the year 2000 was the peak of the economic cycle of the 1990s and the EPR for that year should thus be compared with previous peaks in 1989 (68.1 per cent) and 1973 (68.6 per cent). While the 2000 figure thus shows a slight improvement, those earlier peaks were "achieved" in a more regulated labour market. We should surely have done better than 69.1 in a period of above-trend economic growth and reduced regulation. 

Moreover, comparisons with less regulated labour markets continue to show that we are under-performing compared with countries that have less regulated labour markets and similar political systems. Thus, if we had had the same EPRs as in the US and UK in 2000, we would have had (respectively) about 600,000 and 400,000 more employed. For most earlier years Australia would have had even higher employment figures with the same EPRs as the US and UK.

Yet we should have higher not lower EPRs than those countries. They (and New Zealand – which also has a slightly higher EPR) have considerably higher proportions of their working age populations that are "less employable" because of their lower average literacy and numeracy.

In short, while Australia's performance at the cyclical peak is better than it was, these comparisons with similar OECD countries continue to add weight to the need for a major reduction in labour market regulation here. It is worth noting that a recent US survey confirmed a relatively high degree of job satisfaction there – 69 per cent said they would "decide without hesitation to take the same job again", up slightly from 64 per cent in 1977.

JUDICIAL INTERVENTION – THE CRISIS WITHIN THE LEGAL SYSTEM

My paper to the Samuel Griffith Society meeting on 1 September has already been circulated to subscribers and is on the web site www.ipe.net.au. It was followed by two articles, one in the Herald Sun and one in the AFR (both attached).

The paper deals mainly with the unwarranted intervention by sections of the judiciary (using that term in the broadest sense) in employer-employee relationships. But this interventionism by "judges" who have assumed a self-appointed political role extends far beyond that important area and it is probably not going too far to say that the legal system is in crisis as to what its proper role is.

This is illustrated by the fact that the High Court itself has previously taken Federal Court judges to task on several occasions for their interventionism and has over-ruled their decisions in immigration cases basically on the ground that they constituted an unjustifiable usurpation of the functions of other branches of government. One suspects that the Government’s handling of the current immigration dispute reflects a deliberate strategy to limit as much as possible the opportunities for political judges, such as Justice North, to review administrative decisions made on whether or not a person should be treated as a genuine refugee.

Of course, in industrial relations the main responsibility for reform rests with governments. But the judiciary (using that term in its broadest sense) is making decisions on employer-employee relationships that provide a basis and need for reform. First, it is clear that there is a fundamental misunderstanding within the judiciary of how the labour market works and of how inefficient and inequitable the outcomes of decisions often are. Second, the industrial tribunal/judicial system is dominated by political "judges" who allow their decisions to be heavily influenced by their political perspective. What is required is a major reduction in the capacity of the judiciary to intervene in employer-employee relations. As suggested above, one approach would be to create an authority charged with ensuring competition in the labour market, as the ACCC does elsewhere, and to convert the AIRC itself into a voluntary mediation body.

The decision to establish a Royal Commission into the construction industry is relevant. As argued in the attached excellent editorial in the AFR, the industrial situation in that industry really requires not another inquiry but effective action, as happened in NSW when the Building Industry Task Force was established after the Gyles royal commission. That said, the establishment of another inquiry is a clear indication of the failure of the current system (both "judges" and police) to deal with the violence and intimidation

COSTELLO REVEALS: THE COALITION HAS INCREASED THE TAX BURDEN

In an article in The Age on 3 July, Treasurer Peter Costello noted that the income tax cuts by the Coalition in 2000-01 were four times larger than if tax thresholds had been indexed since 1996 and about double the size if indexation had applied since 1993. He also pointed out that, even if the GST is treated as a Commonwealth tax (which the Statistician does), the estimated ratio of tax to GDP in 2001-02 of 23.8 per cent is lower than in the late 1980s under Labor when the unemployment rate was similar and when the budget was also in surplus.

