Will the Senate Listen to Adam Smith?

Incorporating the Shorter Hendo (TM)

In the late 70s and early 80s, Joh Bjelke-Petersen used to get awfully frustrated with a group of small l Liberal backbenchers known as the “ginger group”. They had a habit of speaking out against government policy and occasionally crossing the floor. Ironically, the Howard government may now face a hurdle in the Senate from a Queensland National backbencher, the newly elected Senator Barnaby Joyce, as Hendo suggests today.

Gerry also highlights the role of the “Coalition’s backbench tax and welfare reform group” spearheaded by Sophie Panopolous. Interestingly, productivity and industrial relations appear also to be on the “tax and welfare reform group’s” agenda. The Australian reports pressure from a number of business groups to “harmonise” the state IR systems with the Federal Workplace Relations Act. According to Panopolous:

“Reform, particularly in a dynamic economy like Australia’s, is never finished business,” she said. “The Coalition’s control of the Senate after July 1 provides an extraordinary opportunity to pursue IR, tax and welfare reform.”

All this is being harnessed to the productivity agenda. Although labour productivity is only one element of overall productivity, and as I argued during the election campaign, the evidence that deregulation of the labour market is largely responsible for productivity gains is lacking, or at best ambiguous, Australian employers appear to be continuing their long term obsession with reinforcing management prerogative. Around the time that the BCA was first pushing enterprise bargaining, a survey of line managers found that “industrial relations reform” was not seen as an impediment to efficient management, but it was the first priority of CEOs. There are some excellent arguments against centralising IR jurisdiction, not least the ability of the states to experiment with different policy outcomes. The issue is not new and the Queensland government’s response to Minister Reith’s paper remains a good statement of the arguments.

What is most disturbing in the light of the Coalition’s post-June Senate majority is this proposal by the ACCI:

It wants to end the current arrangement under competition law by which Australian workers are allowed to band together and set a price for their labour through collective bargaining.

It’s hard to know what this means, and I can’t find anything on the ACCI website. Their Blue Print for Workplace Relations Reform supports freedom of association and sees a continuing (if diminished) role for unions and the AIRC. It’s possible their agenda has changed since the scope of the government’s legislative authority became clear. If it’s accurate, and it means what it says, it presumably means that unionisation and collective bargaining would be illegal.

Adam Smith wrote in The Wealth of Nations:

We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate. To violate this combination is everywhere a most unpopular action, and a sort of reproach to a master among his neighbours and equals. We seldom, indeed, hear of this combination, because it is the usual, and one may say, the natural state of things, which nobody ever hears of. Masters, too, sometimes enter into particular combinations to sink the wages of labour even below this rate. These are always conducted with the utmost silence and secrecy, till the moment of execution, and when the workmen yield, as they sometimes do, without resistance, though severely felt by them, they are never heard of by other people.

I hope some Coalition Senators know their Adam Smith well.

About Mark Bahnisch

Mark Bahnisch is a sociologist and is the founder of this blog. He has an undergraduate degree in history and politics from UQ, and postgraduate qualifications in sociology, industrial relations and political economy from Griffith and QUT. He has recently been awarded his PhD through the Humanities Program at QUT. Mark's full bio is on this page.
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Yobbo
Yobbo
2022 years ago

When was the last time you slept? Clive Hamilton is worried that your blogging obsession is interfering with your quest for inner happiness.

Vee
Vee
2022 years ago

Will the Senate listen to Adam Smith?

Cynicism says the Senate will listen to the Wealth of Nations whilst ignoring the Theory of Moral Sentiments.

Does the Theory of Moral Sentiments have a passage that may counter the quoted Wealth of Nations?

With Senator Joyce, the National Party can prove to the public they’re not just the Liberal Pary by another name.

