Shorten’s pitch positions workplace relations as front line in class warfare

The door may be about to swing open to a litany of woe for the Labor leader.

Bill Shorten with his captain’s pick for the Batman by-election, ACTU president Ged Kearney. Picture: Andrew Tauber

As the politics of disruption intensify in Australia the policy debate sinks into more regression and populism, with the Coalition and Labor running competing growth agendas and Bill Shorten flexing his anti-business, anti-private enterprise and anti-coal muscles.

Shorten’s latest slogan is the “left behind society” to exploit deprivation and resentment arising from stagnant or modest wage rises amid high energy, housing and private health insurance prices — inviting anybody with a grievance to cast their vote against Malcolm Turnbull and the big end of town.

Consider the opening week of the political year. Shorten gave rhetorical backing to the radical ACTU agenda to boost wages by government intervention, he attacked the private health insurance industry, pledged an integrity commission at the national level — long a Greens position — and all but announced Labor’s opposition to the Adani mine in Queensland when opening the ALP’s by-election campaign in the green-oriented inner-Melbourne Batman seat.

Shorten’s rhetorical ability to shift position and tap into public angst is unrivalled, yet guaranteed to maximise doubts about his cynicism, expediency and flawed solutions. “We are in danger of creating two societies,” he said in his year-opening Press Club address. “Business as usual doesn’t cut it and my concern is that Australians have given up.”

The power of the “left behind” delivered Brexit in Britain and Donald Trump in the US. But Shorten’s actual prescriptions don’t fit the problem and rely on a fog of populist confusion — having declared cost of living the problem, his answers are more trade union powers, the imposition of higher wages on business possibly by legislation, retaining high taxes on medium and larger business and, on the energy front, championing his emissions reduction credentials with a far higher 2030 reduction target of 45 per cent.

Unfortunately for Shorten, political disruption cannot disinvent the laws of economics — much of his program seems in practice an agenda for cost increases. This is because it is a grab-bag of political tactics to deliver various stakeholders: keep the unions close, win the renewables vote, keep the Greens at bay, fund more health and education spending, appease the anti-Adani inner-city vote and channel the cultural hostility over business, inequality and “two societies”.

In the end Labor will rely on opposition Treasury spokesman Chris Bowen to save its standing — trim the edges from this agenda, dress it up, offer a more balanced message and contest the government on the economy.

Labor’s Treasury spokesman Chris Bowen. Picture: AAP

The energy in our politics remains on the progressive left, a diabolical problem for the Turnbull government. The Greens and Labor keep moving to the left, sure they are capturing the zeitgeist of our times: let’s ditch Australia Day, intensify the attacks on business, call out the private health insurance “con”, intervene to procure higher wages, stand firm on aggressive climate change action, oppose any new coalmines and repudiate any tax cut for even modestly sized businesses. At what point can Malcolm Turnbull turn the tide?

The government is kidding ­itself. This week the Turnbull government perfected the art of the great silence in response to Shorten’s speech, which warranted a swift and high-profile response. Whatever game the Turnbull government is playing, it is not Australian politics as it has been conducted for the past 50 years — the government is devoid of political organisation, fast media responses, sharp tactical politics or the ability to ­exploit the vulnerability of a vulnerable Opposition Leader. ­Unless this changes, it is doomed at the election.

The risk for Shorten, however, is that he seeks to juggle far too many political balls and that his act starts to fall apart. The ­dynamic on the left empowers him against Turnbull but weakens him against the Greens. After a disappointing result in the Bennelong by-election, Shorten now faces the risk of a devastating Labor loss to the Greens in Batman following the resignation of Labor MP David Feeney over the citizenship issue.

The critical point is the coming High Court decision over ALP senator Katy Gallagher. If the court finds against her on dual citizenship, the door swings open to a litany of woe for Shorten — an ­almost certain by-election in the Queensland seat of Longman where Labor’s margin is only 0.8 per cent, and possible further by-elections. In the process, Shorten would be exposed for misleading the parliament and public for many months with claims that Labor was a dual-citizen cleanskin.

