Mr WILKIE (9:49 PM) —Unfortunately, I believe that, in the long term, people who are involved in the meat industry and many other industries will be far worse off under the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999 than under any previous arrangements. At the outset, I have distinct concerns with the potential outcomes of this bill. Its possible inception leads me to review the famous utterance from Higgins J. when he said that the freedom of contract between an employer and an employee is akin to the freedom of the wolf and the lamb.

This bill seeks to accomplish two objectives: it seeks to liberalise the capacity for management to handle industrial disputes and it seeks to establish a regime in which the union movement is marginalised. Members need to think very closely about the bill before the House. It is essentially flawed because it has been designed primarily to fit an ideological position favoured by the current Minister for Employment, Workplace Relations and Small Business and not with regard to the benefit of either the business community or the unemployed. It is deficient on three counts: it lacks fairness for workers and is not a balanced piece of public policy, it delivers a blow to those who believe the government would not try to destroy the standards enjoyed by workers, and it attacks the independence of the industrial relations system and abolishes the Office of the Employment Advocate. Unfortunately, it is an exercise that will affect the lives of thousands.

This bill, along with other measures this government is trying to introduce, must also be considered to hit the less well off, the less well skilled and the young. All of these measures serve to remove the bargaining power of workers and undermine wages. The minister has very favourably promoted the bill and, to add insult to injury, has even given it the name `More Jobs, Better Pay'.

The minister's speech, however, masks a number of issues that the government needs to understand. The government needs to understand that workers represent much more than cost to the employer; the employee is in fact an investment. The minister needs to understand that simply removing obligations enshrined in Labor's more equitable legislation will not improve the business community's willingness to employ. He needs to understand that we need a willing work force, not a subjugated work force. He needs to understand that, ultimately, investment in the work force will have its own rewards and that that investment is underpinned by the legislative framework of an unbiased and representative agency—the Australian Industrial Relations Commission.

In an article by Green and Burgess entitled `The policy program for growth, jobs and the current account', the authors reflect on the current government's performance. They state:

The present Coalition Government has put its faith in the alleged self-regulating properties of the market. The result has been a slowdown in real investment and an economy living on increasing debt with declining household savings, coupled with widening disparities between high growth and low growth sectors.

Add to this the strategy outlined by this government to deal with industrial relations. The strategy of the government is one of short-sightedness cloaked in a facade of improvement. If passed in its present form, it will bequeath the community three things: an underclass of unprotected and poorly paid workers, a legacy of thousands of workers suffering from employment insecurity, and a failure to address the real issues behind the reasons for business problems—that is, a lack of skills in production, marketing and planning.

Let us look at just how the current arrangements for industrial relations stack up. The government uses the arguments that business would be a beneficiary of this legislation—that the business community would spend less time dealing with the arbitration system, and that it would create more employment. Given that there is such a heavy rhetorical emphasis being made on behalf of the small business community it is sobering to reflect that, although the economy has established a reasonable growth platform—due to Labor's policy diligence when in office—employment growth has depended on foreign savings and consumption. In spite of this growth, employment growth is barely one per cent.

Secondly, the minister must understand that the majority of Australians are not big wage earners. The average wage is $36,000 while the median wage is less than $30,000. In my electorate of Swan 70 per cent of the working population do not receive the average wage. Thirdly, and most disturbingly, the real issue that the minister should be paying attention to is that Australia's economic development is now firmly locked into a path of new technology and elaborately transformed products. These industries require adaptable, diligent and educated workers, not the underpaid drones this government wants to create.

Moreover, what exactly is wrong with the current system of industrial relations? The length of time for settling disputes is generally short. There are well-respected mechanisms in place for disputation and conciliation. By any standard, the level of disputation has fallen over a number of years and labour productivity has also risen. These figures highlight the fact that, contrary to the government's beliefs, our industry is not stricken to paralysis by either high wages or industrial disputation. Other compelling evidence that needs to be considered is in the 1995-96 Industrial Relations Court annual report. This report concluded that only 12 per cent of cases need final arbitration and, interestingly, that:

Contrary to some suggestions, people who bring unfair dismissal claims represent a fairly normal cross-section of the work force.

I think that, given these sorts of comments and statistics, we need to look further than the rhetoric as to why this government would like to implement this legislation. As an alternative, we advocate policies that will lead to an outcome of improved business operations. We can do this by improving staff productivity and by a commitment to management excellence. This is the future for industry.

This bill, however, ignores these issues. The government's strategy is premised on lowering costs and on contracting by stealth. The legislation will allow this degeneration to occur, as the role of the umpire will be stifled. The whole strategy was condemned in a recent publication. In the abstract for an article on employment relations, and speaking about the conservative mantra of reducing employment costs, David Card, writing in the International Labour Review, illustrates an important point:

Although the theoretical arguments underlying this consensus are simple and compelling, the empirical evidence is surprisingly limiting.

If this bill is passed, it will mean a dramatic impact on the lives of thousands of working people but, importantly, it will also impact on the effective operations of thousands of businesses that have operated and depended on the Industrial Relations Commission speedily resolving issues and establishing an industry recognised framework from which to operate.

