Life on the West Island Too busy whingeing…

The West Island federal parliamentary year finished with a bang, with a mass of legislation passing both houses after some heated debate and some cross-party deals to secure a range of major reforms and controversial policy changes.

In the final parliamentary weeks, the opposition foamed at the mouth about its hatred of asylum seekers and disgust at the aftermath of a High Court decision that they could not be held in indefinite detention – even after they had committed no crime – at the whim of a Minister, but rather must be treated fairly in court hearings. Meanwhile, the government – with help at various times from The Greens and some independents – managed to put in place a range of their policies and election commitments.

Perhaps the most significant was the passing of the Closing the Loopholes workplace reform bill, seeking to entrench in law the principle of “same work, same pay,” especially for labour hire and gig-economy workers. Labor obtained the support of Senators Jacqui Lambie and David Pocock, along with The Greens, to gain passage of what seemed like an obviously equitable change to employment law. But the reaction from some employer groups was explosive, as reported by respected economic journalist Michael Pascoe:

As certain as death and taxes – well, death anyway – the business lobby has reacted to Labor’s “same work, same pay” bill by claiming the Four Horsemen are riding in Canberra and the earth shall split asunder, spewing forth toads and serpents and so on. That’s a lot easier than admitting Australia suffers from dud corporate leadership.

The lobbyists’ hysteria coincides with a British economic stagnation study, key aspects of which fit Australia like a glove despite our lack of a Brexit disaster. Specifically, the Economy 2030 report targets low rates of investment (cue Australian non-mining industry) and underperforming management (ditto).

What’s particularly interesting and relevant here is that the study sheets home that underperformance to weak structures of corporate governance stemming from a high percentage of foreign-owned firms and a low percentage of listed companies that have a controlling shareholder to oversee management strategy, an “owner voice” to push management to do more than just manage. At the same time, there is a lack of “worker voice” putting pressure on management from below.

A range of employer organisations reacted to the changed laws with shrill predictions of dire consequences, including mass unemployment, spiralling inflation and higher living costs across the nation. Some went so far as to say that higher wages will kill the economy, at odds with the Productivity Commission, Reserve Bank and a raft of respected economists, who point out that in general higher wages stemming from a shortage of workers encourage businesses to invest more and thus improve productivity. As Pascoe points out, the other side of this coin is that higher wages usually make it more challenging for comfortable Australian businesses to forever increase profits to earn ever higher bonuses for executives. But it’s easier just to suppress wages if you can get away with it, as Australian business generally did with the explicit help of government during the Lost Decade.

The sheer hysteria of the business response to the concept of paying workers the same wages for doing the same job was illustrated by Phil Coorey in The Australian Financial Review, who reported that the heads of the major industry and business groups felt betrayed and were genuinely livid.

For example, Andrew McKellar of the Australian Chamber of Commerce and Industry, asked whether the government was trying to serve the Australian economy, the Australian people, or just interested in rewarding their union mates?

In a public statement, the Australian Industry Group said that the bill will hurt industry, undermine productivity and result in few job opportunities as well as higher costs that will potentially be passed on to consumers.

But in their responses, the Business Council of Australia and other employer organisations all but admitted that their members had been using labour hire outfits to undercut wages. In other words, it was easier to maximise profits by holding down wages rather than investing in new technology or improved productivity.

For too long, West Island workers have been blamed for low levels of productivity growth. But recent expert reports show that the main problem has been a greedy focus on profits above all else, especially by underpaying workers. This has been exacerbated by the neoliberal economic gospel that the major, or even sole, goal of corporations must be to “grow shareholder value.” Of course, this resulted in obscene and unjustified massive bonuses for executives, while real wages went into a tailspin. This obsession ignored the social and economic responsibilities of businesses to work in the national and societal interest and left most West Islanders worse off as inequality spiralled.

Michael Pascoe succinctly summarises the resulting current situation: Corporate governance in Australia has largely descended into a box-ticking exercise that blows out the size of annual reports with fluff and puff without adding substance in driving the managerial class beyond ticking their own boxes to receive the maximum bonus for what are mostly short-term KPIs. The easy path to higher “shareholder value” in the brief time most CEOs hold down their jobs is by cutting costs and not competing too hard in the relatively comfortable mix of oligopolies that characterises much of Australian business. So, they are doing a “thoroughly mediocre job” of investment and productivity growth. But, hey, let’s blame employees for daring to want the same pay for doing the same job.

Put another way, the West Island business response to these recent employment law changes shows that their “leaders” have been far too busy whingeing about workers and government to get off their backsides and invest in lifting productivity.