Senator MACKAY(11.11 a.m.) —At this stage I would like to deal with the very first object of the Workplace Relations and Other Legislation Amendment Bill, which states:

(a)   encouraging the pursuit of high employment, improved living standards, low inflation and international competitiveness through higher productivity and a flexible labour market—

It seems that this government is using this bill as an all-embracing panacea for the difficulties that this economy is facing. When we have examples of slashing labour market programs like Working Nation, what do we hear from the government? `The Senate should not be obstructive. We should get the workplace relations bill through and that will increase employment growth, productivity and our international competitiveness and all will be well.'

I think it behoves the chamber to look at what is happening in other states, particularly in relation to economic activity. That is what I would like to talk about. As a member of the Senate Economics References Committee that dealt with this bill, I, together with a number of others, travelled around Australia and looked at the various industrial relations systems in the other states and at the overall impact that this bill would have in relation to other states, the economy, workers' rights and so on. As a precursor to that exercise, my office and I worked out precisely what productivity figures were on a state-by-state basis and then matched those to the relevant industrial relations systems that each of those states had. It proved to be a very interesting exercise indeed.

The definition of `productivity' became a bit of a vexed question in the hearings that were held. Because I have an interest in this area, I asked many people who gave submissions, particularly employer groups, what they regarded as the definition of `productivity'. Quite frankly, their definition of `productivity' was probably best put by the chamber of commerce from my own state. They said, `Senator, how long is a piece of string?'

I found this quite a disappointing response from a chamber of industry that signed up to a bill that has as one of its objects increased productivity, increased international competitiveness and higher employment levels. If you cannot determine or if you do not know what higher productivity is, how can you have it as an object? The reality is that it is a parenthood statement.

The definition of `productivity' is very simple. There are two definitions that you could use. They are: gross state product by the number of hours worked—that is to gain productivity per hour—or by the number of people employed to gain productivity per employee. This is the ABS formula; this is not something that this side of the chamber has plucked out of the air.

When you use the formula used by the ABS and apply it on a state by state basis, the results in relation to productivity increases become very interesting when, as I said, you look at the various industrial relations systems that these states have. I will go through them, because I would like to put them on the record. I will go through the results from 1991 to 1995. It may be a bit tedious, but I think it is very important for people to understand precisely what is going to happen in relation to this Workplace Relations and Other Legislation Amendment Bill 1996 and what has happened in other states that have attempted similar moves.

New South Wales, for example, in 1991 had minus 0.4 per cent productivity growth; 1992, plus 2.7 per cent; 1993, plus 3.4 per cent; 1994, plus 1.5 per cent; and 1995, minus 1.3 per cent. That will hopefully improve through the changes in the industrial relations system and the election of a Labor government. I am sure it will. Tasmania, my home state, is the worst—surprise, surprise—because of having a state Liberal government for such a long period of time. Tasmania also introduced industrial relations legislation based on, as Senator Collins mentioned, the New Right agenda, the agenda of the H.R. Nicholls Society, and so on. The productivity levels in Tasmania were as follows: 1991, plus 0.8 per cent; 1992, plus 9.3 per cent, which seems a bit of an aberration; 1993, plus 1.95 per cent; 1994, minus 5.73 per cent; and 1995, minus 2.02 per cent. That was the worst economic performance in Australia.

Then we go to South Australia. This is also interesting: 1991, plus 0.65 per cent; 1992, plus 2.15 per cent; 1993, plus 3.58 per cent; 1994, minus 0.41 per cent; and 1995, zero. There was no productivity growth at all. Queensland: 1991, plus 3.6 per cent; 1992, plus 4.34 per cent; 1993, plus 1.87 per cent; 1994, plus 1.43 per cent; and 1995, minus 1.61 per cent.

Now it gets really interesting. In Victoria we have Premier Kennett lauding his industrial relations package as being, to a large extent, responsible for the purported improvement in the Victorian economy. You would think there would be a fairly gargantuan increase in relation to productivity there, given what has happened in Victoria with regard to the low wage outcome that has been deliberately perpetrated in that state. Victoria: 1991, plus 1.5 per cent; 1992, plus 3.3 per cent—these are the years when we actually had a state Labor government, which, incidentally, was absolutely pilloried in relation to economic management by senators opposite—1993, plus 4.3 per cent; 1994, no productivity growth; and 1995, 0.3 per cent. That is not a very good outcome given how many Victorian workers have suffered.