Let us look at the evidence before us. Inevitably, one draws the conclusion that the coalition's position is unabashedly neoclassical in its analysis. What is particularly disturbing is that we can still pursue these simplistic notions even after years of experience tell us they are bound to fail. They fail simply because they premise all outcomes on a particular assumption: that all transactions are a simple product of the function of price and quantity. This is incorrect. The coalition misses a number of issues in the translation to plausible public policy. The alternative arrangement is that the employee-employer relationship should be one born of trust and mutual profit sharing. It is apparent that any bill instrumental in destroying this cooperative environment will be disastrous to the Australian economy. In the first instance, contrary to the minister's belief, the bill will have a detrimental impact on business and the economy. That is for two reasons: firstly, that unemployment will not be reduced by making employees easier to dismiss or, as we have seen in other legislation, by reducing wage rates; secondly, what we need is a series of policies that create the type of environment for work, by instilling an arbitrator with powers.

Let us examine these points in further detail. The Minister for Employment, Workplace Relations and Small Business, the member for Flinders, simply believes that if you make it easier to fire an employee you will lift the performance of the firm. I suspect it is also a belief, as it is the mantra of the Right, that if you cut the price of labour, more labour will be hired. He certainly does not want an effective arbiter to stifle his vision of a non-unionised subservient work force. Of course, as some of us realise, the labour market is a more complex beast. A number of factors need to be considered. Among the most important are the level of demand in the economy and the level of market share that a firm can command. It is necessary to think beyond an analysis based on the cost of labour. What we need to consider is the contribution the labour force can make to industry. It is what the employee will bring that will determine the ultimate success or failure of a business. All this, of course, is elementary. This serves to make it even more preposterous to accept blindly the arguments put forward by this minister.

This brings me to my second main point. We need a series of policies suitable to solve unemployment, not merely to penalise those on the lowest wages or with the least experience. There is an interesting comparison that needs to be made—that is, however you look at it, the previous Labor administration was very effective in creating employment. In fact, figures suggest that, in the last 26 months of the Labor administration, over 330,000 full-time jobs were created. The Howard government's record after a corresponding period stands at less than 120,000. This is even after the enactment of the Workplace Relations Act.

When this nation faced a surge in unemployment, the Labor government instigated novel and effective programs under the Working Nation banner. The aim of these programs was to provide those unfortunate enough to be unemployed with the opportunity to undertake some vocational training. It also meant that special attention could be given to the long-term unemployed. The Working Nation programs did not exist in isolation. The Working Nation plan allowed different programs to supplement each other.

I think the minister fails to appreciate concerns regarding the inherent need for business to have the appropriate staff for tasks. There is a central role in this for an industrial commission: setting standards, offering advice to parties and maintaining a predictable outcome for the community. In a globalised economy, we know that the only way we can compete with lower wage econo mies is to use our resources of intelligence and ingenuity. It will be the clever firms that survive. Of course, those clever firms will be sufficiently structured to be able to cope with business in the new millennium, and they will have sufficient capital and good overall management. They will know how to penetrate markets and develop new products. Most importantly, they will know how to recruit the best staff, they will know how to keep staff, and, with forward-looking human resource policies, they will know how to develop people's potential.

As further evidence against the general nature of this bill, I quote from a document by Dr John Phillimore of Murdoch University. Dr Phillimore explains:

In contrast to the familiar rostrums of neo-classical economics about labour market reform, these may, in the long run be harmful to innovation and economic performance.

Dr Phillimore concludes that his analysis is based on three underlying principles:

One, that it can lower the rate of labour productivity which in turn can slow income growth and reduce an economies technological capacity.

Secondly, reduced wages interfere with the proper workings of restructuring, allowing less efficient firms to compete, which lowers the level of entrepreneurship.

Thirdly, lower wages reduce the size of effective demand, which discourages innovation, particularly for small firms.

Having outlined these arguments, I feel it is necessary to address another important issue, and that is the welfare of many members of the community. It is inherently unfair to suggest that the least powerful in the economy will still be protected under this legislation. The potential exists in this legislation for extensive abuse. It has the potential to create an even larger pool of casual workers. Unable to secure tenure, they do not qualify for mortgages or loans. This pool will be fighting for employment and be willing to accept declining terms and conditions.

Evidence from that paragon of deregulation, the United States, illustrates a point. Earnings for the median worker actually fell 3.1 per cent when they introduced similar policies. Real hourly wages fell for those in the bottom 60 per cent of earnings, and those in long- term employment fell from 41 per cent to 35 per cent over the last decade. It would be nice to pretend that this is not the case—that the minister is just plainly incorrect about his assumptions and the outcomes. I suspect not. We know from evidence in other nations that these sorts of policies have been deliberately manufactured to suppress the rights of workers. Legislation of this sort makes bargaining particularly difficult. It reinforces insecurity and reduces a worker's ability to confront abuse or poor conditions in the workplace.

In conclusion, we are given an opportunity to comment—not only on the bill before this House but about a prevailing ideological position. We need to actively consider the impact on both business and workers. In doing so, we will be making a contribution to an analysis of the bigger picture of the economy, industry and unemployment. What I have tried to illustrate is that we should look beyond what appear to be very simple solutions to the problem of unemployment. Industry requires much more than an unfettered right of hire and fire; it needs a good, effective work force. These workers need to be educated, skilled and conscientious. This will not come through this legislation. This legislation is not a progressive concept. It will simply mean that many people will be subject to more punitive action. These workers will not embark on the journey of education and innovation necessary to assist business.

If the government were sensible, it would develop different legislation—legislation that would serve the community by instilling better business practices and human resource management. It would do this by supporting an ongoing role for the Industrial Relations Commission. Evidence from the statistics available illustrates that the current arrangements are certainly not prohibitive. There is not an abundance of disputation and, furthermore, the process seems to be well managed.