IR bill risks inflationary pressure

At any time, and especially when a nation is facing economic challenges such as inflation, a productivity slowdown and heavy spending on defence and social policy, government must act for the overall good of the nation, not that of sectional interests. For that reason, business is mounting an 11th-hour bid to persuade Anthony Albanese and Jim Chalmers to wrest back control of the industrial relations policy agenda from unions, which represent fewer than one in 10 employees in the private sector.

This week’s Senate hearings into the government’s controversial same job, same pay legislation is an opportunity to scrutinise its likely impact on the economy and examine potential unintended consequences. Such scrutiny would be more effective, however, if the government took up the call by Australian Chamber of Commerce and Industry chief executive Andrew McKellar to subject the legislation to a Productivity Commission review. If the government is confident about the soundness of its proposed workplace changes it will have nothing to lose.

Other business groups agree. Council of Small Business Organisations Australia chief executive Luke Achterstraat said such a review needed to factor in costs of complexity and red tape contained in the bill to small business. “A proper costing would need to include the opportunity cost of lost time spent on sales and service trying to understand a highly complex piece of legislation,” he said. The 278-page Closing Loopholes bill comes with 500 pages of explanatory notes.

In the lead-up to Tuesday’s Reserve Bank board meeting on interest rates, economists have urged caution over the inflationary threat of soaring global oil prices. A week ago, rising fuel prices were blamed for Australia’s inflation rate rising 5.2 per cent in the year to August, compared with 4.9 per cent for the year to July, Australian Bureau of Statistics figures showed. While rates are expected to stay on hold, the inflationary threat is far from over. That is disturbing news for households and small businesses experiencing increased financial pressures as fixed rate loans expire. As Tom Dusevic reported on Monday, the squeeze on family budgets from the RBA’s monetary crusade against inflation is pushing more Australians into financial hardship for the first time as consumers run down savings built up over the pandemic to pay their loans and bills. New documents from the RBA show more Australians are using credit cards to cover the rising cost of rents, petrol, electricity, gas and insurance. Under such conditions, the last thing the economy needs is added inflationary pressures.

In its submission to the Senate inquiry, the Minerals Council of Australia warns that by applying conditions and prices to supply chains, including rates charged by smaller transport contractors, the same job, same pay legislation effectively will resurrect the scrapped Road Safety Remuneration Tribunal by pricing owner-drivers out of the market while driving up costs across the economy, as Joe Kelly reported on Monday. “It will have enormous ramifications for inflation since it will ­affect prices for everything transported by road – including groceries, fuel, clothing and building supplies,” the MCA submission says. “These provisions give effect to the longstanding ambition of certain unions to rig prices in their ­industry, increasing their power.”

Business Council of Australia chief executive Bran Black said the IR changes would “add to uncertainty and the cost of living at a time when Australian families can least afford it”, undermining the job security of those it purported to protect. That is a good reason for close scrutiny of the legislation.