Wednesday, May 07, 2008

Treasury effectively denounced Labor's IR policies

All my long held criticisms of Labor's IR reforms - that they will trigger job losses, worsen inflation and increase interest rates have been supported by the Commonwealth Treasury in its analysis of the plan to abolish WorkChoices. According to The Australian:
"...the secret Treasury advice, the department, under Treasury secretary Ken Henry, concluded that the abolition of AWAs and the return of guaranteed penalty rates would cut jobs, put "upward pressure on prices", create more "flow-on" wage claims from sectors such as mining to less productive sectors and allow unions to "bid wages up above their market level".

"The shift to a more centralised wage system might reduce employment and increase inflation. For example, higher unit costs, either through higher real labour costs, lower productivity, or a combination of both, will place upward pressures on prices, which effectively lowers real disposable incomes, consumer spending and thus employment. The rate of flow-on of wage increases from high-productivity firms and sectors to low-productivity ones may increase. Reinstalling union power will raise the ability of unions to bid wages up above their market level."

In addition abolishing unfair dismissal laws will cut jobs, increase red tape for small business and make it more difficult for people to move from welfare to work.

Treasury said WorkChoices was "expected to allow a more expansionary monetary policy setting and result in higher rates of employment".

Where's Labor's cheer squad on this one?

This document was written before the last election but despite Julia Gillard's denials it is definitely applicable to Labor IR policies. The unemployed of Australia and those facing higher mortgage repayments and higher inflation can attribute part of these problems to inept Labor IR policies and to those sections of the leftwing intelligensia who, against all reason, supported these particularly inept and foolish proposals to reregulate the Labor market.


Anonymous said...

"This document was written before the last election"

More to the point, it was written before the ALP's mid-2007 substantial revision of its IR policies.

Nice try Harry, but no cigar.

Anonymous said...


Maybe this is a more realistic interpretation of Shanahan's article.

Mark U

hc said...

Gee Spiros wasn't much of the report about WorkChoices and isn't that policy going to be implemented.

I don't smoke.

I couldn't open The Crikey reference Mark but I can almost guess the content.

Anonymous said...

Basically it means vote labor and root things up for the economy.

Yea, I agree with that. Treasury is being sound for once.


Anonymous said...

Harry, even the Liberal Party has abandoned and disowned WorkChoices. It's the retarded, delinquent relative they'd rather not talk about, thanks.

Who in Australia besides you and some of the Liberals' slow learning boosters in the media still supports WorkChoices? Or still carries on with the rhetoric that the Government's IR policies will destroy the economy?

Have a butcher's at the piece by Ken Phillips in yesterday's AFR which assesses the Government's IR changes. Phillips is director of the work reform unit at the Institute of Public Affairs, so he would scathing of the Government, right?


Here's the summary at the top of his article

"The Rudd government is entrenching workplace reform, not retreating from it"

Phillips goes on:

"So far the signals are positive ... [the government] is not behaving vindictively towards business organisations that supported WorkChoices ... Rudd is now retaining most of Howard's reforms but changing the style, politics and some substance ... there's a workplace reform policy continuum that transcends party politics ... unions can't monopolise collective engagement and there's a sifting focus to the individual ... Forward with Fairness stops compulsory unionism , secondary boycotts and wildcat strikes and puts rules around union right of entry ... employer groups are reporting genuine, productive consultation and professional consultation ... union dominance and the enforcement of the collective is over ...Etc]

This, I repeat, is coming from the IP bloody A.

Do yourself two favours Harry. One, don't rely on Dennis Shanahan for your talking points on any subject. Two, if you want to write sensibly about IR, get out of your Bundoora Bunker and talk to some people who who know something about it.

hc said...


The Treasury for one. They thought that abolishing WorkChoices would increase unemployment and increase inflation. I do too.

You can jump up and down and get angry but placing barriers on the ability of workers to contract with employers is to the disadvantage of workers.

