Morrison sets sail for a new Australia
Seeking a new consensus is risky when the fractures built on self-interest and narrow vision run deep in Australia.
But the fractures built on self-interest and narrow vision run deep in Australia. Our history as a nation shows fighting high unemployment usually means bitter political division.
After calling on everybody “to put down their weapons”, Morrison, a realist, does not rule out failure. He said Australians “will take a very dim view” of any side not acting in good faith, but added: “It may succeed, it may fail — but I can assure you, we will give it everything we can.”
This is not just about IR reform and a new compact for skills and training, the two issues Morrison addressed this week. He foreshadowed economic change across the spectrum, nominating energy and resources, higher education, research and science, open banking, the digital economy, trade, manufacturing, infrastructure, regional development, deregulation, federation reform and tax.
Morrison talked about a post-COVID-19 agenda extending over three to five years for the next two parliamentary terms. It means new processes, new policies and the national cabinet now reset on a permanent basis, meeting regularly with a single mission — to create jobs. The premiers, elevated as national figures, have signed up.
These are bold steps by Morrison, and realism suggests that not everything could possibly go to plan. At the same time, Morrison, while pushing hard to reopen the economy, is ready to extend the $70bn JobKeeper scheme beyond September in some form to assist industries such as tourism that are still struggling, with Josh Frydenberg saying the government will do “whatever it takes” to avoid the labour market falling off the September cliff. But the fault line now emerging cannot be missed. While Morrison and ACTU secretary Sally McManus met at Kirribilli House a week earlier to seal the new tripartite dialogue, their competing while overlapping goals cannot be disguised.
McManus said of her meetings with Industrial Relations Minister Christian Porter: “We don’t agree with each other on a whole lot of issues, but he listens to us, and we listen to him.” Good faith is present. But good faith is not enough.
McManus said: “The ACTU will measure any changes to industrial relations law on the benchmarks of: will it give working people better job security, and will it lead to working people receiving their fair share of the country’s wealth?” She said the ACTU would never accept outcomes where workers “go back in pay and conditions”.
The McManus mission is to correct the pre-COVID “huge problem” of “far too many insecure jobs”. This is a different goal from Morrison’s. The difference comes down to nuance, but it’s a large nuance. Morrison says that, facing 9 to 10 per cent unemployment, he has a singular goal: to restore jobs. Every instrument must be geared to this task.
This is a cultural, moral and economic divide. Porter confronted it when interviewed by the ABC’s Hamish Macdonald and asked about assurances that nobody would be worse off: “But how do you measure worse off, Hamish? I mean, if we can’t regrow hundreds of thousands of jobs in a relatively short period of time, which is probably the most mammoth economic challenge Australia’s ever faced, everyone is worse off. There’s no point arguing about the terms and conditions of a job that just doesn’t exist.”
The nation is trapped between the old mindset and the new reality. There are more than five million people on welfare from taxpayers (via JobKeeper and JobSeeker), a million people are on reduced hours, whole industries will be damaged for years, many businesses are going to the wall, hundreds of thousands of people face the risk of no jobs, yet we are having a pre-COVID debate about nobody being worse off.
This is serious reality denial. The truth is, many of the five million are potentially going to be worse off in some way or another. Those who cannot get a job are guaranteed to be worse off.
“Part of this process is to explore what people have in mind when they use the term ‘worse off’,” Porter said. Morrison said on Friday: “If you’re not in a job, you’re not better off.”
This is the chasm now opening up in our politics and culture. It is whether your guiding star is the pre-COVID world or the tougher post-COVID reality. It is whether cultural debate will be dominated by the old norms or by the new urgency — by those in secure jobs or by those who are fighting to survive.
In an interview with Inquirer, Porter illustrates the way our IR system is hurting jobs. Referring to “the most complicated award in the most distressed industry” — the hospitality industry — Porter says: “The award has I think 61 different pay points with 14 different classifications inside each pay point. I have been given a pay slip for a junior employee at a cafe who has had five different pay rates over a 14-hour period.”
This industry has just had a wrecking ball put through it, yet it has an award complexity from the pre-COVID era that is inconsistent with meeting the challenge it faces. Expecting cafes and restaurants to navigate their worst crisis tied in knots by this award complex is an intolerable ask.
NSW Premier Gladys Berejiklian proposed a public sector wage freeze for 12 months, meaning a 2.5 per cent increase would be forgone, the aim being to save jobs, with NSW Treasurer Dominic Perrottet saying the intent is to “do what is right” and use every dollar to support “those people who are out of work”.
Yet the backlash is fierce from Labor and the unions, with the upper house likely to reject the proposal. The flawed logic is that no sacrifice is to be permitted from those with guaranteed jobs to help those with no jobs. The moral is that for many people, pre-COVID battlelines remain untouched.
Summarising the difference between the old and new mindset, Porter says: “During 29 years of uninterrupted economic growth, there has been a Balkanisation of the IR landscape, where everyone entered into a vigorous contest over what they perceived to be the spoils. The argument about dividing prosperity is well and truly suspended now because the only argument we want to be engaged in now is how to build prosperity.”
The truth, however, is that the battle between the old and new reality is only guaranteed to intensify. “There are risks in the approach we are taking,” Porter says. “But the risks of not trying are enormous. We now need to try to save hundreds of thousands of jobs. For the first time in modern memory, we are focused on job growth itself as the primary driver of policy.”
Labor has a different approach. Opposition industrial relations spokesman Tony Burke says Labor has an “open mind” about IR changes to help create jobs in the post-COVID world. But Labor wants reforms that “deliver more jobs, higher wages and more secure employment”. From the start, ALP leader Anthony Albanese has made secure jobs a Labor priority.