Now the piece de resistance. We come to Western Australia, where Minister Kierath has actually lambasted this government for not going far enough and for doing the deal with the Democrats in relation to this bill. His view is that the industrial relations system in Western Australia, as currently constituted, is the appropriate way to go in relation to improved economic performance and improved economic indicators. Let us look at Western Australia: 1991, plus 5.6 per cent; 1992, plus 2.5 per cent; 1993, plus 2.4 per cent; 1994, plus 1.5 per cent; and 1995, minus two per cent. In 1995, Western Australia had an economic productivity growth of minus two per cent, the second lowest in Australia. Minister Kierath had the nerve to say to this government in relation to this bill, `You should have gone as far as we did. You have not gone far enough. Had you gone far enough, you would have had the outstanding economic record that we have achieved in Western Australia.' Excuse me! I do not think the second lowest productivity rate in Australia is a particularly good outcome, given the impost and the pain that the workers in Western Australia have had to go through.

It was very interesting in the hearings in Western Australia to hear precisely how the Western Australia government actually presented this so-called terrific economic record. Just for the interest of the Senate, in their submission they used a period of wages growth of three years, a span of three years, to illustrate the economic record. For employment they used a span of three years. For working days lost due to industrial representation they used a span of nine years. For productivity they used a span of one year. Listen to this: they actually said that, for the May quarter 1994 to the May quarter 1995, it was plus 3.6 per cent. Anyone with a rudimentary understanding of economics knows that there is no such thing as a May quarter. They were silly enough to use this in their submission to support the government's bill.

The difficulty in relation to the bill—and the difficulty in relation to the Democrats' position, quite bluntly—is that it is not going to assist the economy at all. The amendments that have been negotiated between the government and the Democrats are not going to assist the economy. They are not going to assist those productivity rates. They are not going to assist employment levels. The only way that they would actually assist employment levels—this is something that both the government and the Democrats should bear in mind, and are, in fact, very well aware of—is if you have a low wage outcome. The only way that you can increase employment through this bill is by having a low wage outcome. You have actually cut workers' wages. You only have to listen to what Senator Childs said with regard to the situation in the United States to understand precisely the impact that has.

Let us have a look at international comparisons again. I think Senator Childs has adequately covered the United States. During the speeches in the second reading debate on this bill, I quoted some statistics with regard to New Zealand. I understood it was pretty clear that the government regarded New Zealand as a relevant model to actually base this bill on. I was interjected upon several times by government senators saying it is not based on the New Zealand bill. If it is not based on the New Zealand bill or on the circumstances in the United States, what is it based on? Of course it is based on the New Zealand bill; of course it is based on the circumstances in the United States.

The reality is—I will not go through it in great detail again—that the report I quoted in the second reading debate, which is called `The report of the study program on structural adjustment and social change', indicated very clearly that:

New Zealand's better growth performance appears to be due more to a more rapid accumulation of raw factors of production (capital and labour) rather than to relative improvements in resource utilisation or in the quality of human capital.

New Zealand's productivity growth has not been good. It has not even matched Australia's performance. This is under the Employment Contracts Act, this great system that was supposed to provide economic nirvana in New Zealand. Our national growth rate has been higher than New Zealand's—that is the reality. New Zealand's reforms have had very little impact on efficiency. This is clearly not a good sign. They also said in the report that much of New Zealand's recent strong economic growth can be attributed to temporary factors and they go on with the most telling point that the report made:

The potential gains from New Zealand-type reform need to be weighed against the social costs.

That is right. Let us say you are not concerned about social cost. Let us say you are not concerned about the lives of ordinary Australians. Let us say you are not concerned about how much people are paid. Let us say you are not concerned about whether they actually earn—as Senator Childs says—$5.15 per hour if they are lucky. In the United States workers are largely casual, which is essentially what this bill will promote in Australia. Let us say you are not concerned about that. If you look at the fundamentals in relation to economics, this bill will not produce the outcomes the government claims. The only way their bill can produce increased employment is by reducing workers' wages.

Quite clearly, what I have attempted to demonstrate here by using empirical data, not simply by using rhetoric in relation to productivity, is that those states that have chosen to adopt a new right or radical industrial relations system have not seen the gains in relation to productivity. They have not been realised at all. I turn to to the deal between the Democrats and the government. Economic outcomes have not been addressed here either. There is no way either the fundamentals of this bill or the government/Democrat amendments have done anything to improve those economic outcomes.

The Workplace Relations and Other Legislation Amendment Bill 1996, as has been said by previous senators, will not create jobs unless workers' wages are battened down. That is the only way that job creation is going to occur. And what kind of jobs will you have? We will see the same sort of situation as in New Zealand where you have largely part-time workers. But they are not really part-time workers in the sense we currently know them; they are actually casual workers. I say to the government and to the Democrats that the amendments that have been put forward and the bill in its entirety will not assist Australia's economic outcome. In fact, it will make it worse and it will make the lives of ordinary Australians worse.