BTW if Phillips claims were correct and Rudd is following Howard's IR agenda (in some sort of implicit way) what actually was the difference between Labor and its opposition at the last election? The me-tooism was everywhere except for the WorkChoices issue. Now you are telling me that Labor was mimicking Howard on IR as well.

But I don't believe this story. Cost push inflationary pressures are about to emerge again and eventually Labor will create a much-greater pool of unemployed than would have occurred with decent government.

Anonymous said...

Harry, Treasury was commenting on Labor policy as it existed in April 2007. You will recall that following the ALP national conference in June Labor changed its policy significantly.

"Now you are telling me that Labor was mimicking Howard on IR as well."

Largely, yes. Politics is about perceptions. I don't suppose you know any actual employers, but if you do, why don't you ask them what has actually changed?

As far being angry, that I am not. My side is in doing things I like. They are a solar system in front in the polls, and will probably govern for the next decade and a half. What's to be angry about? Have a read of the tone of your post here, and your post on Victorian teacher deal, and reflect on who it is that is angry.

Anonymous said...

Harry, Treasury was commenting on Labor policy as it existed in April 2007.

Spiros, what's materially different from the policy then and the one they're implementing.

Correct. It's nothing.

harry, why are you debating with an ALP supporter who knows next to nothing about economics and thinks a smart arse comment here and there will suffice?

Don't waste your time.

Anonymous said...

Harry, take JC's advice and don't argue with me - at least not until you get better arguments.

hc said...

JC & Spiros, I'll debate however I choose to.

But Spiros my main concern is not to attack the dills in the ALP - it is to point out the adverse consequences of reversing a trend to reform in labour markets. You just don't get the point that many others - including the Commonwealth Treasury see the abolition of WorkChoices and the reinstallation of unfair dismissal laws as something that will limit jobs.

I have listened numerous times to diatribes from the left accusing the Coalition of waging war on workers etc and I regard these claims as blatant lies. Sheer lies that the proponents of these arguments believe will win the day if repeated often enough.

I'll feel happy to point out the value of getting governments (and dumb-assed unions) out of labour markets and allowing workers and firms to do the best they can for themselves in competitive labour markets.

Anonymous said...

Sure thing Harry. But if you are going to invoke Treasury as an authority, why don't you find out what they think of the policy that was actually implemented, rather than the one that wasn't.

Anonymous said...

Harry, arguably every piece of government regulation on its own prevents a certain number of jobs being created. I've no doubt that if there were no laws restricting the employment of children, or the destruction/pollution of the environment, that there are corporations out there that wouldn't flinch at employing 10yos for $5/hour to assist with clearfelling delicate and irreplaceable ecosystems, if there was money to made out of it. Sure it would create more jobs, but at what cost? An extreme example to be sure, but it's disingenuous to simply point to one policy and say "this is bad becuase it will cut jobs".
What matters is whether the total set of policies works to encourage employers to provide decent wages and conditions for as many employees as possible, in a manner that doesn't leave future generations robbed of a clean and thriving environment.
The fact this that countries with high levels of regulation (e.g. Norway) still manage very high levels of employment, so the two are not incompatible.

Anonymous said...

Mr Clarke it would be an advantage to read articles you link.

Perhaps even an understanding of how a treasurer directs treasury would also be of assistance.

First of all Costello directed Treasury to write this after Mr Rudd had made a speech on the subject not when the policy had been released. We do not know the full brief but we do know that Treasury assumed that IR policy would go back to pre-1993.
I find it strange you have missed that point particularly since this is the main reason for the conclusions!

Good golly I wonder why they assumed that rubbish.

If the Government or Treasury was confident about this it would have been publicly released. It wasn't and Treasury did not want to release it.

ever thought why?

It is not hard to find out whether unfair dismissals or workchoices have had a significant effect on the labour market.

Have you ever wondered why there is NO evidence to back you assertions up?

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