Jim
Jim
2022 years ago

Mark,
Can’t help myself – a few observations;
1.A system which allows organisations to end demarcations and improve efficiency in exchange for higher wages is self evidently beneficial for shareholders AND staff. The IR system has been modified in some jurisdictions (I always laugh when I hear someone breezily suggest that workplace relations are now “deregulated”)and the result has been higher wages growth (higher under this government than it’s predecessor),lower unemployment and increased productivity – we’re going in the right direction obviously.
2. Is it really that unusual that organisational leadership is pursuing the strengthening of “management prerogative” given the significant increases in responsibility they face? If organisations and the individuals who manage them are becoming increasingly accountable across a whole range of areas (WPH&S for example) don’t they need to have the clear capacity to meet these responsibilities? Accountability and management prerogative go hand-in-hand and are not mutually exclusive.

3. I’m glad to hear you endorse the idea of IR jurisdictions experimenting with different policies and outcomes. It’s my experience that generally the IR club doesn’t support any significant policy differentiation away from the standard highly regulatory model.In any case, you must be pleased with the Federal Government’s differentiation from most state jurisdictions – and the outcomes achieved!
All the best in your new job!
Jim

Peter Stryzlecki
2022 years ago

I used to be a big fan of Adam Smith until his “invisible hand” stole my wallet.

Makes me wonder what other invisible body-parts he has.

I for one would not recommend trusting a man with an invisible penis?

nick paul
nick paul
2022 years ago

to make unionisation illegal, i’d suggest a little more demonisation of them is required.

otherwise there may be a backlash.

perhaps blame the unions for the out of control OH&S ‘menace’, that pesky 40 hour working week and accuse them of unwittingly funding terrorist groups (naive ideologues, ya know?).

Mark Bahnisch
2022 years ago

I sleep well, yobbo. Except when the doof doof music from the disco aka apartment downstairs wakes me up. Gotta love living in New Farm.

Jim, I haven’t got the job yet but thanks.

On managerial prerogative, what concerns me is what Boris Frankel calls “sadistic” management. Some Australian companies realise that autonomy and participation in work organisation is a plus for productivity, some sadly don’t. But the whole issue seems to me to be much more of an ideological bottom line than anything else. There are some serious impediments to productivity and economic growth in Australia which are becoming more apparent and it concerns me that the reflex response is “more labour market deregulation”.

On wages growth etc. please refer to the link to my earlier post.

Austopin
Austopin
2022 years ago

Perhaps the govt could set an example by first getting rid of the most powerful union of all – the AMA!

liam hogan
2022 years ago

Pfft, the chances of floor-crossing in the next three years of Parliament are minimal at the best.
Even if rogue Nationals were to go crazy and take walks around the big pink room, the Government just needs to suck up to the remaining Democrats to pass radically anti-union laws. They’ll fold, as the saying goes, than Superman on laundry day.

Mark Bahnisch
2022 years ago

I agree, Liam. I’m a bit over parsing Hendo so I didn’t point out that voting with the Opposition and pursuing one’s own agenda from the backbench are two very different things. He confuses the two, and undermines the central point of his column. Panopolous’ group is doing the latter. The Nats are likely to kick up a stink on Telstra and that’s about it – with maybe a few demands for rural and small business pork barrelling and Joyce pushing his Christian Right agenda as an instance of the “shift the government from within” phenomenon. The situation in the Fraser years was radically different, as Hendo should know.

Mark Bahnisch
2022 years ago

I’ll add that my question is a combination of irony and wishful thinking. I think there is little chance of Liberal Senators crossing the floor on anything.

Joel Parsons
2022 years ago

Hmmmmmmmm, HR Nicholls union busting the AMA, what a lovely right wing dream . . .

My father is a GP, and there is a human toll to the AMA’s restrictions on GP numbers. That human toll is the full waiting room in the surgery where he works, the shortages of doctors in rural and outer suburban areas, and the ridiculous hours that doctor’s work. Unfortunately, because medicare bulk billing gives doctors a blank check from treasury, the interests of the government and the AMA in limiting doctor numbers are aligned. That puts the AMA in a very cosy position, because any attack on their privileges can be characterised as either fiscal imprudence or an attack on bulk billing.

From an economic point of view the health sector is a vital area which should grow significantly in the next twenty years. Market reform in this sheltered enclave of soviet bread line economics would be very beneficial.

