HR Nicholls Society XXXIV Conference on “Stopping the Decline: Our Urgent Jobs Plan”

The highlight of the Brisbane conference of the HR Nicholls Society last Saturday was the dinner address by Queensland Attorney General and Minister of Justice, Jarrod Bleijie, followed by his proficient answering of questions for a considerable period, and the response by leading barrister Stuart Wood. While Bleijie spoke about various major problems which the Newman government has faced since acquiring office in 2012 (including the large net government sector debt left by Labor), he also outlined the government’s actions to  reduce disruptive activities on businesses by unions and bikie gangs. This includes legislation (just operative) designed to  prevent the fabrication of non-existent safety issues used to extort employers. It  removes the right of immediate entry by unions to work sites and the power of unions to direct workers to stop working because of an alleged unsafe situation.

Most importantly, both Bleijie and Wood emphasised the need for a State to maintain law and order. In my question to Bleijie I suggested that, given the reluctance of the Abbott government to initiate proposals for major workplace relations reform, the States might be able to help by adopting policies specifically designed to protect property rights.

The need for law and order to be applied was also emphasised by former Royal Commissioner in NSW, Roger Gyles, who reported to the Greiner government in 1992. That government established a body to ensure the law was applied in the NSW building industry. Of particular importance was the direct involvement of police in the operation of that body (police forces are generally reluctant to prevent disruptive action by unions). The Greiner body, however, succeeded in moving NSW building costs down below those in other states – until, that is, Carr became Premier and dissolved the body.

Gyles also expressed the view that the ABCC has an inadequate structure that needs to be changed if it is to be effective in dealing with the intimidation approach adopted by building unions and that action needed to be taken to reduce collusion between unions and major contractors  (see also attachment on Gyles). He also offered some thoughts about what the Heydon Royal Commission might examine: the RC might find it useful to talk to Gyles.

Barrister Alan Drake-Brockman painted a similarly worrisome picture of the MUA in WA seemingly being able to freely disrupt  shipping in WA, including the holding of off-shore vessels to ransom. His picture seemed one of close to chaos in an area where the commercial shipping of iron ore is important.

Both Michael Knox (chief economist at Morgans Financial in Brisbane and Theresa Moltoni, managing director IRIQ in Brisbane and HRN board member) addressed the employment outlook in the current context where OECD analysis shows Australia having the highest unit cost of labour  and where there are various impediments to employment  under the existing regulatory arrangements. Knox’s conclusion is that, as the mining industry slows, competitive pressures will lead to a collapse in the real exchange rate to around 70 cents to the US dollar.

As a prelude to a period of audience questioning of a panel (which I chaired), I circulated this graph taken from the Reserve Bank’s recent statement on monetary policy. My comments on the trends shown in the graph are added.

I note that the unemployment rate does not provide a meaningful indicator of the strength or weakness of the labour market because account also needs to be taken of those of working age who drop out of the labour force altogether. The figures at the end show that, while the working age population has been increasing since 2008-09, the growth in employment has been much less. But except for 2008-09 (when the GFC occurred), most of the working age population who were not employed simply dropped out of the labour force and ceased to look for work. By contrast with the period before 2008-09, the growth in employment has not  kept pace with the growth in the working age population.

At the de-briefing on the statement, the RBA Assistant Governor explained this development as mainly reflecting either the ageing of the population or the slowing of employment in the mining sector. I suggested that the increased regulation of workplace relations would also have acted as a deterrent to employers to add to their work forces (see brief reference to this at the end of the first page). One might add here that an environment conducive to employment would be provided by a “free” market – that is, free subject to normal contract law.

As President Adam Bisits pointed out in his opening remarks, it is not necessary to have an inquiry into workplace relations by the Productivity Commission. It is already quite clear that the regulatory arrangements act as an unnecessary deterrent to employment and also prevent the freedom of employers and employees to bargain individually in a modern day society where employers are unable to exploit workers.

I have not mentioned here several other speakers who made valuable contributions to the conference, including a former adviser to Peter Costello who updated the main changes to the existing legislation seen as necessary by HRN (of course, the main aim is to have minimal regulation). In due course all papers will be put on the HRN website.