Australia in the Global Economy Prime Minister’s Economic Forum, Brisbane 12 -13 June 2012
Building & sharing Australia’s prosperity
Foreword This Prime Minister’s Economic Forum is a welcome opportunity to engage on important issues confronting Australia in the 21st century. The Australian union movement is pleased that the Australian government recognises the significant benefit of government, business, unions and others in the non-‐government sector working collaboratively to tackle these challenges. Unions bring a unique perspective to the table. Like business, it is in the interests of the working people we represent to see our economy innovate, grow and deliver prosperity. Our unique concern is to ensure this is done in a way that affords everyone the opportunity to participate and contribute to this growth, and to share the benefits fairly. This means our tax system should not unduly hamper growth, but also not reward vested interests while leaving others behind. It means ensuring that our education and training systems are providing Australians with the opportunity to gain new skills and use them to contribute to the economy. It means a system of workplace laws that respects every Australian’s right to be treated fairly, with dignity and in a way that allows them to meet their family obligations and other commitments outside of work. This social contract, and the desire to improve our overall economy and every individual’s standard of living, means productivity improvements are crucial and sharing the benefits of those improvements is equally important. We recognise that all the issues confronting the economy will not be fixed in one day. For that reason, unions are keen to have ongoing dialogue with employers across a range of industries after this forum concludes. As we discuss in this paper, we believe consultative committees at an industry level would go a long way to foster collaboration and innovation to the mutual benefit of business, workers and the Australian economy. If we balance our common interest in a growing and innovative economy, which delivers opportunity and prosperity for all, then Australia will be well placed to continue leading the world as an economy and society. Dave Oliver ACTU SECRETARY JUNE 2012
Building & sharing Australia’s prosperity Today’s economy & future challenges On many measures, the Australian economy is faring well. Unemployment is lower than it was for most of the 1980s, 90s and 2000s. Since the end of 2007, our economy has grown by around 10% in real terms, while the OECD as a whole has grown by only 1%. We have a larger pipeline of planned investment in the economy than ever before. Yet we know that challenges face the Australian economy and Australian society. Up to 40% of Australian workers are in insecure jobs without paid leave entitlements or enough certainty about future income to satisfy either formal criteria for lending institutions, or an informal sense of security which allows individuals to feel comfortable taking time off work for leisure or illness. While some workers enjoy some aspects of flexible arrangements, many would prefer to have stable, reliable, secure jobs. There is an economic cost to denying individuals the ability to make long-‐term plans for their lives. Insecure work has created an economic house of cards hurting both businesses and workers, and our overall economic capacity. The lack of a stable, loyal workforce removes the incentive for employers to invest in education and training, while the lack of a stable income prevents individuals from making that investment themselves. This prevents workers from gaining skills and progressing through a career structure, and making way for the next generation of workers. A further, negative consequence of this is high youth unemployment and a shortage of skilled workers – two key problems in our economy at present. While high-‐trust, high skill workplaces are the best environment for high-‐ productivity, a lack of job security usually creates a workplace environment where fear and confrontation act as a barrier to collaboration and innovation, as well as contributing to poorer health and safety outcomes. Job security is one aspect that should be a key goal in an overall strategy to grow our economy. Equity is another. While average wages have increased by 12% in real terms since 2005, the real minimum wage has only risen by 1%. This has increased the gap between our lowest paid and the average worker. Again, as well as personal costs, there are real economic costs associated with the disharmony that inequity creates in our society. For many reasons, inequality is something we should aim to reduce as we continue to grow our economy in the 21st century. Maintaining some balance between different sectors of the economy is also an important economic goal. Despite good overall growth, the multi-‐speed economy means not everyone is doing well. The dramatic appreciation in the value of the Australian dollar has put significant pressure on trade-‐exposed sectors like manufacturing and tourism. Government has a key role to intervene in the
