Labor knows growing the economy is best for wages

Bill Kelty was the third policy amigo in Labor’s reform era that began in 1983. Together with Bob Hawke and Paul Keating, Mr Kelty was one of the mainstays of the Accords that helped to promote economic growth, job creation and wage containment. Mr Hawke had come to power with wages and prices growth out of control. The Accords — between Labor’s political and industrial wings — were novel and adaptable, allowing trade-offs on superannuation, tax cuts and increases in the “social wage” in exchange for more moderate wage rises. The then ACTU secretary was also in the vanguard of structural changes — tariff cuts, financial deregulation, enterprise bargaining — that opened the economy to more competition. Mr Kelty often pleaded with his members to accept dislocation and adjustment pain in the national interest, and kept the industrial peace.

Mr Kelty has entered the political fray amid the ACTU’s push for a “living wage”, pegged at 60 per cent of the median wage, and Bill Shorten’s mix of messages on how he would change industrial law to ensure the Fair Work Commission increased the minimum wage — irrespective of economic conditions or productivity gains. Mr Kelty supports the ACTU’s push but brings a deeper understanding of what drives economic growth and business profitability. He sensibly argues any move to a living wage depends on a careful phase-in and needs to be linked to gains in productivity. If not, there would be a wages blowout, a cost spike for the economy and fewer jobs.

Last week, after declaring the election would be a “referendum” on wages, the Opposition Leader launched a soapy thought bubble endorsing the unions’ living wage push. He’s since said Labor would use legislation or perhaps make a submission to the FWC to broaden its scope in setting the federal minimum. Labor’s frontbench has been playing catch-up ever since, with Treasury spokesman Chris Bowen suggesting the alternative government was consulting to find “the right mechanism to ensure the minimum wage is fit for purpose”. It is policy on the hop, on the eve of an election.

While Mr Shorten often cites the Hawke-Keating model of economic progress as one to emulate and views Mr Kelty as a mentor, his words fall well short of their pragmatism and aspiration. The Accord-era reformers embraced roles in educating the public about the “big picture”, tax cuts and the dynamism needed to grow an economy. But Mr Shorten succumbs to the lowest common denominator of ancient class struggles and zero-sum confrontation. Labor’s reformers worked with business to raise profits, living standards and wealth. Mr Shorten now denigrates employers as “fat cats”, mimicking the war cry of former treasurer Wayne Swan. This anti-business rant may once have played well on analog or VHS. But it strikes a discordant note in modern, mainstream, enterprising Australia.

It’s odd that this class-based rhetoric is coming from Mr Shorten, who was a pragmatic, can-do Australian Workers Union official. Mr Shorten seemed to strive for balance in negotiations; wage deals were struck on a win-win basis, ensuring members retained jobs and industry its profits — to invest, expand and hire more workers. Those business leaders who dealt with Mr Shorten at the AWU would not recognise the populist spruiker at large today. As employment and workplace relations minister in the Gillard government, Mr Shorten promoted co-operation between capital and labour. Why? Not due to a 1980s nostalgia, but to improve the skills base and drive productivity. In the national interest, he believed there was a “sweet spot” between fairness and flexibility that would lead to prosperity for all. That Bill had the right idea.