Tag Archives: producitivty commission

Hackneyed penalty rates debate sells nation short

When politicians and business leaders talk about the need for flexibility, it is usually preceded by the word “labour”, and often comes down to cutting penalty rates, leave arrangements and other worker entitlements.

Which is what makes the contribution by Reserve Bank of Australia Deputy Governor Philip Lowe particularly refreshing.

While Lowe sees a flexible labour market as contributing to the overall adaptability of the economy, it is only but one part of the picture.

Instead, in his speech to the CFA Institute conference, the senior RBA official seen as a front-runner to head the central bank when Glenn Stevens retires, emphasises the importance of a freely-floating exchange rate, financial innovation, robust competition, incentives for innovation and investment in education as critical to the flexibility of the economy.

This is a much broader picture than the current hackneyed focus on industrial relations, and it opens up many more fruitful avenues for action and reform.

The wrongheadedness of the “IR-only” focus underlined by the fact that, by and large, current labour market arrangements seem to be serving the country fairly well.

As Lowe says, during the resources boom there was little spill-over from huge wage increase in the mining sector, while in the subsequent slowdown flexible work hours and weaker wage growth have helped limit unemployment.

“From a cyclical perspective, the labour market has proved to be quite flexible, and things have worked reasonably well,” he says.

In its recent assessment of the nation’s workplace relations, the Productivity Commission similarly thought the IR system was in need of repair, rather than replacement.

“Contrary to perceptions, Australia’s labour market performance and flexibility is relatively good by global standards…Strike activity is low, wages are responsive to economic downturns and there are multiple forms of employment arrangements that offer employees and employers flexible options for working,” the Commission reported.

Not that everything is rosy.

The Productivity Commission was critical of the Fair Work Commission’s “legalistic” approach to award determination, and suggested the need for an “enterprise contract” as a mid-way point between enterprise agreements (unwieldy for small businesses) and individual arrangements. It also said that at the moment it is too easy for employers to dodge punishment for sham contracts and exploiting migrant workers.

But overall the Commission supported, with some caveats, the minimum wage, penalty rates, Australia’s “idiosyncratic” awards system and enterprise bargaining.

Lowe’s speech suggests there are other areas that demand greater attention.

He says maintaining a flexible financial sector will be crucial in ensuring business is able to grab opportunities as they emerge. To achieve this, regulations will have to strike a judicious balance between supporting financial innovation while protecting investors.

Competition policy needs to ensure that businesses harnessing new technologies do not face unfair barriers to entering the market, and that the tax and legal systems – as well as community attitudes – provide incentives for innovation and entrepreneurship.

In education, Lowe says, “continual improvement in our human capital will hold us in good stead”, and has urged the need to strike a balance between developing specific technical and professional skills and encouraging general learning.

Many may quibble about what is on, and not on, Lowe’s list, but it opens things up a much more fruitful debate about what needs to be done to make sure the country is best-placed to take advantage of future opportunities as they arise.

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Secretive govts costing lives

The Productivity Commission is not really known for engaging in hyperbole, so when it says that the refusal of successive governments to share information could be costing lives, it is worth listening.

In its latest annual report, the Commission has a chapter in which it argues persuasively of the need for governments, State and Federal, to make the information they collect on us, as a matter of routine, every day, publicly available.

This is not a call for some Edward Snowden-type data dump.

The Commission says any data released should be appropriately de-identified to protect privacy.

But what the Government can offer researchers are unique datasets covering large segments of the population over significant periods of time which can help provide a window into important (dare we say, lifesaving) questions about everything from what we take and when we die to how we work and play.

To take one example. The Commission cited researcher Professor Fiona Stanley,  who said access to real-time prescription and birth data could have detected the connection between the morning sickness drug thalidomide and thousands of birth defects much earlier.

“Greater linking of health and non-health data sets could save lives and deliver more efficient and better targeted services,” the Commission says.

Another suggestion from the PC is to use linked data to analyse the interaction between welfare and work.

So, if there is so much useful information sitting on government hard drives, why isn’t it being shared already?

Privacy concerns and resource issues are regularly cited in objections to government data sharing but, as the PC points out, these are hardly insurmountable issues.

The real reason probably lies in the reluctance of governments to give the public the means to measure the effectiveness of their work.

As the PC says, “Administrative datasets could be instrumental in gaining insights into whether government programs meet their stated objectives, operate as intended, are delivered effectively, and deliver services in the right places”.

It notes that blockages to the release of data “occur within policy departments, reflecting sensitivities that providing data for independent research could yield unfavourable public findings about policy effectiveness”.

Maybe there’s a chance for a new approach to data sharing before the Abbott Ministry gets too much skin in the game –  but I wouldn’t want to bet on it.


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