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Aussie workers worse off under Howard

Written By: - Date published: 7:00 am, October 17th, 2007 - 47 comments
Categories: workers' rights - Tags:

A new report (PDF) by the University of Sydney shows Aussie workers are doing markedly worse under a Howard government.

His desperate bid to buy them back this week with the offer of tax cuts doesn’t address the deep unfairness they’re being subjected to by his doublespeak-ish “Work Choices” legislation.

The Australia@Work study, published this month, surveyed more than 8000 workers and concluded that those on Howard’s individual work contracts earned on average $106 a week less than those on collective agreements.

Howard’s “Work Choices” legislation is a lot like National’s Employment Contracts Act of the 90s. It’s designed to abolish collective bargaining and undermine the rights of workers. In Australia it has allowed bosses to cut overtime payments, public holiday pay, maternity leave and meal breaks.

To add insult to injury it looks likely that Aussie workers will now be subjected to further steep interest rate rises as a result of Costello’s cynical bid to buy back their votes.

The ABC reports that his tax cuts “will make the Reserve Bank nervous and could push interest rates higher”. A senior economist is quoted as saying “It certainly means interest rates would be higher than they would otherwise be… I cannot imagine were it not for an election the Treasurer would be contemplating these tax cuts of this order.”

There have already been five interest rate rises since the last Australian election and mortgage repayments are up sharply there – somewhere in the order of $65 a week on average.

The combination of tax-cut fueled interest rate rises and draconian employment relations legislation makes things look decidedly grim for workers across the Tasman.

If I was a worker there I’d see Howard’s tax cuts for what they are: a desperate attempt from a government trailing in the polls – in large measure as a direct result of its unrelenting, decade-long assault on the rights of workers.

47 comments on “Aussie workers worse off under Howard”

  1. Wodger 1

    Obviously we will be able to see a sudden reversal in the trans-tasman immigration flow as all those hard-done-by aussie workers abandon “The Lucky Country” and move to Godzone “The Workers Paradise” were those rich bastards are made to pay!

  2. Sam Dixon 2

    But aren’t tax cuts all you need?

    The blank faces when you try to explain the macroeconomic effects of tax cuts that appear on tories’ faces are truely worrying.

    Of course cutting tax and increasing borrowing, bringing in money from overseas, is inflationary. The last term in Australia has proven that yet Costello is claiming that this latest elction bribe somehow won’t be inflationary

  3. Benodic 3

    I wonder what National’s industrial relations policy is? For something they’re “very passionate about” they’ve been very quiet about it lately.

  4. The inflationary effect of tax cuts depends on their impact on the labour supply. As both NZ and Aussie are short of labour, an increase in labour force participation from tax cuts would put downward pressure on inflation, which would partially counter-act the upward pressure on inflation from the increased fiscal stimulus.

    In fact, if you cut taxes and spending by a corresponding amount, the increase in labour force participation would be the only relevant factor, and so inflationary pressures would ease.

    In terms of NZ, if we cut taxes and not spending I’m pretty sure inflationary pressures would increase, as I don’t think labour force participation would rise considerably on the back of tax cuts.

  5. Another thing. I’m not sure this article is saying “Aussie workers are worse under a Howard government”, it is just saying that workers in collective agreements (so they have market power) get higher wages, which is obvious.

  6. Conor Roberts 6

    You think the NZ media will give as much prominence to these revelations that they have given to Howard’s tax scramble?

    Or is it easier to repeat the mantra that everything is easier in Aussie and we are overtaxed?

    (also leaving aside all state taxes, Medicare, compulsory super, stamp duty…)

  7. Conor
    When the surplus was announced, TVNZ’s Guyon “I don’t think the Hollow Men will impact Don Brash’s role as Leader of the National Party” Espiner, managed to get in 14 references to tax in a 2:30 story supposedly about budget surpluses, that’s once every 11 seconds.
    I suspect he’s competing in the BRT-sponsored competition to see how many times a journalist can insert the phrase “tax cuts” into a single story. Not that they or their editors have a personal agenda mind.

  8. r0b, yes I agree, our participation rate is 68.8% which is pretty danged high. That is why I said that I though a straight cut would increase inflationary pressures. However, if taxes and spending were cut (I’m not saying they should be, I realise that the majority of people do not want both cut) then inflationary pressures would fall for two reasons:

    1) A slight increase in the labour supply, increasing productive capacity
    2) The fact that private spending is less inflationary than public spending, because of the type of goods that private spending produces.

    I’m not advocating a tax cut or a cut in government spending (I’m an economist not a politician). I’m just saying that if taxes were cut and not spending inflation would rise. If taxes and spending were cut by an even amount, inflation would fall.

  9. r0b 9

    “I wonder what National’s industrial relations policy is?”

