Save Search

Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Tuesday, 8 August 2006
Page: 132


Mr Murphy asked the Minister for Employment and Workplace Relations, in writing, on 9 November 2005:

(1)   Has he read the article titled ‘PM big on WorkChoices hype, but economists have doubts about the reality’ in the Sydney Morning Herald on 15 October 2005 which reported that economists cannot see where all the employment and productivity improvements are supposed to come from and that most economists would be hoping the big employment gains come from lowering the minimum wage.

(2)   What economic modelling has been undertaken by his department to determine the effect of the changes contained in the Work Choices Bill 2005 on (a) employment levels and (b) wage levels in Australia.

(3)   Can he confirm that the only economic gains from the Work Choices Bill 2005 will come from lowering the minimum wage; if not, why not.


Mr Andrews (Minister for Employment and Workplace Relations and Minister Assisting the Prime Minister for the Public Service) —The answer to the honourable member’s question is as follows:

(1)   I am aware of the issues raised in the article.

(2)   My Department engaged the Centre of Policy Studies (CoPS) at Monash University to undertake economic modelling of the impact of aspects of the workplace relations reforms on key economic variables such as productivity, wages, employment and GDP. The aspects of workplace reform considered were changes to unfair dismissal laws, the benefits of moving to a national system and the changed wage-setting arrangements.

(3)   Minimum wages can not fall under the Workplace Relations Amendment (Work Choices) Act 2005 - (the Act). Under the Act, minimum wages will be protected at the level set after the inclusion of the increase from the Australian Industrial Relations Commission’s 2005 Safety Net Review and can not fall below this level. A number of economic gains are expected from WorkChoices such as increased productivity. Productivity improvements are expected to be driven by:

  • the shift of workers reliant on awards to other methods of pay setting such as collective and individual agreements. A number of studies have indicated that workers on agreements exhibit higher productivity than those on awards; and
  • firms no longer having to divert as many resources to compliance tasks associated with two systems of industrial relations (federal and state).

   Employment growth will be stimulated by changes to the unfair dismissal laws which represented a barrier to employment. Further growth is expected through the simplification of procedures that employers must undertake to comply with workplace laws.

   The negative impact of the previous unfair dismissal laws was demonstrated by a study titled ‘The Effect of Unfair Dismissal Laws on Small and Medium Sized Businesses’ for the Department by Dr Don Harding of the Melbourne Institute of Applied Economic and Social Research using the (then) Yellow Pages Business Index survey. The study was publicly released on 29 October 2002. It found that:

  • the estimated costs to small to medium sized enterprises of complying with unfair dismissal laws amounted to $1.3 billion per year; and
  • 11.1 per cent of small to medium sized employers that did not have employees but previously did, were influenced by the unfair dismissal laws in deciding to reduce the number of workers they employed. This translated to the loss of 77,842 jobs in which unfair dismissal played some role (35,000 of those in which unfair dismissal laws played a major role).