The left continues to win the battle on defining issues. With Shorten having embraced the ­integrity commission concept this week, it will be near impossible for the government to resist this ­initiative. It is popular, populist, sanctified by retired judges, ­beloved by the progressive media and justified by a grand and fraudulent argument that it will ­restore trust to politics, a result not evident in any jurisdiction in this country where such commissions have long operated.

The dysfunctional nature of our national politics has many fundamental causes but corruption is not among them. The creation of an integrity commission is apparently an idea whose time has come. It cannot address the causes of our malaise because it misconceives the nature of the problem and it will almost certainly be ­manipulated for political ends as a tool to discredit and destroy political opponents.

The philosophical divide between Coalition and Labor was drawn even more sharply this week. Turnbull runs on his corporate tax cut, buttressed by income tax cuts to boost jobs and wages, while Shorten casts this as a boost to foreigners, millionaires and two Australias. His “left behind ­society” slogan flows from British Labour leader Jeremy Corbyn’s ­famous line that “we will build a society in which no one and no community is left behind”. And Corbyn nearly won last year’s British election.

Shorten’s rallying hyperbole is rarely matched by hard pledges. This week he denounced private health insurance as a “con” but ran away from abolition of the private insurance rebate — creating the impression he will act but not hurt.

The moral this week is that the Liberals are no longer the party of John Howard. Howard initially made his name running on industrial relations reform but the Liberals — the integrity and account­ability issue aside — no longer have an interest in reform of the IR system. They have not fought on this front for years.

The IR debate, of course, is not dead. Just the reverse: it is alive and the agenda is run by the ACTU and the Labor Party.

The only questions under a Shorten government are how far the system will be re-­regulated, how much extra power will be gifted to the unions at the expense of companies and how much the minimum wage will be increased.

While business indulged itself over the past two years with its ­diversity agenda, it lost the battle about power in the workplace. It will have many years to reflect on the utility of that soft-option trade-off. Shorten and his astute workplace relations spokesman, Brendan O’Connor, have signalled for some time that they want far-reaching changes to the Rudd-Gillard IR system. And a Shorten government would be well placed to secure its proposals through the Senate.

There are three IR benchmarks in Shorten’s speech. First, Shorten pledged an ­increased minimum wage, saying it was “no longer a living wage” and must take account of cost pressures, notably energy and health costs, and he asserted a disconnect between present productivity growth and low wages.

O’Connor told The Australian during the week that “one option” was to legislate the minimum wage to a fixed proportion of the median wage — this is ACTU policy and was rejected by the Fair Work Commission when the ACTU argued for a peg to be set at 60 per cent of the median wage achieved over four years.

Any notion Labor would legislate the minimum wage removing this discretion from the Fair Work Commission would constitute an unprecedented upheaval in our system. Asked about the implications, Jobs and Innovation Minister Michaelia Cash said: “Until this week there has been bipartisan ­acceptance for over a century of the principles that minimum wages should be set by an independent body and not the government or the parliament.”

The last increase in the minimum wage was 3.3 per cent, distinctly ahead of inflation. O’Connor said Labor was not committed to the ACTU’s 60 per cent peg. This is hardly a surprise given the dire consequences. The commission was scathing about a target, saying: “We do not find this to be a helpful characterisation since there is nothing particularly analytical about having a number to aim at.”

Shorten has pledged Labor to legislate to protect penalty rates and override the Fair Work Commission. The idea of legislating a minimum wage goes further and would destroy the notion of an independent body finding a ­balance between the needs of the low-paid and the performance of the economy.

In its submission to last year’s wage review, United Voice argued that to achieve a 60 per cent of ­median earnings target over four years the minimum wage would need to be increased by 6.5 per cent each year for four years.

The head of the Australian Chamber of Commerce and ­Industry, James Pearson, tells this paper: “If Labor is going to legislate on penalty rates and the minimum wage then this raises a critical question: what is the future of the Fair Work Commission? What is the future of the decision-making body that just two cycles ago the Labor government established to settle these issues? What has changed so much since then?