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economy to ensure we sustain a diverse economic base and do not rely on booms or fall victim to busts. Key industries will require innovative policies to help them weather the perfect storm of global economic turmoil and the effects of the mining boom. The Australian Aluminium Industry Plan proposed by the AWU is an example of the opportunity governments have to intervene in Australia’s long-‐term interest. In addition to these current challenges, we will need a long-‐term strategy to grapple with the implications of an ageing population, and of a large shift in the balance of economic activity towards our region. For the Australian economy to continue to prosper, we need to make sure that our policy settings are right today. Are we doing enough to support skill formation and infrastructure investment? Can governments do more to support innovation in industries? How can we further spread the benefits of the boom, to make sure that no Australian is left behind? These are the questions that Australian governments should be asking. In this brief paper, unions have outlined the key issues we believe should be part of any debate about the future of our economy, as well as respond to the agenda items the government has suggested at this important forum. We look forward to working with all participants to tackle these issues over the next two days and beyond. A fairer Australia – addressing rising inequality Australia has long prided itself on being an egalitarian nation, the land of the fair go. Australians are deeply attached to the idea that anyone who is willing to work hard should enjoy a decent life, and that any Australian should be able to fulfill their aspirations regardless of the circumstances of their birth. This fundamental Australian value is under threat from rising inequality. Among the advanced economies, Australia has a moderate level of inequality and a moderate level of social mobility. But inequality has been rising, particularly in the last decade. If this trend is allowed to continue, it could put Australia on the road to being a very different country, one with a ‘working poor’. Worrying trends in Australia include the following: •
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In the past thirty years, the share of national income that goes to the top 1% of individuals has doubled. The top 1% of individuals now received around 9% of total income. The average remuneration of executives in ASX100 companies rose from 17 times annual earnings in 1993 to 42 times annual earnings in 2009, according to the Productivity Commission. Minimum wages have grown less rapidly than average wages, so low-‐paid workers’ earnings have fallen behind. In the mid-‐90s, the National 2
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Minimum Wage was around 54% of the average full time wage. In 2011, that had fallen to 44% of the average. Wealth inequality is also significant -‐ the top 20% of households hold around 62% of the wealth, while the bottom 60% of households hold only 18% of the wealth between them.
Australian workers and their unions share an interest with business and governments in sustainable economic growth. However, prosperity must be widely shared. Addressing rising inequality should be at the heart of any agenda for the future of the Australian economy. Doing so will involve continuing to build a fairer tax system, addressing the issue of insecure work, helping Australians get the skills and education they need to obtain high-‐productivity jobs, lifting minimum rates to reduce the growing gap with the average wage and protecting rights at work. Fairer for everyone – addressing workforce participation and pay equity Any serious economic strategy must consider the need to lift the rate of participation amongst individual groups of workers, not just overall. Rates of participation, particularly in better-‐paid occupations are still lower for women, as well as the young or aged. Pay equity is crucial to lifting participation rates, and ensuring that our economy takes full advantage and values the contribution of all members of our society. Access to affordable and quality childcare is an obvious issue affecting women’s participation. The value of work done by childcare educators is important not just for the educators who work in the sector, but also for the quality of education of the children who will make up the future workforce. We must make sure that our economy values the contribution that everyone can make, and invests in it. A fairer tax system The principal goal of the tax system is to raise sufficient revenue to fund the provision of high-‐quality public services and the social security system (the ‘social wage’). If current levels of social provision continue, Australia will need to raise more tax (as a proportion of GDP), in order to fund the costs associated with the ageing population. Adequate tax revenue will be vital to deliver on other areas of social need such as the National Disability Insurance Scheme. The tax system is also one of the key ways that governments can address inequality and promote opportunity. As Dr Ken Henry said,
“Leaving fairness solely to the market to determine should be unacceptable to a civilised society...The tax-transfer system is the principal means of expressing societal choices about equity. The tax-transfer system is a reflection of the kind of society we aspire to be.”