    They are quiet aren’t they. Understandable I guess, as talking about their policies doesn’t seem to go so well for them. Anyone want to take bets on a return to an Employment Contracts Act (ECA) type regime?

  10. r0b 10

    “The inflationary effect of tax cuts depends on their impact on the labour supply.”

    “In fact, if you cut taxes and spending by a corresponding amount, the increase in labour force participation…”

    Hi Matt. So the theory is that cutting taxes usually leads to a significant increase in employment (because people are more motivated to seek employment?). There doesn’t seem to be much scope for that effect in NZ right now, with near record low unemployment.

  11. The whole private vs public inflation business seems to be about how ‘productive’ different sectors are, so how much output you can get from a given input. Say with health spending, the government puts a lot of money in, but in the extra ‘output’ that is created from that spending is quite small. As this additional spending has created little extra output, the people that get paid to produce this small amount of output will put pressure on the price of other goods when they try to buy things.

    Now this doesn’t mean that we should suddenly slash government spending or anything, after all there are social benefits etc etc that have to be weighed up with what you believe. But the fact that the areas where government spend money are less productive does imply that additional government spending will be more inflationary than additional private spending.

    If you are interested in health outputs, there are some people on my blog that discuss it under health economics, but thats not my specialty, so I won’t be able to answer much on it 🙂

  12. r0b 12

    “I’m an economist not a politician”

    Pleased to meet you. I’m neither, but I’m willing to learn.

    “private spending is less inflationary than public spending, because of the type of goods that private spending produces.”

    I have never understood this claim – can you elaborate on why this is so?

  13. Sam Dixon 13

    Matt, welcome to the Standard. Isn’t it good to see a blog where the message boards have calm discussion and informed debate? sucha contrast to the days when kiwwiblog was king.

    For myself, I’ve never brought the argument that the private sector is inately more efficent than the public sector. I think there are a few relevant points:

    1) measuring prodcutivity is a real challenge, eespecially for goods and services paid for via govt revenue, rahter than a purchase price
    2) The govt does a lot of things that the private sector simply doesn’t do (emergency healthcare, police, courts, prisons, defence, welfare), and likewsie the priavte sector does a lot the govt doesn’t do. So we’re not really comparing apples with apples (same point applies to public vs private sector wages – of course public sector wages are higher, the govt doesn’t employ labourers, taxi drivers and other low-paid employees)
    3) Any very large organsiation suffers from diseffiencies of scale from under utlisation of employees’ capacity, you see it in both the public and private sector (and the public sector does have a high proportion of large monolithic organisations by its very nature)

  14. Santa Claws 14

    Sambo: “Matt, welcome to the Standard. Isn’t it good to see a blog where the message boards have calm discussion and informed debate? sucha contrast to the days when kiwwiblog was king.”

    Wow Sambo, you must have missed this jewel of calm discussion from Robespierre a couple of days ago…
    “Hey santa – you made your stupid joke an said your goodnights now fuck off. Oh and it’s not about a gay image you dick it’s about the cyberbullying of a fifteen year old boy by a middle aged man. Sorry if a general disgust with that seems out of order to you. But seeing as it is you can just fuck off (did I already say that?)”

    Here’s Tane being calm:
    “And don’t give me your shit about low income workers.”
    “Honestly mate, you’re shameless.”
    “you’re talking crap”

    Even you get into into the area of on-topic, calm-promoting issuances (btw didn’t realise you were such a fan of Dean Kamem)
    “some racism, some mysgyny, some strange EFB segways, some beneficairy bashing, some xenophobia and a bit of ill-informed rubbish about the strike wing and legal aid.”
    “I despise people like you.”

    Really, you and your slimy attack poodles will have to take a chill-pill if you want to promote calm discussion.

  15. Tane 15

    Santa, we can all pull quotes out of context, but some of us are more interested in constructive discussion. Do you have anything to add, or are you just here to troll again?

  16. r0b 16

    Really, you and your slimy attack poodles will have to take a chill-pill if you want to promote calm discussion.

    Online culture is notoriously thoughtless and abusive. This is a shame, because it tarnishes what could be a brilliant medium. The Standard is not perfect in this respect, but I think it is better than most, and I hope that it remains so. Alas Mr Claws, you are part of the problem, not part of the solution.

  17. Robinsod 17

    “Robespierre”? I kinda like that – it makes me sound all kinda tough and scary. Thanks claws.

  18. r0b 18

    “As this additional spending has created little extra output, the people that get paid to produce this small amount of output will put pressure on the price of other goods when they try to buy things.”

    OK, I think I can make sense of this if by “the people that get paid to produce this small amount of output” you mean not “people” (as individuals their purchasing power is not increased), but rather “institutions”. So crudely, if schools and hospitals have more money to buy stuff with then prices go up. Is that it?