Darlene
2022 years ago

Interesting about Mr Joyce. At a women’s forum prior to the election he suggested he might be a thorn in the government’s side regarding issues such as Telstra. Mind you, he also didn’t think he was going to win or get out of the forum in one piece. Guess he was wrong on both counts.

yellowvinyl
2022 years ago

Darlene, did he mention his views on medicare funding of terminations? I imagine he was hoping no-one at the forum read his ads in the Courier-Mail claiming to be the most anti-abortion of all anti-abortion candidates running…

Andrew Bartlett
2022 years ago

Liam’s comment suggesting that any (or all?) of the remaining Democrats would support passing “radically anti-union laws” is a piece of gratuitous slagging off with no foundation in fact. If there was even the slightest truth to it, the same Democrats would already have passed such laws, as they have had the numbers to do it for years. Despite what some people may think of the heavily amended 1996 legislation passed by the Kernot-led Democrats, to suggest that was radically anti-union would be just silly.
As for Liberal or National Senators crossing the floor, I’d be highly (albeit pleasantly) surprised if it happened. There’ll be the usual sabre-rattling to help the Govt justify some poorly targetted rural porkbarelling as part of passage of the Tesltra sale, but I doubt we’ll see much else.
The tax and welfare ‘reform’ issues being raised lately by the so-called ginger group of backbench Libs such as Sophie Panopolous try to paint the Senate as having prevented needed reforms. They neglect to mention the fact that a number of the tax measures (i.e. reducing bracket creep and raising the tax-free threshold) they are floating were never put to the Senate and would likely have passed if they had been, as they have been promoted by the Democrats in the past. It’s the Govt that’s failed to move on these things and most of the real welfare reform proposals out of the McClure report. I think the whole thing is just a cloak to surround their push for the one tax item they all really want, which is more tax cuts for the highest income earners by dropping the rate (rather than just raising the threshold) for the top income earners and the one welfare item they will always want, which is cutting back on entitlements under the guise of ‘reform’ and providing ‘incentives’.
A final comment – I noticed an interesting piece by Bob McMullan around Dec 28 or 29 (can’t remember which paper) supporting a single national IR system (although obviously not of the sort that the Libs would propose). I tend to agree, although I do acknowledge there can some benefit from state-based experimentation as Mark suggests.

alphacoward
2022 years ago

Its interesting to note that the Liberals don’t even need the nationals in the lower house to pass legislation.

Will tax cuts, selling telstra (and australia post) and free trade go down well in rural communities?
how many farmers earn more than 52k a year?
And a free trade agreement with the US who subsidises an average of 50% of each farmers income while we only provide about 1% income assistance to our farmers .

So there is either going to be some serious pork barelling to keep that group of agrarain socialists happy or a split in the coallition and with the liberals joining family first / democrats to pass legislation in the senate.

Mark Bahnisch
2022 years ago

Andrew, I worry a bit about Senator Murray.

The op/ed in the fin today made it clear that the tax reform worked in with the IR reform to compensate for low wages at the bottom end of the labour market. Of course, if we didn’t have IR “reform” in the first place we wouldn’t have to worry about maintaining the living standards of the low-waged through taxation and welfare policy. Typical!

Stephen Hill
Stephen Hill
2022 years ago

Noel Turnbull’s piece in Crikey has an interesting take on how little many neo-liberal advocates have contributed to the economic debate in this country.

http://www.crikey.com.au/columnists/2005/01/12-0001.html
(Scroll down about half-way down)

“On the subject of strange religions and West Australia, The H.R. Nicholls Society and Ray Evans are lumbering into action

Mark Bahnisch
2022 years ago

Thanks, Stephen, I’d agree with all of that.