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Some key facts about the Australian tax system are: •
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Australia is one of the lowest taxing advanced economies. In 2009, Australia’s total tax revenues (including all levels of government) accounted for 25.9% of GDP. The OECD average was 33.8%. Australia’s tax/GDP ratio was the sixth lowest of the 34 OECD countries, well below the ratios in the UK, New Zealand, and Canada, and only just above the United States. In each year of the current Labor Government, the tax/GDP ratio has been below the levels recorded in every year of the previous Coalition Government. In the 2000s, personal income tax changes delivered much larger tax cuts to high-‐income and very low-‐income earners than to workers on average earnings. The household compensation package associated with the Clean Energy Future package delivered tax cuts to low and middle-‐income households, targeting tax relief to those who need it most. The effective tax-‐free threshold has risen significantly in recent years as a result of the increases in the Low Income Tax Offset. It will rise further when the statutory threshold is tripled from 1 July 2012. In real terms, the effective threshold in 2012-‐13 will be more than double the level it was in 2005-‐06. Barriers to workforce participation exist for some workers (and potential workers) in the form of high effective marginal tax rates (EMTRs). Super contributions have been subject to a ‘flat tax’ of 15%. The Labor Government is making this more progressive, by effectively abolishing tax on super contributions for low-‐income earners and reducing the concession for very high income earners. The tax system provides incentives and opportunities for individuals to disguise their labour income as business income, including through ‘sham contracting’ arrangements. Aspects of the tax system that relate to housing are arguably inequitable and inefficient. Negative gearing, it is often argued, increases the cost of housing without expanding its supply. Stamp duties can provide a barrier to people moving for work. A broad-‐based land tax with a high threshold could be both progressive and efficient, yet we do not have one. Australia is unique among advanced economies in that we do not tax bequests.
Unions have called for future reforms to include: •
Further increases in the tax-‐free threshold, but not as part of a ‘flattening’ of the personal income tax system;
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Changes to make super contributions tax even more progressive, by having the super tax rate rise in line with an individual’s marginal rate (as recommended by the Australia’s Future Tax System Report); Reductions in the barriers to workforce participation faced by low-‐ income earners, including through changes to the withdrawal rates for social security payments; A Housing Tax Forum to comprehensively evaluate the effectiveness of current arrangements and examine the proposals put forward by Australia’s Future Tax System Report; Changes to the business tax system that support jobs and growth, while ensuring that business continues to pay its fair share; Reforms to prevent ‘sham contracting’ and other tax avoidance activities; The adoption of the Australia’s Future Tax System Report recommendations on the taxation of savings income. This would see capital gains tax rise, but would see taxes on other forms of savings income (like bank interest) fall; The adoption of a version of the ‘Buffett Rule’, that would ensure that millionaires who principally derive their income from capital gains pay at least as much in tax (as a proportion of their incomes) as ordinary working Australians.
Unions are eager to participate in a debate about business tax changes that would promote employment and support industries to cope with structural change. However, we believe that the share of tax revenue that is paid by business should not be reduced. In other words, any reductions in company income tax should be funded by a reduction in concessions received by business. Fairer workplaces We can’t build a fairer, more prosperous Australia without an industrial relations system that promotes job security, facilitates collaboration and cooperation among employers, employees and their unions, and provides a decent safety net for all workers. Some commentators have erroneously portrayed the current industrial laws as being inflexible and harmful to productivity growth. The evidence suggests this is not the case. Australian productivity growth surged in the mid-‐1990s, and has fallen ever since. Work Choices didn’t revive productivity growth, and the Fair Work Act hasn’t damaged it, as shown in Figure 1. In the year to March 2012, labour productivity rose at the fastest rate in a decade.
