Right to disconnect is all about politics and populism — forget productivity

Anthony Albanese at Collie Power Station, Collie.

The circumstances that justify a call from the boss after hours are something reasonable people generally can work out between themselves. For the few who can’t there is Form F92, a 10-page applica­tion for your case to be considered by the Fair Work Commission accompanied by a five-page explanation.

The idea that a law that creates more red tape can boost productivity is counterintuitive, to say the least. Yet Anthony Albanese claimed exactly that on ABC radio last week when he was asked about the Business Council of Australia’s concerns over the right to disconnect legislation.

“You know what it’ll do? It’ll boost productivity,” he said. “It will mean that employers and employees have to have a commonsense conversation about what’s reasonable and what’s not reasonable, and that will lead to better workplace relations.” The Prime Minister provided no evidence to support his claim, probably because the evidence shows the right to disconnect from work will not improve productivity but will hasten its decline.

Gallup’s latest State of the Global Workplace report calculates disengaged employees cost the global economy $US8.9 trillion last year ($13 trillion), the equivalent of 9 per cent of the world’s GDP. Gallup reports workplace engagement has plateaued since the Covid disruption, after more than a decade of steady growth.

Yet the right to disconnect has become a global fad among governments that want to be seen doing something but have run out of useful things to do. It is no surprise to learn the idea began in France, where the working week is 35 hours and the homegrown variant of 7-Eleven is 8 a Huit.

The Closing Loopholes Act 2023, which contains the rule, is arguable the most egregiously misnamed pieces of legislation to be given assent. The legal fraternity will be picnicking for years on its ambiguities, omissions and technicalities. In disputes about the definition of words such as reasonable, the Fair Work Commission will almost certainly come down on the side of the employee.

Albanese’s frivolous use of the word productivity is not limited to the workplace. Last month he appeared at the Townsville Bush Summit, where he was asked about the community backlash to industrial-scale renewable energy developments. He responded with a novel argument about the benefits of solar panels for sheep farmers. “It makes it less cold at night and takes away some of the heat during the day as well,” he said. “There can be real productivity benefits as well.”

It was an off-the-cuff answer to a question for which the Prime Minister seemed unprepared, suggesting he and his advisers are even more out of touch with the mood in rural and regional Australia than we thought, particularly in Queensland where renewable energy developments are a source of open anger.

Former ACTU secretary Bill Kelty

Albanese also appears to have a subprime understanding of what productivity is and why he should be worried about its unprecedented slide since. The Productivity Commission’s latest annual productivity bulletin reports labour productivity across the economy fell by 3.7 per cent in 2022-23. It warned that wage growth without productivity growth fuelled inflation, yet that has not stopped the government from promising a record pay increase for childcare workers and pumping up expectations about wage rises elsewhere in the public sector. The recognition that wage rises must be matched by productivity was well understood by Bob Hawke’s Labor government. It was baked into the reform agreements with the union movement led by the eminently reasonable Bill Kelty.

Yet the politics of economic reform has become much harder for Labor across the past four decades. The special interest groups and moral crusades that influence Labor policy today are profoundly anti-productive. Satisfying the environmental crusaders inevitably means significant government spending with little economic benefit in the short to medium term.

The government’s Future Made in Australia plan is built on substantial subsidies to businesses that inevitably lower productivity, propping up unproductive enterprises that deserve to die.

Former Productivity Commission chairman Gary Banks said earlier this year that “seeking to obtain benefits to society through ­subsidies for particular firms or industries, including in the form of tax concessions, has proven a fool’s errand, particularly where the competitive fundamentals are lacking”.

The government’s energy targets are pushing tens of billions of dollars of capital towards renewable energy, preventing that capital from flowing naturally to enterprises likely to deliver the greatest economic return. Wind and solar energy technically may be free, but the two things vital for the production of so-called renewable energy, capital investment and land, are scarce resources with alternative uses.

Bob Hawke

Labor’s support base is heavily skewed towards the non-market economy. Public servants or people whose income relies on government funding in institutions such as the ABC have an intense interest in government spending and none whatsoever in multi-factor productivity.

Productivity in the non-market sector is hard to measure since the value of the product public institutions produce is often hard to measure if the product can be identified at all. Every indication, however, suggests it is low. The acceleration of public sector growth under this government and the relative decline of the private sector have contributed to low productivity.

The union movement – the most powerful vested interest in the land – has long abandoned any consideration of the national interest. It no longer seems to care that long-term improvements in wages and conditions can be achieved only with economic growth. It has returned to the brutal game of smash and grab, which the government has facilitated with three rounds of pro-union legislation, appointing Labor-friendly judges in the Federal Court, stacking the FWC and granting it new powers to make it effectively the Anti-Productivity Commission.

Delving into the archives to read how Hawke reacted to the challenges of wage inflation and economic growth is both instructive and demoralising. “I will not shirk the hard decisions that are necessary to ensure a bright future for us and for our children,” Hawke told Australians in a televised address in June 1986. “I would rather risk electoral defeat than take the soft options now that would mean.”

Labor went on to win three elections. Albanese leads a hollowed-out party that will be lucky to muddle through one.