“To legislate a wage level is to ignore the reality that Australian business needs to succeed in the marketplace. About 80 per cent of jobs are in the private sector and this proposal would be a direct threat to the viability of these jobs and businesses. If a living wage was mandated by law, the consequence would be that a generation of young people would be put in a position where they would never find a job.

“We seem to overlook we have the second-highest minimum wage in the world and a very strong social safety net through the tax and transfer system. Labor appears to be rejecting a system and a process that it put in place when it was last in government.”

The chief executive of the Australian Industry Group, Innes Willox, says: “The idea is a recipe for inflicting harm on businesses, damage to the economy and reduced employment prospects for low paid workers.”

Cash argues that the highly ­regarded Household Income and Labor Dynamics in Australia survey shows that more than two-thirds of workers who enter low-paid employment leave such employment within one year — in short, it is an entry point leading to rapid advancement.

In his speech, Shorten said the “capacity of industry to pay” had to be considered. The logic is obvious: Shorten should reject as unten­­able any suggestion that Labor would legislate a minimum wage. He should also reject any target in ­relation to the median wage for the reasons explained by the commission.

Second, Shorten attacked business for keeping wages low and for assaulting the enterprise bargaining agreement system. He accused companies of taking the “nuclear option” of terminating enterprise agreements and sending workers back to award standards. He said the proportion of workers relying on awards had grown from 16 to 24 per cent since 2012.

These claims are dubious at best and misleading at worst. Statistics submitted by the Fair Work Commission to a Senate inquiry last year showed that less than 3 per cent of applications to terminate enterprise agreements were contested in 2015-16. The FWC under the law can only terminate an agreement if it is satisfied such an act is not contrary to the public interest. Cash says that while award “reliance” has ­increased since 2012, many of these employees are still paid above-award rates.

Willox says industry would be “very concerned” if Labor moved to prevent companies from seeking to terminate an agreement. He says: “Unions are always arguing that a large number of enterprise agreements are being unilaterally terminated by employers.

“This is wrong. The Fair Work Commission’s statistics show that only a minuscule proportion of agreements are terminated in proceedings contested between employers and unions. The vast majority of enterprise agreements that are terminated relate to projects or contracts that have been completed.”

Enterprise bargaining is supposed to be a Labor glory. If so, Labor should stop manipulating its present problems and address itself constructively to buttress the enterprise model. It is singularly failing to do this and harming its own heritage. One place to start is the problem with the Better Off Overall Test that requires that every employee covered by an ­enterprise agreement must be better off than under the award.

The test is far too rigid and is weakening enterprise bargaining. The AIG has submitted to the Fair Work Commission that “such a test is unworkable for businesses that may have tens of thousands of employees who work a vast array of shifts”. This is particularly the case in the fast-food and retail ­industries. The employer body has told the commission its interpretation of this test is too theoretical, leading to the withdrawal of applications for enterprise agreements.

Third, Shorten recycled the ACTU’s obsessive mantra about job insecurity and casualisation of the workforce. He accuses business of “trying to make every job a casual one”. This typifies Labor’s ­approach to industrial relations. The facts on casualisation are that many people like the option and the figure has been steady at about 20 plus per cent of the workforce for the past two decades.

Labor is pledged to abolition of the Australian Building and Construction Commission and to 10 days of paid domestic violence leave for all employees. The notion that in a more competitive world it will also shift the Rudd-Gillard IR system even further in favour of union power will ultimately be a negative — though it is unknown whether this materialises before or after the election.

Shorten needs the unions to maintain his leadership and to win the election. Labor’s tragedy is that its union connection became a ­serious negative when it was last in office and that problem only looms as potentially greater today. While Shorten will try to limit in policy the class-warfare rhetoric he ­deploys there is another reality — if Shorten wins on an anti-private enterprise agenda it would be folly to think this sentiment will not be given expression in office.