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Figure 1: Labour productivity growth in the market sector
The rate of productivity growth has slowed since the 1990s, but eroding workers’ rights is not the way to restore it. Instead, the high road to productivity growth includes a renewed focus on skills and education, innovation, removing bottlenecks in our national infrastructure, and a collaborative approach between workers, employers, and government. The resources boom has also had an adverse effect on Australian productivity, although some of this effect will be reversed as projects are completed and begin to generate output. Striking claims Other claims about the effect of the current IR laws on the Australian economy are also unsupported by the evidence: • Since the Act came into effect, there has been an average 4.4 working days lost to industrial disputes per 1000 employees per quarter. This compares to an average of 13.7 days during the Howard Government. This is a striking figure, particularly when you consider that some days have been lost as a result of employer militancy, as in the QANTAS dispute. • There has been no ‘wages breakout’. Wages growth has been solid, but moderate, with the WPI rising in line with its long-‐run average. Real unit labour costs are lower than they were when the Howard Government left office. Inflation is around the bottom of the RBA’s target band. • Australia’s unemployment rate is one of the lowest of any advanced economy.
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The Fair Work Act provides a good foundation to build on in the area of industrial relations. Unions reject the idea that the way to build a more prosperous and fairer Australia is to erode rights at work. A better and fairer education system While we do not wish to extensively discuss reform of the primary and tertiary education system in this paper, it is noteworthy that a significant review of Australia’s education system has been completed and is awaiting Government action on its recommendations. Consistent with the recommendations of the Gonski Review of Funding for schooling, unions believe that there must be greater investment in school education and the adoption of an explicit resource standard lined to education attainment, to ensure that achievement of the National Goals for Schooling is a realistic objective for all students. Funding (which should be automatically indexed annually to actual cost increases in school education) across different schools and sectors must be distributed fairly and equitably through a consistent approach to assessing student needs and through having regard to the level of resources available for students. Better coordination between State, Territory and Commonwealth governments is crucial.
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Prime Ministers’ Economic Forum: Australia in the Global Economy A brief outline of union views on this forum’s sessions Session 1: Australia’s Patchwork Economy and the High Dollar The Issues For the first twenty years after the Australian dollar was allowed to float, an Aussie dollar bought 70 US cents, on average. The AUD is now around parity with the US dollar. The real, effective exchange rate (real TWI) is now 56% higher than it the average for the period 1983 to 2003. Figure 2: Real effective exchange rate
Source: RBA Statistical Table F15 and ACTU calculations. This dramatic appreciation in the value of the Australian dollar has undermined the competitiveness of Australian firms in trade-‐exposed industries and has put jobs at risk. Manufacturers, in particular, have found that the strong dollar poses significant challenges. Tourism is similarly affected. The finance industry has ‘offshored’ some Australian jobs, partly in response to the high exchange rate. In response to these widely acknowledged pressures on trade-‐exposed industries, some commentators have sought to downplay the effects of the strong currency on employment. Manufacturing, it is often pointed out, has been declining as a share of total employment for several decades, as shown in Figure 3.
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Figure 3: Industry shares of total employment
Source: RBA statistical tables, ABS 6202, ACTU. However, while it’s true that manufacturing’s share of employment has been declining for decades, the absolute number of Australians employed in manufacturing was reasonably stable from the early 1990s until around 2008, at about 1.05 million people. The absolute decline in the number of persons employed in manufacturing is not merely the continuation of an old trend – this represents something new, and something significant to the working lives of many Australians. Figure 4: Number of persons employed in manufacturing in Australia
Source: ABS 6202.
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The mining boom has brought substantial benefits to Australia, but public policy should ensure that those benefits are fairly distributed and that our economy is not ‘hollowed out’ by the effect of a high currency. We need a vision for the Australian economy that looks beyond the resources boom. How can we ensure that Australia will continue to have a diverse economic base that provides secure, high-‐productivity, high-‐wage jobs for Australian workers? How can we maximise the opportunity for our goods and services producers to access foreign markets? The business tax system has a bias against equity financing and in favour of debt financing. It also taxes normal returns at the same rate as above-‐normal profits. There is a case for moving towards a new business tax system, such as an Allowance for Corporate Equity (ACE) that would address these issues. A properly designed, revenue-‐neutral ACE could increase the taxes levied on economic rents, while reducing taxes on marginal businesses. Some structural change will always be a reality in a dynamic economy like Australia’s. Workers and their families need assistance to handle the labour market transitions that will result. With our lack of a true unemployment insurance system, and a Newstart Allowance that is meagre and restricted, unions are concerned that workers who lose their jobs aren’t being given sufficient assistance. There have been concerns raised about the design of the Job Services Australia system – is it appropriately designed to help people gain skills and permanent, secure jobs? Areas to be addressed: Unions look forward to discussing and debating the following issues: • • • • •
Ensuring that the benefits of the boom are distributed fairly; The role of industry policy in supporting employment and maintaining a diverse economic base; Government assistance for workers and their families who are negatively affected by structural change; The removal of barriers to labour mobility; and The need for measures to ensure a true level playing field in international trade, such as the Government’s anti-‐dumping reforms.
