Senator McGAURAN (7:37 PM) —The Workplace Relations Legislation Amendment (Youth Employment) Bill 1998 amends the Workplace Relations Act 1996 and the Workplace Relations and Other Legislation Act 1996. It promotes the inclusion of junior rates and awards and workplace agreements and exempts junior wage rates from the anti-discrimination provisions of the Workplace Relations Act. In essence, the legislation before the Senate maintains the junior rates of pay in awards beyond June 2000, when they are due to expire because of legislation introduced by the previous government.

While I do not wish to waste my valuable time on comments made by some of the speakers on the other side of the chamber, I particularly wish to single out Senator Campbell's comments and respond to some of the falsehoods he put about this government. I know that he often wraps up his speeches with the old cliche that this government is against the worker. Although this description is general, I would like to point out to Senator Campbell and those on the other side of the house—

Senator Ian Campbell —George Campbell.

Senator McGAURAN —Senator George Campbell, to be correct. Your interjection is utterly correct—how could we possibly get the two of you wrong when you are chalk and cheese? In response to Senator Campbell, this government produced a real wage increase of five per cent in its first term. Because that real wage increase has been linked to productivity, we have a falling unemployment rate—now 7.5 per cent—which is the best rate for over a decade. Added to this, the average worker with a mortgage has saved over $400 through this government's tight and responsible fiscal and monetary policies—that is, a lower interest rate regime. That is what we have put directly into the pockets of the workers. So the last thing we should hear in this debate on youth wages is an ideological attack on the workers; rather, what we are seeing is a commonsense approach to protect young Australians in the work force. Senator Cooney used biblical terms which were utterly incorrect. We are giving young people a far more competitive advantage, by not pricing them out of the market. This pretty basic and commonsense attitude towards the workplace and the marketplace is to the advantage of over 420,000 youth workers on the junior rates of pay.

Instead, we hear tonight from the other side—particularly from Senator Campbell—the old line that the level of wages is not linked to the level of employment or the ability to employ; that the employers take no notice of the level of employment; and that the cost of labour has no effect. That is the old line we have had run here tonight. Besides being very dangerous, it is nothing more than a defence of the old union ways of the seventies and eighties—during those years when the unions really did have some economic and political power which they used to devastating effect. It was a time when we had crippling interest rates, crippling inflation rates and crippling unemployment rates. It was a time when unions thought they could pull on a strike at any time to devastate big business, to bankrupt small business and to hold the nation to ransom. It was really the glory days of the union movement; and we have heard every argument they used then being run again here tonight by that arch monument to old unionism, Senator George Campbell.

Employment was never a factor during those times, nor does it seem to be a factor now. It is just simply a matter of putting the ambit claim—the highest wage claim possible. Whether it is sustainable or whether it is linked to productivity has no relevance at all. You were running a protection racket for the employed. It does not matter who drops off or who cannot get into the marketplace, it is a protection racket for the employed. That is the philosophy we have had here.

Senator Campbell has got a nerve to make the same old mistakes. He blames technology and structural change as the reason for youth unemployment in this country. As evidence of that he quoted the manufacturing sector, for example. Yes, there has been a shedding of employment—young and old—within the manufacturing sector. But he has got a nerve to mention the manufacturing sector when over 200,000 jobs were lost when he was head of that union. One single ambit claim, one single wage rise, brought about over 200,000 being unemployed in his time. And he says there is no link between wage rises—excessive wage rises—and unemployment in his period. Well, there is.

He also failed to mention—and I attempted to make this point by interjection—that the retail sector employs the most young people on junior rates. He uses the manufacturing sector as his prime example—the sector which he personally devastated—but he never mentions the retail sector, which is the biggest employer of young people. Presently, there is an incentive to employ young people; there is an incentive to give them the training and experience they need for their first time in the workplace. For most of them, it is the first time. This is a sector that has not been subject to a great amount of structural change or technical change at all; it is simply price sensitive. We are told by the Retail Traders Association that if this legislation does not pass and junior rates are abolished, virtually overnight we will have some 60,000 unemployed.

Whether you believe that figure or not, one thing you can be sure of is that, if this legislation does not go through in that sector, there will be the non-employment of young people; that is what you will have. You will have a percentage shed, and you will certainly have no new ones coming in, certainly not at the current take-up rate.

This debate is all about employment. It is about the government's responsibility to undertake policies that will reduce unemployment. That includes no less, of course, than youth unemployment. We all know that no single approach will solve the problem. Governments must act on a wide front, and we have acted on a wide front. We have promoted policies of low inflation and low interest rates so as to stimulate business investment, which, of course, follows on to employment. We have also tackled social welfare, where there is quite often a disincentive to take job opportunities should they come up.

We have tackled the industrial relations area. This government has introduced a more flexible wage system. We have introduced a fairer dismissal system et cetera. We have undertaken these measures in our first term with success. We know we have achieved the lowest unemployment rate for over a decade. Much more can be done and should be done, and we are attempting to do it. We have a pretty good record in this area.

On each of those occasions I have mentioned, let alone tonight, we have been blocked, hindered and frustrated by the Senate, regardless of our good record. The irony is that the scourge of unemployment requires immediate action. The public would expect this government, after winning its second term, to immediately get on with the job of tackling unemployment. It does not want us to sit around waiting for reports to be produced or tabled, especially given that we went to the election with this policy.

The Democrats have been complaining about some commitment that the Minister for Employment, Workplace Relations and Small Business broke with Senator Murray. But a greater commitment than anything we might make with Senator Murray in the corridors of this place is the commitment we make to the Australian people at an election.

Senator Forshaw —More of whom voted for us than for you. More Australian people voted for us than for you. If your commitment is to the Australian people, the majority of them do not agree with you.