However, he did not mention that the Commonwealth tax to GDP ratio was only 22.8 per cent when the Coalition took office in 1995-96 or that it was only 21.5 per cent when the Whitlam Government left office in 1975-76. Admittedly, the resultant increase is less than the increase in the tax burden of OECD countries on average, which is up 5 percentage points since 1980 and 9 points since 1965.

In short, the "evil" influence of globalisation, let alone economic rationalism, is a long way from achieving small government!

GLOBALISATION: THE CHINESE THREAT

One major complaint about globalisation is that it destroys or undermines national "culture". It used to be said, for example, that Australians had a "cultural cringe" centred on British influence. That has largely gone and been replaced by one centred on American influence. This is reflected in the attacks by S11 protesters, not only in Australia but around the world, on that symbol of American culture, McDonald’s.

But, given the size of China and the agreement of the authorities there to allow "entrepreneurs" to become members of the Chinese Communist Party, perhaps the Chinese threat is even greater. After all, McDonald’s only have 28,000 restaurants world wide, while Italian culture is being destroyed (sic) by the 20,000 Chinese restaurants already in Italy alone (for more such "McFactoids", see AFR 30 June)!

THE BATS ARE WINNING

Your correspondent can assure you that there is nothing in the story, doubtless spread by greenies, that the reduction in the number of bats in the Botanical Gardens from 20,000 to 5,000 is due to culling by desperate, selfish Melbourne residents trying to protect their gardens. The Director has made it clear that, although getting approval to cull up to 50 per cent, "it was never our intention to kill up to" that proportion of this lovable species.

The truth is that most of the bats have gone north on their holidays and will shortly be welcomed back by all nature lovers as they continue their fertilization of the gardens.

PRIVATISATION DECLINES: ONLY $US 100 BILLION LAST YEAR

The OECD reports a decline in proceeds of privatizations from $US 140 billion in 1999 to "only" $US 100 billion in 2000. The reason? Mainly because there are fewer and fewer government enterprises left to sell, particularly in the bigger countries.

Last year’s privatizations were concentrated in the telecommunications area, where Australia lags in the privatization stakes.

"HURRAH FOR THE NEW TORY GOVERNMENT"

Privatisation is, however, extending into the UK education and health sectors. This helps explain the above heading to an article in The Times by William Rees-Mogg after Tony Blair easily won his second term.

According to Rees-Mogg, Blair proposes a "Tory Education Bill (to) increase the number of specialist schools, allow private enterprise to take over failing private schools, allow successful schools more freedom from the national curriculum, give head teachers more money and bring private businesses into the management of schools". He also proposes reforms to the National Health Service ("which greatly annoyed Unison the public sector union") that will include decentralization and will expand private involvement in both financing and managing the NHS. Blair’s program is "more Tory than the Tories would have felt able to push through", according to R-M.

It is a pity that Bracks can’t take a leaf out of Blair’s book. After all, the Herald Sun recently quoted him as stating that it was "rubbish" to believe every Kennett policy was wrong and that every Labor policy was necessarily right. Needless to say this was not reported in the other Melbourne paper that continues to misrepresent what happened during the Kennett era.

THE IT RECESSION WE MISSED - AS THE CENTRAL BANKERS DID TOO

The end of the IT "bubble" in the US (in both real and financial terms) has slowed its economy to a walk as the extent of IT over-capacity there has been recognized, IT investment has ground to a halt and US sharemarkets are adjusting to more realistic prices. However, the relatively small size of the IT sector, and the comparative health of the rest of the economy and of basic economic policies, should allow the US to avoid an economy-wide recession –subject to possible adverse effects from the terrorist attacks.

Countries like Singapore and Malaysia are in recession, though, primarily as a result of their economies’ heavy reliance on high technology production for overseas, mainly American, markets. Japan’s already poor economic situation is worsened too.