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Session 2: Economic Transformation: Innovation & Collaboration Key points: • Industry collaboration • Opportunities for clean technology • Maximising local participation • Choosing the high-‐performance model over the-‐race-‐to-‐the-‐bottom approach on productivity The Issues Global economic uncertainty and volatile AU$ makes long-‐term investment in new technologies and production methods less likely. This generates powerful incentives to compete on costs rather than quality, knowledge and innovation. This helps to explain why manufacturing in Australia has lost over 100 000 jobs in the past 4 years – and further losses are expected in the years ahead. Compared to leading industrial nations such as the US and Germany, a high proportion of firms in every sub-‐sector of Australian manufacturing are SMEs: firms that typically find it difficult to fund R&D and therefore difficult to increase their participation in global value chains. Many Australian SMEs serve only local markets -‐ which results in few opportunities to build scale and innovative capacity. The present problems facing manufacturing have been aggravated over the past 15 years by historic underinvestment in capital stock and declining levels of investment by firms in workforce skills. The 2008 Cutler Review of the National Innovation System found the system to lack coherence and a sense of common purpose. In particular, it found that many participants lacked understanding of the how it was meant to function and how collaboration was meant to work. Australia ranks poorly (18th among OECD countries) in terms of the total proportion of firms that collaborate with and use the products of research organisations. Businesses (and SMEs in particular) report that they find accessing and working with researchers difficult: their Intellectual Property is prohibitively priced; their work is often not geared to industry needs and therefore is difficult to apply quickly and efficiently in a business context. Researchers report that they find working with SMEs difficult: their priorities are often short-‐term; they lack the in-‐house knowledge and resources to make effective use of new technologies. There appears to be a deep disconnect between Australia’s research in universities and Publically Funded Research Organisations (estimated to total $9.4 billion in 2011/12) and what is happening in terms of employment and innovation across much of our industrial base.
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Firms report that the barriers to firm-‐level innovation include: problems of accessing appropriate finance; access to skills; costs of new product development; uncertain demand for new products. Ways Forward To innovate firms need to be able to compete fairly for business at home and abroad – to generate the cash-‐flows and profits needed to fund investment in new products and ways of working. Government can help firms survive and innovate by: -‐ The more effective application of Australian Industry Participation policies; -‐ A more pro-‐active and effective policing of dumping; -‐ A greater preparedness by the RBA to intervene in currency markets when the value of the dollar is above fair value. In the long-‐term, we need to create an environment that cultivates greater collaboration between firms so that they can pool resources, share knowledge, and so better access global value chains. Measures that will help to achieve this include: -‐ Enterprise Connect: a budget for EC that is adequate to providing the support many firms need; increased provision of specialist assistance to help bridge the gap between invention and application; assistance to help make SMEs ‘NBN ready’; -‐ A more user-‐friendly and coherent set of government support services that are more accessible and understandable by firms; -‐ The introduction of Innovation Vouchers to support interaction between firms and the research sector where firms want to generate new processes and/or products and can make a business case to government that the costs of transacting with a relevant research body are prohibitively high; -‐ Support for ‘innovation precincts’ that bring together clusters of researchers, firms and government agencies with the aim of generating and disseminating new ideas and practices; -‐ Government consideration of establishing a Strategic Investment Facility that will co-‐invest in activities of likely long-‐term significance for the Australian economy but which currently have difficulty attracting investment. This model of collaboration should be applied across many key industries including hospitality, tourism, construction, finance, childcare and transport for example. Innovation must also be practiced in the workplace. ‘High performance workplaces’ can deliver significant improvements in productivity by means of continuous innovation and making better use of the creativity and skills of employees. Such workplaces are better able to attract and retain skilled workers and able graduates. Government can help by taking the lead in diffusing knowledge and understanding of what ‘high performing workplaces’ are and how they may be developed.
