Today’s AFR column.
Losing is sometimes better than winning. That might be the case for the Australian business community which supports the Commonwealth’s new wages setting policy.
Of course, the Government could eventually lose. Although no government Senator will want to incur the Prime Minister’s wrath by voting against “a matter of faith”, a defeat is possible in the High Court.
The High Court’s recent decision on the Government’s industrial relations advertisements shows how unpredictable that court is. A majority of the justices allowed federal departments to spend their appropriations on whatever they wanted. That perplexing opinion – one which surprised those who administered appropriation laws – was conjured up by four Justices who fundamentally disagreed with the arguments advanced both by the Government and the ACTU.
So, it is possible that an unfathomable High Court will find in favour of the States against the Commonwealth. But it is equally possible that the High Court will accept a further centralisation of power away towards the federal government. Some of the implications of such a victory should concern the Coalition and business.
If you believe Commonwealth advertisements, its industrial relations legislation will cause a wages blow-out. The government says that WorkChoices deserves community support because those on Australian Workplace Agreements earn more than award wages. The head of the Australian Chamber of Commerce and Industry, Peter Hendy, last week used this argument to rebut concerns about low wages for unskilled women workers. Hendy said that on average, women on AWAs “earn 60.5 per cent more than women across the labour market” and “48.1 per cent more than women who are on collective agreements in the workforce.”
If business really believed that WorkChoices would broaden these results, it would be an opponent not a supporter of the proposed law. But the advertisements are propaganda. The statistics mean little more than the statement that women who wear suits earn more than women who wear aprons. Ask a cleaner or waitress to wear a suit and see how she fares in her AWA negotiations. No, the real threat from a High Court win is the power it allows the Commonwealth in other matters.
Following the strong defeat of the Commonwealth’s 1948 constitutional referendum to give it power to control rents, prices and charges, federal governments have believed they had limited peacetime powers in this arena. In Gough Whitlam’s first term he introduced the Prices Justification Bill to moderate inflation but that law was more about public bullying than setting prices in the private sector.
Recent federal governments have also shied away from using their constitutional power to make laws concerning corporations, believing that the power has real limits. But if the Howard government is correct that the Commonwealth parliament can directly control minimum wages paid by corporations – without the need for an industrial dispute and a court such as the Industrial Relations Commission – the federal government should also have the power to set maximum wages paid by corporations. It would be a simple drafting exercise to give this power to the Fair Pay Commission or to a minister.
Should voters believe that executive pay is outrageous, which they are, the electorate could reward political parties which bring executive wages under control. The Howard government won’t regulate these wages, although it has voiced concerns about them. But the possibility that another government could intervene should worry businesses.
There is even a more troubling matter. If the Commonwealth has the power to set prices which corporations can pay for their workers and executives, it should also be able to set prices for other inputs used by corporations. It might even have the power to set prices for outputs of corporations.
The most likely candidate for price control is petrol. Anxiety over petrol prices – especially refining and distribution margins – could re-emerge when another set of shocks destabilises the petroleum market. The Australian Competition and Consumer Commission understands consumer concerns and distances itself from accusations that it is doing too little. Its literature makes plain that “The ACCC currently has no power to regulate wholesale or retail petrol prices in Australia.” But its submission in June 2000 to the Productivity Commission shows it would welcome pricing powers. Business should hope that the word ‘currently’ is not a portent for a future government.