As I have previously suggested, the substantial improvement in our policy fundamentals has left Australia without major imbalances. Accordingly, although growth has slowed to around 2 per cent pa in adjusting to the pre-GST over-expansion in domestic demand, the eventual adverse effects on our exports from the slow down/fall in demand overseas should not prevent continued growth.

It is fortunate that Australian governments did not succumb to any extent to the advice from the "picking winners" clan and start providing large subsidies for IT production after that sector took off in the US. As a recent OECD report concluded, "the key to benefiting from IT and communications is to focus on policies to foster its use, rather than its production" (the report was aptly titled "The New Economy: Beyond the Hype"). Australia has, of course, become a big user even without "fostering" policies.

The failure of the US monetary authorities to handle the ups and downs produced by the IT bubble raises further questions about the capacity of monetary policy to "fine tune" interest rates to keep the economy on a steady growth path. Monetary policy, both in the US and here, is still too oriented to the short term. Fed Chairman Greenspan recently acknowledged that "the country must develop better ways of measuring its economy" -" we need far more information than we currently possess". While this referred mainly to the effects of swings in asset values, it points to the inherent limitations of the policy and the need to focus more on medium term objectives.

AUSTRALIAN STRATEGIC POLICY INSTITUTE

Yours truly has been appointed to the Board of this new think-tank (ASPI) that has been created on a bipartisan basis to provide an independent view on defence/strategic policy. With a small staff and drawing on outside experts, it will publish research projects on a range of issues. Although funded by government, the think-tank will be able to canvass issues that would not normally be the subject of Ministerial or official discourse.

NORWAY – THE PLACE TO BE

Norway has been in the news because of the attempts by the Norwegian ship captain to land in Australia the "refugees" he picked up in Indonesian waters. He should have taken more notice of the UN report that picked Norway as the best country in the world in which to live (with Australia coming only second). But, as the Norwegian authorities had recently sent home immediately a busload of "refugees" that arrived in Oslo from Bulgaria, he doubtless recognized the futility of taking his refugees back even to the best place in the world.

 

 

Reith’s departure is cause for concern

(AFR 3 July 2001)

Far from being a free-market ideologue, Peter Reith was a prudent conservative who’ll be missed, argues Des Moore

That Defence Minister Peter Reith won’t stand for re-election is a loss not only for the Coalition but for the country. Australia can ill-afford to lose experienced politicians of such quality, particularly those prepared to advocate and promote the hard economic reforms that most regard as in the national interest.

Mr Reith has been no ordinary advocate either. While some have resented his often forceful presentations, they usually reflected the comprehensive briefs he had prepared and his confidence in their basic theses. All too frequently our politicians have neglected to prepare themselves adequately when canvassing reforms. That Reith did his homework can be seen from the few policy questions asked of him in Parliament by the Opposition.

Those who have mistaken his firm advocacy for an unbending attitude have also overlooked his capacity for patience and compromise. This was well demonstrated by his long drawn-out negotiations with then Democrats leader, Cheryl Kernot, over the Workplace Relations Act 1996; and by his relentless but well-formulated pursuit of further labour market reforms after 1996.

It was not Reith’s fault that the reforms allowed by the act fell well short of what is needed. There can be no doubt that they have improved the flexibility of employer-employee relations and led to more productivity-enhancing bargaining at the individual and enterprise levels. The limitations placed on the Australian Industrial Relations Commission’s wage setting role was a significant step forward.

He has also displayed both the courage and the capacity to tackle the hard issues that inevitably arise when reforms require the breaking down of existing monopolies. Nowhere was this clearer than during the waterfront dispute, during which he received minimal support from either the judicial or police services despite the obvious criminal activity in the picket lines.

The latest productivity figures of over 25 crane lifts per hour across every major Australian port (a national first) provide clear evidence of his and Chris Corrigan’s success in achieving what union officials described at the time as unachievable. The sour union welcoming of the Reith announcement tells its own story too.