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Session 3: Investment In Productive Infrastructure Unions would like to see the government to review its current tax and procurement policy settings with the aim of facilitating the greater long-‐term investment of workers’ capital in our economic and social infrastructures. This should include specific consideration of the following potential initiatives: 1. The development of new forms of flexible long-‐term government bonds and other government-‐guaranteed investment vehicles explicitly designed to attract workers’ capital from within Australia; and 2. New means of facilitating investment (including government-‐guaranteed investment) in key areas of social infrastructure, such as affordable public housing and quality aged care, and green energy initiatives. We also need greater collaboration between the state governments, the federal government and industry. We need to relieve the bottlenecks at the state government level. Infrastructure Development An efficient infrastructure and transportation system is vital in improving the productivity and competitiveness of the Australian economy. According to Sir Rod Eddington, Chair, Infrastructure Australia, ‘We must find ways to make better use of existing infrastructure, remove the bottlenecks and gaps that are holding back Australia’s growth, and identify opportunities for new capital investment.’ Much of the past decade has seen the supply side of the economy constrained by the infrastructure bottlenecks at our ports and rail links. Our major cities are gridlocked and the transport system and the congestion it causes is a major barrier to economy wide productivity growth. This is occurring at the same time that Australia has become a relatively high-‐cost location, mainly because of the high dollar, but also because of this slump in economy-‐wide productivity growth partly attributable to under investment in infrastructure. Despite these problems, Australia still consistently ranks as having amongst the most livable cities in the world. This is something that means a great deal to Australian workers and their families. It is also a huge plus for attracting and retaining entrepreneurs, scientists, engineers and other skilled workers as well as the senior management of global firms. Such people are also attracted to locations that have a modern and up to date social infrastructure. Unless the Commonwealth and the States invest appropriately in the future of this social infrastructure and make this the decade of unclogging the transport system, cutting the congestion, and getting the rail/road/sea/air linkages for freight and passenger transport world-‐class, we risk a diminished, economy-‐ wide productivity performance and a diminution of our deserved reputation for having the most livable cities and all that brings us in terms of both attracting and retaining human and financial capital.
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To attend to these challenges we need to address the following issues. We need national priorities for our infrastructure provision. This should ensure that there is full, fair and reasonable access to local suppliers, including of manufactured building products, labour and services, to better spread the benefits of the boom throughout the broader economy. Inconsistent state government regulations and legislation also need fixing so we have a national market for things like our rail infrastructure. It is a major impediment for the state and territory governments to each decide on different designs and specifications for their railway rolling stock and different standards and rules and regulations for how the rail system will operate in their state. It effectively takes us back to the bad old days of different rail gauges everywhere and anywhere and will deny us the chance to win the lion’s share of the $33 billion that will be spent in the next decade on renewing the rail car fleet. Governments need to fund their infrastructure requirements and not get pre-‐ occupied with deficit and debt where this isn’t a problem. When governments need to go to the market for public-‐private infrastructure financing, they need better planning and a better pipeline of projects. Session 4: Building the workforce: skills and education There are myriad policy issues at play in the skills area at present, but two of the key priorities for unions are: 1. Supporting the apprenticeship system; and 2. Supporting TAFE in its essential role as the public provider of quality vocational education and training. Support for apprenticeships To meet our future skill needs and provide employment opportunities, a sustained increase in apprenticeship training and completion rates is required across Australian workplaces. However, the latest figures from the NCVER show the number of people commencing apprenticeships in trade occupations fell by 5.9% in 2011 and have been on the decline since September 2010 – six consecutive quarters. In WA, amid the resources boom and continuing talk of skill shortages, there was no growth at all in apprenticeship and traineeship commencements in 2011. We do not have a skills crisis. We have a training crisis. The concern that unions have is with those employers or sectors that don’t take on apprentices, but yet are happy to either poach skilled workers from those that do train apprentices or use temporary overseas workers.