Andrew Bartlett
2022 years ago

Mark
It’s not really possible to go into an in-depth analysis of every Democrat decision on every IR Bill in the last 7 years, nor appropriate for me to detail variances of views amongst Democrats Senators. However, I would say that any suggestions that Andrew Murray has taken positions on IR legislation dramatically at variance from his personal views because of the views of the rest of the Democrat Senators would be mistaken. He (and all of the other Democrats) have often taken positions somewhat at odds with the unions, but have not supported any of the major and/or radical proposals put forward by the Coalition since 1997. There have been a heap of different IR Bills (many of them recycling the same key agendas), and there have been a number of (often heavily) amended Bills making gradual changes here and there, but the big changes such as outlawing pattern bargaining, scrapping unfair dismissals, setting up a separate IR regime for the building industry, etc have all been totally rejected. If you look at his minority reports in the many Senate Legislation Committee Inquiries that have occured, you will get a good idea of his views, as these tend to reflect his policy-based assessments, without the more general political considerations that the Senators as a whole (including him) take into account when the final Bill might come to a vote. I think any fair reading of these would show that he is a long way from supportive of any of the radical and destructive (and counter-productive) IR agendas of the Libs.
A good summary of his (and the rest of the Democrat Senators’) views would be that there has been no case made to justify any major changes to the federal IR laws, but there is always room for ongoing refinement. The only exception to this is a willingness to consider moving to a single national IR system, but only if that can be done without reducing the existing rights of employees. There was one Bill which sought to do this with the unfair dismissals power (I think it was called the Fair Terminations Amendment Bill – not to be confused with the frequently rejected Bill to remove unfair dismissal protection for small business employees), which all the Democrats were willing to consider supporting, but could not get the Govt to agree to it in a form which would ensure that no employees would be worse off if their unfair dismissal rights were shifted from their state to the federal jurisdiction.
Whilst I’m keen to correct misapprehension about the views of Andrew Murray or any Democrat Senator on IR stuff, I’d also say that its totally academic, as I can’t see any Nats OR Libs being at all likely to pick this area as the one where they’d cross the floor. Even the Lib moderates who’ve muttered in the background about refugee and other human rights issues haven’t shown any sign of being concerned about worker or union rights.

Mark Bahnisch
2022 years ago

Thanks, Andrew, I’ll have a look at some of Andrew Murray’s minority reports.

I agree with you that it’s most unlikely that there are any coalition senators concerned about worker or union rights.

The big difficulty with a National IR system is that workers enjoy more rights under state legislation. The provision in the Queensland IR Act for award review and the pay equity provisions in Tasmanian, Qld and NSW legislation are particularly important in this context. The other distinctive feature of the Queensland state legislation which is worth preserving is the non-legalistic nature of the Commission which improves access and reduces costs.

I can see very little of merit in the case for uniform legislation.

Andrew Bartlett
2022 years ago

Enjoy your reading Mark!
On the matter of a national IR system, I found that Bob McMullan article I referred to in an earlier post – to quote his view (obviously not official ALP policy):
“The first thing that needs to be recognised is that it is in the national interest to have a uniform national industrial relations system. The economic efficiency argument is clear and unequivocal. The contemporary difficulty for Labor is the likely character of any proposed Howard government-imposed national IR system.”
This basically equates with the Democrats’ previous views – whilst noting your point about the higher standard of rights for some workers in some states and the difficulty of making such a change without reducing those protections.
The full article is at http://www.theaustralian.news.com.au/common/story_page/0,5744,11792775%255E7583,00.html

Francis Xavier Holden
2022 years ago

andrew bartlett – Thanks for your comments. You and the Dems have just gone up in my estimation on the basis of this blog engagment. Its achieved more than all the mainstream media stuff. I wish the others would do a bit of it.

Mark Bahnisch
2022 years ago

Thanks for the link, Andrew. I don’t agree with MacMullan and I don’t think in that piece at least he provides a lot to back up his argument.

Mark Bahnisch
2022 years ago

ps – I second Francis’ remarks. It’s good to see you hanging out in the blogosphere, Andrew.

yellowvinyl
2022 years ago

yeah, thanks for dropping in, Andrew – hope to see you back here again.

wbb
wbb
2022 years ago

Jesus, if that’s all it takes, then will we see the Lord of All Evil commenting here soon? Or maybe Howard Junior can just work up a robot to spam the comments boxes.

Geoff Robinson
2022 years ago

The Australia-US Free Trade Agreement has a chapter on labour standards. How would this fit with an all-out attack on collective bargaining?

Mark Bahnisch
2022 years ago

Geoff, if it’s anything like NAFTA, it wouldn’t be much of an impediment. NAFTA binds each country to enforce its own labour laws. This was a heavy point of criticism when it was introduced.