Senator McGAURAN —I confess that I am distracted by that point because it is central to the debate. Senator Forshaw interrupts and says, `We got more votes than you.' That is a pretty humble, if not pathetic, interjection from someone who happens to be sitting in opposition. It is not quite like that, and Senator Forshaw knows it.

Let us dispel this. Your primary vote did not jump at all. Your primary vote jumped by one per cent, so you did not get more. The Labor Party in fact had the second lowest primary vote. It jumped by one per cent from 1996. It was the second lowest primary vote in the history of the Labor Party. You jumped up a bit on preference votes, but you got most of them from One Nation. You won three seats in Perth from One Nation preferences.

Senator Ian Campbell —Four.

Senator McGAURAN —You won four seats in Perth. If One Nation, which is now imploding, had done the right thing, you would not have won four seats. It would really then have looked like a devastation. But you are dressing it up as something else. That is the distraction I have taken up. I will now get back to the debate. That point is important to this debate, because we have a mandate to act. Like most of the policies we have attempted to pass since the election, we put them to the Australian people before the election. I know that Senator Forshaw is tired of the word `mandate'. Those opposite are pig-headed about frustrating the Senate, so that is what they are going to continue to do.

I assure the Senate that we will continue with our strategy to reduce unemployment and all the policies we took to the people of Australia in the last election. We have not just the political confidence to do that now; we have the empirical evidence, particularly on this issue. It is from no less than the Productivity Commission, which produced a paper that supports our view. It states the obvious. The conclusions are unambiguously clear.

Senator Forshaw —Oh, wow!

Senator McGAURAN —You are scoffing at the Productivity Commission. After you amended it so much, there could not be an organisation further at arm's length from this government than the Productivity Commission. It looks into matters such as this and other economic matters. Do not forget that you amended it so that it was much more to your liking. That is how you got it. This is what it says:

The empirical results indicate a strong and robust negative relationship between youth unemployment and youth wages. This relationship suggests that a 1 per cent increase in youth wages would lead to a decrease in youth employment of between 2 and 5 per cent in industries employing a relatively high proportion of youth.

It should be noted that the opposition has been running the false argument that the introduction of this legislation will reduce all young people's wages. It does not. It simply maintains the existing junior rates and encourages junior rates for other awards.

Remember that the industrial relations reform package has written into it the no disadvantage test. So what is the problem? A measure of just how out of touch and out of date the opposition is is that many unions are now embracing the junior wage rates that we have in place now in their enterprise bargaining agreements. They are there now. They are writing them in. The Australian Chamber of Commerce and Industry report claims that age-based junior pay rates were common in the last batch of enterprise agreements struck with the bosses.

Imagine that out of the blue in June 2000, not linked to any productivity outcome or wage negotiation, employers were faced with pay increases of greater than 40 per cent just for 18-year-olds. For example, a junior shop assistant employed under a retail award would, with the abolition of junior rates, cost an employer $43.20 more to employ; that would be for a 20-year-old. It would cost $86.35 extra to employ a 19-year-old and $130.55 extra to employ an 18-year-old. You are trying to tell us that it will have no effect. In one hit, it will have more than a $1 billion effect throughout the economy on the wage rates of this country.

The coalition's strategy is to reduce unemployment based on empirical evidence and common sense. The surest way to handicap a young person in obtaining employment where junior wage rates are part of the award—and they have been there since federation—is to increase the employers' costs to the extent that there is no difference between the wages of an experienced adult employee and those of an inexperienced junior employee. So the onus is upon those supporting the removal of junior rates to show that such a change would not damage the jobs of young people. It is not discrimination to pay less to young people who are less skilled and who have less experi ence. Rather, the prime interest of young people is to gain experience and develop labour market skills.

It has been said that the alternative to what we are offering is competency based wages. That is what the opposition now wants to put in place. The great theorists in this debate are promoting the competency rate against age based rates. The point is that junior rates specifically target the youth unemployment problem. They go straight to the heart of the matter. This is a prime aim of the government in introducing its legislation.

Competency based rates are not a solution to youth unemployment. It is a complicated and very subjective system, and it will cut out young people from early employment opportunities. One of the main complaints of young people—I am sure you have heard it—is that they are unable to get a job because they are inexperienced. Yet how do you get experience without a job? Competency based rates will only accentuate this problem.

I refer to a committee report which quotes major views on competency based wages. Senator Crossin had much to say about this report, Youth employment: A working solution. It is a report by the House of Representatives Standing Committee on Employment, Education and Training, September 1997. It quotes extensively the likes of Coles Myer, Woolworths and McDonald's, the three biggest employers of the junior sector and shows just how complicated, subjective and ill-advised the competency based system is. I refer to pages 79 and 80 in regard to this matter. Together all of these employers employ hundreds of thousands of young people.

Further, we need to consider the impact of a competency based rate on adult earners. Not only does it make employees vulnerable to a very subjective assessment of their competency but it may well have the effect of dragging many adult wage earners down to what was once a junior rate, the lowest of the competency rate—in particular, working women.

Consider a working woman with a family to support who has lost her job in which she had become skilled over, say, 10 years in the manufacturing sector—a most common occurrence. The area of growth is the retail sector. So she takes up a job in that area and is plummeted to the wage at the lowest level, the former junior wage rate, because of her competency, because she is judged not to have the skills required for this industry. So the system that once supported the adult worker with a family now does not recognise her contribution and her working life as an adult. It will simply pull away the safety net for many adult workers. So in conclusion, in the words of the Canberra Times on 26 October, `You have to wonder about how serious some people are about lowering youth employment' when they stand against this legislation.