It would be a mistake to see Reith as an ideologue with a fundamentalist, even free market, agenda. His approach has come more from the conservative side but one prepared to support and promote change where the case could be established. He has been a pragmatic politician, moving when he perceived it was the right thing to do in the national interest, even where it could offend vested interests.

Reith probably first came to attention as a serious contributor to policy issues during the 1988 referendum when then Attorney General Lionel Bowen proposed four constitutional changes that included a mini bill of rights. As shadow attorney, Reith revealed the weaknesses in all of them and the referendum was lost by a record majority.

But his most important contribution may have been to the formulation and enunciation of Fightback! prior to the 1993 election when he was shadow treasurer to John Hewson. Reith played no small part in the development of a reform package that was probably the most comprehensive and detailed set of policies ever produced by an Opposition. Little wonder that a pamphlet containing the main principles still hangs in his office.

Although industrial relations reform was described as the centrepiece of the Coalition’s economic policies, Fightback! included major changes in taxation, budgetary, monetary and structural policies. Its development provided the intellectual and political basis that the Opposition had lacked during most of the 1980s and it recognized the need for Australia to respond more quickly to mounting international competitive challenges.

Once the Coalition was elected in 1996, Reith continued to make a major intellectual contribution to government policy beyond his own key portfolio of workplace relations. His 1997 small business package on trade practices matters and his (leaked) 1998 letter to the Prime Minister on employment policy were two such examples.

Although there is a complex set of reasons for his departure, it undoubtedly sends a signal to the Government. Reith would be the last to claim academic prowess, but the move by the Coalition to the political centre diminishes the prospect for those prepared seriously to pursue the reform task.

Some would argue that, unless the Coalition more clearly differentiates itself from Labor, it will be extremely difficult to obtain a third term. Peter Reith’s decision will make the task of differentiation even harder. On both scores his imminent departure is a worry for Australia, too.

 

 

Inquiry won’t fix construction

(AFR Editorial 20 July 01)

The Federal Government is set to proceed with some form of inquiry into the severe industrial disruption occurring in the construction industry. But the question is whether such an inquiry is needed.

There is already a long history of inquiries and government responses to disruption in the commercial component of that industry. This led to the de-registration of the Builders Labourers Federation in the 1980s and the establishment of Task Forces in NSW and Western Australia to apply the rule of law.

The apparent success of those task forces suggests the order of the day should be more action rather than more words. That is, there are better ways for the Government to fix up construction than to call for a judicial inquiry into the industry.

The stark contrast between the commercial and other sections of the building industry is relevant, with the residential and civil engineering components being relatively free of disputation.

Of course, the large capital invested in high cost projects by the commercial section offers scope for union action to try to extract economic rents by threatening costly delays. And the aggressive anti-capitalist attitude of the Construction Forestry and Energy Union ensures that every extractive opportunity is exploited.

The situation has worsened in the last five years, with the building industry accounting for the largest proportion of working days lost outside coal mining.

The 1999 Productivity Commission report on work arrangements on large city building projects pointed out that, while employers in the industry can pursue legal remedies against such union disruption, this option has rarely been used. Indeed, as revealed by the Gyles royal commission report in 1992, open industrial disputes are often only the tip of the iceberg.

The Gyles commission reported that law enforcement had generally been absent in the industry and that the law of the jungle prevailed. The connivance of both sides in illegal activities was having obvious adverse effects on the commercial and industrial morality of all participants, including their acquiescence in 'no ticket, no start' policies and in collusive tendering.

The NSW specialist task force established after the Gyles report provides one model for response. For three years, it acted as an effective law enforcement agency for the industry through a co-ordinated use of civil remedies and criminal prosecutions, and prompt investigations of complaints.

But the Carr Government then abolished it, halted the recommended deregistration proceedings against the CFMEU and also eased the prohibition of compulsory unionism. In Western Australia, unions produced a similar response to the election of the Labor government when they immediately hoisted illegal," no ticket, no start", flags on all major sites.