    I don’t see how such an effect is likely to be any more or less inflationary than we consumers going out en masse and purchasing more imported goodies.

    However, I’ll stop bothering you for further details, I’ll visit your blog, and I’ll move economics further up my list of stuff I really should learn more about.

  19. Santa Claws 19

    Tiny

    “but some of us are more interested in constructive discussion.”

    Nice to see the hypocrisy coming through strongly there, and so early in the day too.

    Just pointing out that the same supposed paragons of reasoned debate on here aren’t shy abut being nasty elsewhere.

  20. Robinsod 20

    Hey Santa – what part of “fuck off” don’t you understand?

  21. and it makes you sound frenchie…everyone wishes they could be a bit more ‘continental’.

  22. Nih 22

    I forget – is a continental breakfast good or bad? Why couldn’t they just call it Awesome Bacon Breakfast or Shitty Cereal Tossoff?

  23. continental is like a…”if i was gonna pay for brekie why would i pay fo this crapolla” kinda brekie

  24. Santa Claws 24

    Robespierre, I’m sure they are missing you witty repartee over at KWB

    ho ho ho!

  25. Robinsod 25

    Santa are you David Farrar?

  26. Sam Dixon 26

    But Santa, I do despise people who call hardworking people working crappy jobs for minimum wage ‘freeloaders’.

    Have to say that I actually think you prove my point if that’s those are the worst quotes you can come up with – (must have taken some digging too, that first quote from me was days ago … are, are you stalking me Santa? I’ve never had a stalker before, let alone one that can tell if you’ve naughty or nice)

  27. Sam Dixon 27

    hey robinsod – re: your ‘Santa Claws are you David Farrar?’, that reminds me of an edit my mate made to DPF’s wikipedia page the other week, it got taken down within 10 minutes (DPF doesn’t sleep) but you can still see it here:

    http://en.wikipedia.org/w/index.php?title=David_Farrar_(New_Zealand)&oldid=159358554

    scan down to ‘Appearence’

  28. Nih 28

    That was pretty funny. You should probably keep the jibes above belt though. We really don’t have to sink to him and his buddies’ level to kick their asses all over the blogosphere.

  29. Sam Dixon 29

    Nih – yeah I know, bit of the H word but, still, funny.

  30. This research is very sophisticated because it disagregates the labour market by the level of engagement and monitors wage effects accordingly. Buchanan and his colleagues are some of the smartest labour market analysts around and their conclusions, that Workchoices has reduced wages of the most vulnerable, have resonanted widely across the electorate because they’re coherent with people’s experience. The Minister, Hockey, tried to discredit them but he’s pushing it up a hill frankly.

    Australia may have near record levels of participation but you need to examine the nature and extent of that participation closely to see that a lot of it is in poor quality and low value jobs – non-standard work – in the retail and service sectors where careers are limited and churn is high. There remains significant levels of disengagement – young women, mature men, people with disabilities, some migrants – and tax cuts alone will do bugger all to increase their participation – the reasons for this are too complex for this posting…

  31. r0b 31

    Great to have your comments on this mardypants.

    “and tax cuts alone will do bugger all to increase their participation – the reasons for this are too complex for this posting”

    Where can I go to learn more?

  32. Mardy pants I’m also interested in why you think that tax cuts will do little to increase labour market participation. I feel like they won’t have a great affect on participation rates, but I’m not really sure what the reason would be.

    If a large proportion of current labour demand is for unskilled labour, then the incidence of the tax should be fully borne by the employer (as the employer will only want to pay new employees at their reservation level). As a result, any cut in tax will increase labour demand. Implying that the change in the quantity of labour will depend on the elasticity of labour supply. As Aussie has a participation rate in excess of 65% I would expect labour supply to be fairly inelastic, which would suggest a relatively small labour market response to any tax cut.

  33. Pascal's bookie 33

    This is related to something that puzzles me about the constant comparisons between Aus and NZ.

    Why is it that we always hear about the tax rates and kiwis leaving and blah-diggiddy-blah, with wage rates getting a smaller share of the discussion? And the discussion we do get about comparitve wage rates never makes the rather obvious point about the comparative extent and experience with labour market reform vis-a-vis union participation and individual contracts.

    Am I completely fncking stupid in believing that the 20 odd years headstart we have had on the aussies in ‘labour market flexibility’ type reforms have had at least a discernable influence on the wage gap?

    If not, then why doesn’t the Labour party make more noise about this aspect? Is it that they are too scared too push back against those reforms for political reasons?

    Or am I missing something really obvious?