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For example, the NRSET report – aside from recommending EMAs -‐ found that the capacity to offer high wages and ready access to temporary migration has allowed resources companies to meet their skill needs with little thought to investment in skills development. The NRSET report cited NCVER research that the resource sector trained just 3.6% of Australia’s apprentices, despite employing 5.6% of the nation’s tradespeople. In response to this, the recommendation from NRSET, supported by Government, was that the resource sector needed to significantly increase the number of apprentices it employs, given that it currently employs considerably fewer than would be expected given its share of trade employment. At the same time, there is an issue with poor completion rates at around 50 per cent. That means around half those who start an apprenticeship don’t go onto finish it. Almost a third of starting apprentices leave in the first 12 months. What needs to be done The Apprenticeship expert panel provided a way forward for dealing with these issues. The Government has made progress in implementing the recommendations but outstanding issues remain. Unions support further action in the following areas: -
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Introduction of training levies. They would be based on a simple user-‐ pays type proposition for employers– that is, if you don’t make your own contribution to the future supply of skilled workers by training your fair share of apprentices and trainees, then you make a contribution to a fund that supports industry training. Improved wages and conditions for apprentices – the ACTU and unions have made applications to FWA to lift first year wage rates to 60% of the trade rate, and ensure adult apprentices are paid no less than the minimum wage under their award. This claim recognises the impact of low wages on commencement and completion rates, the cost of living pressures for apprentices on current award rates of pay, and the changing age profile of modern day apprentices. Stronger training requirements for 457 visa sponsors - employers who seek to use temporary overseas labour, including on EMAs, must be able to demonstrate their current and ongoing local training efforts so that they reduce their reliance on temporary migration. This should include specific, quantifiable commitments to the training of apprentices and trainees
Support for TAFE as the public provider •
In the past twenty years, governments at state and federal level have neglected the TAFE system, despite its position as the pre-‐eminent provider of quality vocational education and training (VET) to students and workers across Australia. 15
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Recurrent funding per student contact hours declined by 15.4% between 2004 and 2009, and by 25.7% from 1997. Government funding for TAFE has declined for two reasons – because of the reduction in overall funding but also because of the shift of government funding away from the TAFE sector, and into private, for-‐ profit providers under market-‐driven policies of contestability. In Victoria, the state at the forefront of the move to full contestability, there has been a massive shift with TAFE market share slumping from 75% in 2008 to only 49% in 2011. In that same period, the number of private providers grew from 225 to 528 and their market share increased from 14% to 40%. 16 out of 18 TAFE institutes in Victoria are now operating in deficit, a turnaround since 2008 when only two institutes recorded deficits. Nearly 300 ongoing TAFE staff have already lost their jobs and many teaching contracts have not been renewed. In the Victorian State budget in 2012, the Government slashed a further $300m from TAFEs. This will result in further massive job losses, campus and course closure, and will deny Victorian students and workers access to high quality vocational education. This has particular implication for apprenticeship trades training. Given the additional expenses and facilities required to support quality trades training, private providers tend to steer clear of offering courses in these fields. It is essential that TAFE continues to be supported to provide high quality trades training in industries across the country. Referring to the point made on job security earlier in this paper, it is noteworthy that up to 80% of TAFE teachers are employed on casual or short-‐term contracts – a major issue for attracting and retaining quality teachers in the sector.
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The public TAFE system needs to have adequate levels of guaranteed funding, with an immediate reinstatement of funding in Victoria The federal Government needs to properly scrutinise the implementation of the national partnership funding agreement to ensure that Commonwealth funding does not flow to any state or territory, but particularly to Victoria, unless it has met conditions of that funding agreement to enable public providers to operate effectively in an environment of greater competition. State and territory governments to demonstrate their support for TAFE by requiring that the national entitlement to a guaranteed training place is offered only at TAFE. A proper public examination and review of the consequences of full competition on TAFE and VET, including the impact on educational quality of VET, levels of student support and teaching infrastructure.