But the NSW practice and tendering code established after Gyles for all government construction projects has continued to limit collusive tendering for State government projects and has also been adopted by the Commonwealth. If a national code breach is substantiated by the Employment Advocate, potential contracts with the Commonwealth Government are jeopardized.

In the absence of effective action at the State level, the Employment Advocate is proving an important authority for restraining employer and union restrictive practices. Indeed, a high proportion of all complaints to it come from the building industry, and many are resolved out of court.

Clearly, the Federal Opposition should review its decision to abolish what the Opposition Leader, Mr Kim Beazley, has called "the Orwellian Office of Employment Advocate".

And with only about twenty compliance officers around Australia, the Advocate may not be able to respond adequately to outbursts of union aggression.

Last week-end’s attack by the CFMEU on the Defence Minister, Mr Peter Reith’s car, and the "run-ins" that have led to AMWU officials being charged with aggravated burglary, riot and affray, certainly suggest worrying attempts in some union quarters to spread the jungle of intimidation into other parts of the industrial and political arena.

Where brazen defiance of the law is established, the courts should impose penalties more commensurate with any resultant damage or disruption. And legal officers should ensure that penalties are implemented promptly.

Rather than set up a judicial inquiry into the construction industry, the Federal Government should strengthen the Employment Advocate and encourage State governments to follow the specialist task force model.

 

 

Rural life was never better

(AFR 29 August 2001)

Successful farmers do not need more regional aid, maintains Michael Moore

Today, the Deputy Prime Minister, John Anderson, will unveil yet another multimillion-dollar rural assistance program. Yet it is ironic that, after governments have extended greatly increased assistance to farmers and the bush generally, national and state political parties face increased threats from independents in rural electorates. Never mind the growing opportunities available to young people on the land.

Consider the lower than average rate of unemployment (6.0 per cent) in agriculture and growing reports of shortages of labour. At its Outlook 2001 forecasting conference, ABARE predicted the net value of farm incomes to increase by 29 per cent in 2001-02. This reflects much more than good seasonal prospects and comes after an increase in farm gross domestic product of almost 25 per cent in the previous six years.

NSW farmers are enjoying their best returns in more than a decade and, as NSW Farmers Association President, Mal Peters, recently pointed out, the improvements can partly be attributed to the very deregulation that some farmers complain about.

The President of the Victorian Farmers Federation, Peter Walsh, has even predicted that a doubling in that state’s food export market could produce a massive agricultural boom, creating an extra 100,000 Victorian jobs over the next ten years.

This is hardly surprising. After all, with the expansion in Asian markets and improved productivity, rural exports have increased in real terms by more than 50 per cent in the 1990s and most prices have also improved.

The development in Australia of processed food products for export is also helping to combat agricultural protectionism. The dairy industry has been particularly successful in expanding such exports to the Asian market.

The country’s clean and green image is an important factor behind the export resurgence, notably for meat, and this emphasises the need for good managers. A major contribution is also being made by the lower exchange rate and, although the $A is said to be under-valued, the lowering of domestic and world inflation reduces the likelihood of the earlier wide fluctuations that made agriculture so risky.

 

Of course, the recent difficulties of attracting young people into agriculture derive from past economic problems experienced by farmers, reflected in the stagnation in farm GDP in the 1980s. The continued decline in the number of farm businesses in the 1990s also fostered an adverse image of rural lifestyles, as did the belief that a wholesale population movement to the cities was occurring.

In fact, the growth in provincial cities’ populations has been only slightly less than in capital cities. And while this growth has often been at the expense of nearby smaller towns, these "sponge cities" have provided the opportunity to access a more diverse life style, as well as cheaper goods and services. Improved transport links and more reliable vehicles allow more management by those living "off-farm".

Nor should the reduction in farm numbers be taken as an indication of a declining industry. Rather, it reflects the extensive structural changes being undertaken to improve agriculture’s competitive abilities.