  34. burt 34

    This “new report”

    Sponsored by:
    Unions NSW
    Australian Research Council

    This report was published by the Workplace Research Centre at The University of Sydney

    So this is taken as an impartial report?

  35. Nih 35

    Who did you want to sponsor it? McDonalds? Coca-cola? Someone has to pay for it, it might as well be someone interested in seeing the results.

    Not everything is a sign of corruption.

  36. burt 36

    Nih

    No, not everything is a sign of corruption. But should I just read that report (sponsored by the unions) or should I compare my time there under the Hawke Govt, my time there during the transition, or my more recent experiences under Howard?

    Spin it how you like, it’s been good in some areas, it’s been bad in others. But the bottom line is that that the flow of trained people is flowing in one direction and has been ever since they did something silly and started to pay better salaries and tax less.

  37. Nih 37

    There’s a vast pay gap between skilled white-collar jobs and factory floor employees.

  38. Burt, you’ve posted a suggestion that the ARC and/or UnionsNSW are partial and that their partiality influences this report – did you plan to back that up? Are you actually across the report and/or its methodology (or for that matter the approval process)? I am.

    What a frankly soft response to the findings. The Liberals could have responded in numerous ways but instead they decided to declaim the obvious – how unbelievably stupid. Are you looking for a conga line of suckholes? If so, I think you’ve found it.

  39. burt 39

    Union density seems to be falling everywhere really except for Finland and Sweden.

    See page 45 (8 of 12).
    ( Union Memberships )

    So we can’t replicate the Irish model because… Oh I know – they have tax cuts and they are racing along. Aussie model, no tax cuts and growing well, Oh I know, lets pick a model thats working under completely different economic conditions that we cannot replicate.

  40. Nih 40

    We can’t emulate Ireland because most of our population is stupid. If we’d had 300 years of bar-room Darwinian evolution we’d all be ruthlessly intelligent as well.

    Also, the captcha has just had me transcribe a medical term for “penis”. Dirty, dirty captcha.

  41. Seamonkey Madness 41

    “There’s a vast pay gap between skilled white-collar jobs and factory floor employees.”

    There’s are a word in that sentence that is the entire reason behind it.

    Skilled.

    (Okay, maybe I’m being a tad pernicious. ‘Factory floor employees’ have to have certain training and skills to operate specialist machinery – and more power to them. But the ‘white collar jobs’ have to (more often than not) obtain a tertiary (i.e. NOT Whitirea) qualification in order to get into that job.)

    It’s not me, it’s the reality out there.

    Also Nih, can I question your choice of language in that sentence? Why white collar ‘job’ and factory floor ’employee’? Why not apply worker, job, employee, position or staff to both?
    I am honestly interested to know.

  42. Nih 42

    Do you even have a serious question?

    Some people troll. Others try to be cunning about it but fall into the trap that they’re asking a serious question AND trolling.

    This is self-deception. You’re not coming across as half as smart as you think you are.

  43. Seamonkey Madness 43

    Nih,

    It was an honest-to-god question.

    I am trying to be a serious commenter. I put, what I consider to be, an honest question across and all I get back is abuse (albeit, without coarse language – I can at least thank you for that!). 😛

  44. Nih 44

    Are you seriously questioning the interchangeability of language? I try my ass off not to use the same words more than once and I get questioned for it? Don’t be so boring! I don’t think I’ve ever lept down D4J’s throat for his atrocious grasp of english. Sort of sets a standard for you to aim for, don’t you think?

    As for your other question, my comment was in response to burt alluding that the brain-drain was an indication that the study was incorrect. I was pointing out that the study and the brain drain target different areas of employment. Your question did expand on my point though.

  45. Matt/rOb

    In the Australian context, or more particularly the NSW context, the specific barriers to labour market participation faced by the not-engaged cohort are not strictly wage related, they’re access to childcare, lack of skills, changes to industry (skill redundancy) and tax disincentives (the family tax credit drops out too low).

    There’s been lots of recent work in NSW on strategies for improving participation for different groups – most recently by the Independent Pricing and Regulatory Tribunal – a link to the report, which focused on improving the quantity and quality of skilled labour is here – http://www.ipart.nsw.gov.au/investigation_content.asp?industry=5&sector=current&inquiry=94&doctype=7&doccategory=1&docgroup=1

    Also, the Tribunal commissioned a useful piece of work that examined the mismatch between the supply of skills and demand/utilisation – this is here http://www.ipart.nsw.gov.au/files/NCVER Final Report – Matching skills and development opportunities in NSW – 31 July 2006 – Website Document.PDF

    Always happy to talk through these issues – no single intervention will address the problem of course which is why the Nat’s tax mantra is so frustrating.

  46. The second link may not work – access to the report is available via the first link (go to consultants reports).

  47. r0b 47

    Thanks mardypants…

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