Sure, secure jobs and higher wages are desirable goals. But the new COVID world is about priorities. You just lost the luxury of an ideal world. If you don’t surrender some of your cherished ideals, you don’t understand this crisis or what it means. Cherished ideals should be surrendered not because they are bad ideals but because the task now is deciding priorities.
Economist and Deloitte Access Economics partner Chris Richardson provides the critical context. Richardson tells Inquirer: “We all have our longstanding agendas — and I’ll admit I have mine — but we need to check these agendas at the door. We need to ask: what’s public enemy No 1? The answer must be driving unemployment back down. We’ve heard (Treasury secretary) Steven Kennedy and (Reserve Bank governor) Philip Lowe say it, and I agree with them — I’m not saying our long-term agendas are good or bad ideas. But I am saying they are not helpful now.
“We know the unemployment rate has jumped the most for young Australians. They are the ones at risk of being a lost generation. This is the moment to get inside the room, put a photo of the younger generation on the wall and say: how can we help them and help them incredibly fast?”
Yet many of our institutions, leaders and media are not there. Indeed, they are living in another bubble. Nowhere is the gulf between the pre and post-COVID mindsets on more startling display than in the ABC’s coverage.
Senior ministers just shake their heads at the scale of the collective disconnect. Here is an exchange last Wednesday between Virginia Trioli and Porter:
Trioli: “Surely, one of the key things has to be — and really that you’ll have to be measured by as a government — is whether the reforms can lift real wages after such an extended period of wage stagnation in this country? Can you guarantee that will be one of the outcomes, because that’s the most pressing issue for listeners this morning, is when their wages will actually, in real terms, start to rise and keep reasonably rising?”
Porter: “Well, I think, sure, that’s a desirable outcome for a process like this, as it is in any stage in our economy …”
Trioli: “Desirable or central?”
Porter: “Well, highly desirable. But you know what is central is having a job in the first place, right? The foundational problem is not arguing about what particular wage might be paid at what particular point or time, or how it’s growing — the first argument is: do you have a job? Like, there are hundreds of thousands of jobs that need to be regrown in the workplace, and that’s just not going to happen magically. Like, we actually have to apply our intelligence and acumen and organisation and co-operative skills to that task.”
Morrison has nominated five working groups covering award simplification, enterprise agreements, casuals and fixed-term employees, compliance and greenfields agreements. This is no sweeping reinvention of the IR system. It is about practical changes that can make a difference. Every sign is Morrison wants to rewrite the Liberal Party rule book on IR after two decades of lethargy.
Morrison and Porter seek to be defined by results — more jobs and better productivity — not by partisan identification with the employer side. This is a decisive Liberal break from John Howard’s industrial relations philosophy that delivered initial success but came undone over Work Choices.
The ACTU and the unions have a tactical decision to make: do they make this process work, or do they stick by their pre-COVID class ideology?
This is a test of the maturity of McManus and the union leadership. Once again, the question is whether institutions can move to the post-COVID reality. Porter will chair each working group and be assisted by a deputy chair from the public service. The aim will be to ventilate positions from unions and business and seek consensus.
The purpose is to put meaningful legislation to the parliament that has credibility from all parties. Porter, influenced by the Hawke-Keating reform methods, says: “The product going into the parliament is ultimately strengthened by having as much agreement as possible in its development.”
Labor is hostile to Morrison’s initiative because, yet again, it is being marginalised. Morrison’s game plan is obvious: to dominate the centre ground and push Labor into the margins for the entire post-COVID recovery story.
Business Council of Australia chief executive Jennifer Westacott tells Inquirer: “We all have to leave everything at the door and say ‘How can we create a new job? How can we get people back to work? How do we give people the skills they need?’ We can’t afford to fail because the people we’ll be letting down are the young people who think they’ll never get a job, the older people who are worried they’ll never get back into the workforce, and the small business people who are seeing their life’s work slip away.”
Porter points to the decline in enterprise bargaining as evidence of a failed IR system: “I have had the enterprise agreement process mapped, and it is the most complicated, confusing process that I’ve ever seen as a lawyer.” He tells Inquirer the shift from enterprise bargaining to awards “necessarily means you have an increase in the numbers of workers covered by awards that were meant to be the safety net”. It means workers miss out on enterprise agreements and the capacity to be “better off in terms of wages and conditions”.
The system has been under attrition largely because of the “better off overall” test that says the Fair Work Commission in authorising an enterprise agreement must be satisfied that each employee covered would be better off than under the award than they were before. This is a high bar that is counter-productive.
The latest figures on enterprise bargaining, covering almost 40 per cent of the workforce, show that reform is imperative. When this system is defective, the entire IR framework is damaged. There are 2.16 million workers employed under enterprise agreements, as opposed to 2.6 million at peak coverage in 2014. The number of such agreements is the lowest since the late 1990s. There were 10,877 agreements current at September 2019. Wage increases under these agreements are running at 2.7 per cent averaged annualised, ahead of the economy-wide average of 2.2 per cent.
McManus says “bargaining is on the table” and agrees there are too many “hoops” for both unions and business in reaching enterprise agreements. Westacott says they should strive for a system that has a safety net and “lets workers and employers come together to figure out how their enterprise can be more successful” and how the benefits “can be shared through higher wages”.
Scott Morrison’s departure from Liberal tradition in seeking consensus on industrial relations reform poses the crucial choice for Australian institutions, leaders and the public — whether the nation can navigate new directions or will merely succumb to political gridlock with the misery of prolonged high unemployment. The Prime Minister has done the right thing by using his political authority to bring government, business and unions together. Just ask the counterfactual: should he not have tried?