According to the Productivity Commission, agricultural productivity since the mid 1980s has been growing at nearly three times the economy’s average. Needless to say, the requirement for further improvements in efficiency provides a major challenge to future managers in the agricultural sector.

Managers and professionals (such as livestock, cropping and general managers) already comprise more than half of those employed in agriculture. Indeed, over 30 per cent of all managers and administrators employed in Australia are in agriculture.

This sounds a signal for young people to become qualified. A business management diploma at an agricultural college, for example, can now earn a starting salary package of over $40,000 a year and institutions offering such courses require only modest entry scores. Also available are degree courses that range from farm management to agricultural science.

Contrary to some perceptions, indicators of student satisfaction with tertiary institutions show a slight improvement from 88 to 90 per cent since 1996 and good teaching assessments have also risen, albeit only to 77 per cent. It is surprising indeed that many institutions providing agricultural training are experiencing difficulty filling their courses.

Michael Moore is a member of the council of Marcus Oldham College, which provides agricultural training.

 

 

Courts no place for pay fights

(Herald Sun 4/9/01)

 

Many will welcome as a sign of more decisive management the withdrawal by the Bracks Government of its large pay offer to police. But, given the reputation of industrial tribunals for bias against the employer side and their generally poor understanding of the workings of the labour market, the Government’s decision to pursue the matter in the Industrial Relations Commission is unlikely to produce a better outcome.

Indeed, Minister Haermeyer has already sold the pass by indicating he does not rule out reinstating the 12 to 24 per cent offer there.

A major problem with industrial tribunals is their implicit assumption that a major imbalance of bargaining power exists between employers and employees. This fails to recognize the competitive conditions actually existing in modern labour markets.

Equally, the explicit employment conditions they lay down cannot take account of the many implicit factors determining whether an employment relationship works.

The potential adverse effects on the unemployed have also been overlooked, as have actions by both sides of the political fence to create a more flexible labour market.

Significantly, even AIRC President, Mr Guidice, has recently complained that the uncertainty generated by the mixture of laws which impact on employment relationships..constitutes an erosion of freedom and impacts on the quality of our society. He said that the outcome of particular cases is of very little predictive value in similar cases.

This extraordinary situation, when combined with the long periods taken to reach some decisions, deters employment and investment even when employers receive more reasonable treatment, as in yesterday’s Yallourn Energy (eventual) outcome to allow contractors.

The adverse social and economic effects from judicial interventionism in the employment relationship makes a strong case for reducing by legislative means the capacity to exercise legal discretion.

This is reinforced by the marked contrast between interventionism in the corporate and industrial relations areas. Those thought to have infringed corporate law are pursued and, if caught and convicted, are fined or jailed and the companies they have operated may be made insolvent. Some are even barred from operating a business.

But, while this is appropriate, there appears to be less comparable action in relation to behaviour by unionists or employees that is either unlawful or deliberately obstructive. Repeat offenders seem to reappear undeterred. 

This apparently soft approach presumably reflects a fear that jailing a unionist or causing union insolvency is socially unacceptable while providing the same treatment to a greedy capitalist is not. The reluctance of the police to pursue complaints against intimidation and coercion by unionists is part of this syndrome.

One response might be to establish a body charged with ensuring competition in the labour market and with prosecuting those who behave unlawfully, just as the Australian Competition and Consumer Commission prosecutes anti-competitive behaviour by businesses.

There is also a need to reduce the role of the Federal Court in industrial cases. Although its interventionism has moderated somewhat after public expressions of concern, it remains excessive and it seems absurd that compositional changes in a court should be a determining influence.

Of course, Labor’s effective adoption of the ACTU’s industrial relations agenda, would mean that its attainment of government in Canberra could even exacerbate the interventionism and the accompanying adverse employment effects.

Labor was, of course, responsible for many of the Federal Court appointees.