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Session 5: Competition and Deregulation Reform Agenda COAG has agreed to pursue a set of reforms dubbed the Seamless National Economy, which consists of 27 areas of regulatory change. 16 of these reforms have been completed. One of the key areas in this agenda that is of interest for working people and unions has been the harmonisation of occupational health and safety (OHS) legislation. National OHS laws were enacted in 5 jurisdictions by 1 January 2012 (in line with the Government’s timeline) – QLD, NSW, NT, ACT and the Commonwealth. Tasmanian model laws will take effect on 1 January 2013. SA laws are currently before the State Parliament. WA indicated in their budget that they would introduce the laws during 2012. Victoria announced in its budget that it would not be enacting the model laws. The process for the development of model Codes of Practice continues through Safe Work Australia. Other areas of interest include: • • • • • •
Environmental assessment and approval processes; Harmonisation of payroll tax provisions and definitions; Licenses for tradespeople; A new consumer policy framework; Maritime and rail safety regulation; and Directors’ liability.
Where there is needless duplication of regulation across State and federal governments, unions are open to participate in a discussion about streamlining and approving the regulatory system. However, too often discussion of regulation proceeds from the assumption that regulations are necessarily bad and that deregulation is necessarily good. This is a false premise. Unions will be vigilant to ensure that important and necessary regulation of safety at work, and occupational and environmental standards are not watered down as part of the push towards deregulation. Areas to be addressed The ACTU is concerned that the next round of red tape reduction may include harmonisation of workers’ compensation regimes. There is the risk that such an exercise could involve a move towards the ‘lowest common denominator’ in workers’ compensation schemes. Unions have also identified several deficiencies in the model OHS laws that we will seek to remedy. These include:
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Industrial manslaughter legislation or its equivalent in health and safety or criminal law;
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Union right to prosecute for breaches of Health and Safety law;
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Improved health and safety representative rights, improved access to union approved training and increased number of training days;
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Regional and roving health and safety representatives;
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Improved protection against discrimination;
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Enhanced union Right of Entry, including effective entry to remote workplaces; and
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Ensuring all jurisdictions have specific regulations for the registration of TCF factories, in order to combat exploitation of home based outworkers and workers in sweatshops.
Conclusion During the 1980s and 90s economic reform was done in a collaborative rather than confrontational approach. Key stakeholders in every industry – representatives of employers, workers and government – chose to work together, rather than battle to achieve their own interests at the expense of the other parties. As we know, this period coincided with one of the longest periods of economic and productivity growth in history. The more confrontational approach, created by a federal government hostile to unions, coincided with a decline in the levels of productivity achieved in the mid 90s and early 2000s. This is not a monkey we have yet shaken from our back, but the return to the collaborative, tripartite model has seen us move forward in key industries – notably manufacturing – where an industry taskforce facilitated by the federal government and Prime Minister is due to report in the near future. Industry councils – a way forward to continue this collaborative approach at an industry level Unions therefore propose that Fair Work Australia be invited to facilitate consultative councils in other industries – retail, hospitality, childcare, aged care and construction, for example – to further the debates begun at this forum in similarly collaborative environments. Such councils would allow each the key industry representatives (employer associations and unions) to work together to discuss productivity and the particular challenges facing their sectors, and develop strategies to address these to the mutual benefit of businesses and workers, and the economy overall. Unions consider Fair Work Australia to be the appropriate body, and are hopeful that the outcomes from this forum will allow all participants to recognise the value in continuing this collaboration on an ongoing basis.
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level 6 365 queen street melbourne victoria 3000 t 03 9664 7333 f 03 9600 0050 w actu.org.au
D32/2012
Authorised by Dave Oliver, ACTU Secretary Designed & printed in Australia by union members. 06/12