Institute for Private Enterprise

The highlight of the past month was the "bite" I got from the Federal Shadow Minister for Industrial Relations, Arch Bevis, at a Conference of the Australian Industry Group in Canberra, at which we were both invited to speak on the subject IR Legislation - Further Deregulation? After I had spoken, Bevis spent the major part of his address on a stinging response to my report on The Case for Further Deregulation of the Labour Market (which he said he had read in full) - and trying to portray its proposals as extreme.

As this speech evidently reflects Labor's main objections to my proposals for deregulation, I am enclosing the full text (my own speech is available on the IPE website - www.ipe.net.au - or available on request). It is worth noting that Bevis argues that the "threshold issue" is the inequality in bargaining power between employers and employees, which means that "there will always be a case for regulation, for laws that confer rights on trade unions, and for an Industrial Commission." This antiquated thesis fails to recognise (among other things) : the vulnerability of employers to industrial action; the over 900,000 businesses competing with each other (with over 50 per cent of employment coming from small businesses); the effect of such competition in limiting profits (and hence preventing wages from being "forced down"); and the potential for employees to use agencies to help in bargaining (with, under my proposed reforms, a new voluntary AIRC having the capacity to provide advisory/mediation services on a subsidised basis).

Also relevant, as pointed out in my article on The Performance of the US Labour Market in the March edition of the Australian Bulletin of Labour (attached), is that in the less regulated US labour market the share of national income going to labour is now significantly higher than in the period prior to the mid 1970s. This article suggests that fears that deregulation here would lead to the dispersion of earnings widening to US levels fail to take account of : marked differences in the composition of the respective labour forces; differences in the measurement of earnings and the under-statement of changes in US employees' living standards; and the fact that our more regulated market appears to have produced a similar proportion of "working poor". To the extent that deregulation did lead to a widening in earnings dispersion, either our means-tested social security system would offset falls in wages or (as in the US) earned income tax credits could be introduced to supplement wage earnings (or some combination of the two).

Contrast this flexible approach, with the reactionary Bevis response that an increase in earnings dispersion would be "indefensible." How come an increase in dispersion from reduced regulation would be "indefensible" but the increase in dispersion that has occurred under the present system has (presumably) been OK? Given the capacity to offset any lowering of wages at the bottom end through the social security system, Australia would be mad not to explore the potential for increasing employment and reducing unemployment by reducing labour market regulation to US levels. (Of course, factors other than labour market regulation influence employment levels. Even so, on 1997 OECD employment figures, if we had then employed the same proportion of working population as the US, we would have had another 900,000 employed).

Incidentally, it is interesting that Professor Bob Gregory, the Australian academic who has done most to discourage people from thinking of US style labour market deregulation in Australia, did not find time to take up the offer of the Editor of the Australian Bulletin of Labour to write a response to my analysis. That offer was made many months in advance of publication and Gregory had my text well in advance. I understand that he may still submit a response.

Bevis also attacked me on the ground that I do not oppose the use of child labour in any circumstances. Yet many children help run Australian family businesses and farms. The main need is not to outlaw all "child labour" but to ensure that there is no interference with children's education.

My other main activity during the past month (which consumed considerable time and energy) was advising the NSW Opposition on an alternative Budget strategy. My analysis of the Carr Government's Budgetary Performance and Forward Estimates was released to the media by Shadow Treasurer Phillips in the second last week of the election campaign. It included an assessment that the estimate of a substantial surplus in 2001-02 was "simply a pipe-dream and has no credibility". This led to Treasurer Egan holding a press conference and attacking me for being an Opposition employee - but not answering the substantive points in the analysis. One or two of the journalists did pick up those points but, typically, the bulk of the media merely played up Egan's attack, with the SMH describing the Opposition as using "dirty tricks" in employing me but pretending that I was independent!

When I pointed out that I had also advised the Labor Opposition in Victoria, Egan apparently then persuaded Shadow Treasurer Bracks to issue a press release denying this. In the release, headed "Moore Has Never Worked For Victorian Labor", Bracks claimed that "he had never solicited any advice from Mr Moore". Although this was quite wrong (last year he invited me to Parliament House to talk to him about Victorian Labor policies), and although I issued a denial, Brack's claim was reported without checking with me. Talk about "dirty tricks"!

My analysis of the Coalition's Budget Strategy, describing it as "coherent and responsible", was subsequently released along with other documentation which provided considerable detail of that strategy. That constituted a landmark in election transparency by a State Opposition. The Opposition was assisted by Treasurer Egan's agreement to allow it access to the NSW Treasury to check costings.

Unfortunately, this alternative strategy was not released until three days before the election - too late to have any impact on the campaign. One consequence was that, during the campaign, the (high spending) Carr Government was able to paint the Opposition as making irresponsible spending commitments even though the overall picture revealed at the end showed that these commitments were, as one journalist noted on election day, "surprisingly affordable". Another consequence was that, without publicly available budget figures, the Opposition found it difficult to highlight the potential benefits from net interest savings and debt elimination from its proposal to privatise the NSW electricity industry. It clearly also placed too much reliance on polling showing a majority of the electorate to be unenthusiastic about privatisation: the history of privatisation is that the majority oppose it beforehand but do not want to reverse after it has been done. Moreover, even those who oppose privatisation will not necessarily allow that to determine their vote. Even more than other Coalition parties, the NSW Coalition has found it difficult to enunciate clearly what they stand for and this resulted in a half-hearted promoting of the privatisation policy.

With the return of the Carr Government with an increased majority, this is now history - although the lessons from the election still need to be correctly drawn. For those interested, both of the above-mentioned analyses are on the IPE web site.

Finally, although the Kennett Government continues to defend police failures during the waterfront dispute, there now appears to have been something of a break-through on Victorian policing policy generally. This is reflected in the attached article on the latest attack on North Limited by the Jabiluka Action Group.