The continued support for a highly interventionist industrial system in a modern economy reminds one of Dr Johnson’s observation of an acquaintance: "such an excess of stupidity, Sir, is not in nature".

 

 

 

IR rulings in dire need of objectivity 

(AFR 5/9/01)

An ACCC-style body could ensure competition in the labour market, suggests Des Moore 

Judge-made law has existed for so long that AP Herbert even quipped in 1935 that "the Common Law of England has been laboriously built about a mythical figure of The Reasonable Man." But, with much greater statute law today and a statutory requirement that judicial interpretations should promote their objects, why do judges still impose their own views so much?  

Chief Justice Murray Gleeson has warned several times recently against excessively individualized or subjective assessments of cases. AIRC President Justice Guidice has also complained that uncertainties in employment relationships were eroding freedom and impacting adversely on the quality of society. Alarmingly, he acknowledged that the outcome of particular cases was of little predictive value in similar cases.

But the legal arm of government has not moved to remedy the many problems caused by the wide discretion exercised in industrial cases. A major concern with industrial tribunals is their implicit assumption that a major imbalance of bargaining power exists between employers and employees. This fails to recognize that, even within their regulated framework, modern labour markets operate under competitive conditions.

Similarly, the explicit conditions tribunals prescribe cannot take account of themany implicit factors determining whether an employment relationships works. The adverse effects on the unemployed have also been overlooked, as have actions by major political parties creating a more flexible labour market.

All this suggests there is a strong case for limiting judicial discretion by legislative means.

The marked contrast between interventionism in the corporate and industrial relations areas also needs addressing. Those thought to have infringed corporate law are pursued and, if caught and convicted, are fined or jailed and the companies they have operated may be made insolvent. Some are even barred from operating a business. But, while this is appropriate, there is very limited comparable action in relation to behaviour by unionists or employees that is either unlawful or deliberately obstructive. There are few higher penalties for repeat offenders. 

The apparently "soft" approach adopted towards such behaviour presumably reflects a fear that jailing a unionist or sending a union insolvent is socially unacceptable while providing the same treatment to a "greedy capitalist" is not. The reluctance of the police to pursue complaints against intimidation and coercion by unionists is part of this syndrome and helps explain why royal commissions into the construction industry are needed from time to time.  

What we badly need is a body to ensure competition in the labour market and to prosecute those who behave unlawfully, just as the Australian Competition and Consumer Commission prosecutes anti-competitive behaviour by business in the production and trading fields. The NSW Building Industry Task Force operated successfully for three years in the construction industry and it could provide a model for a body with wider authority. Publicly expressed concern has produced some recent moderation in judicial intervention in industrial cases, most notably reflected in the Federal Court’s compositional change. But the picture is mixed, with numerous puzzling exercises of discretion and long periods taken to reach decisions. That compositional changes should determine outcomes highlights the need for radical Federal Court reform alone.

It remains particularly worrying that an examination of the plethora of industrial cases suggests that "ad hocery" prevails. Chief Justice Gleeson’s general call for an "abiding need for predictability and certainty" is certainly nowhere to be found in industrial relations: it has been overwhelmed by what he characterized as the "irreversible move towards subjectivisation of issues" - with obvious deterrent effects on employment and investment.

If Labor were to attain Government in Canberra, there is a further worry that even the recent slightly more moderate Federal Court approach would not last. Labor has already largely adopted the ACTU’s industrial relations interventionist agenda and was responsible for many of the Federal Court appointees. 

Those who understand that minimal intervention in employment relationships is in the best interests of the community, particularly those in the poorest group, clearly need to better explain the problems. Those who continue to support a highly interventionist industrial system in a modern economy should be reminded of Dr Johnson’s observation of an acquaintance: "such an excess of stupidity, Sir, is not in nature". 

Des Moore is director of the Institute for Private Enterprise. This is an edited extract from his address to the Samuel Griffith Society conference.