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'The foundations for future growth', 1999 Annual Dinner of the Australian Chamber of Commerce and Industry, Canberra, 23 November 1999: speech notes for address.



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The Hon. Peter Reith, MP

Minister for Employment, Workplace Relations and Small Business 

Leader of the House of Representatives
 

Parliament House, Canberra ACT 2600

 

SPEECH NOTES FOR ADDRESS BY THE FEDERAL MINISTER FOR EMPLOYMENT, WORKPLACE RELATIONS AND SMALL BUSINESS 

HON PETER REITH MP

1999 ANNUAL DINNER OF THE AUSTRALIAN CHAMBER OF COMMERCE AND INDUSTRY

 

‘THE FOUNDATIONS FOR FUTURE GROWTH’

CANBERRA

23 November 1999

Rob Gerard, President of the Australian Chamber, board members and executives of the Cha mber, members and guests, ladies and gentlemen,

The business community teaches us much about alertness and entrepreneurship, especially the large group of growing small and medium sized businesses in Australia. They need to have their eye on the ball - all day every day. Competitive challenges force that focus. A day of lazy decisions means that risk taking can become dangerous rather than considered. A day of basking in the often selfish glow of apparent success can mean missed opportunities which are difficult to recover from.

Like our Australian cricketers, no matter how successful, no matter how soon since the world cup was won, another challenge lays around the corner, and another historic moment lies ahead to be grasped.

Like our cricket team, I have no doubt that the foundations for future growth in Australia lie in us being an alert and entrepreneurial nation. On the ball. Up with the main game.

Our Economy

We do not need to go too far back in time in Australia to see a government that failed. The last half of the Hawke Labor government and the whole of the Keating government were characterised by a failure to keep the eye on the policy ball. They were content with their so-called early achievements. They did not renew, and they focussed and fought over the grandeur of office rather than the things that mattered to the community.

The result - a self inflicted economic recession, the worst in Australia since the 1930’s, unemployment up to one million, record small and medium business bankruptcies, interest rates through the roof, debt and deficits, lower real wages, hardship in regional communities and a reduction in living standards for Australian workers and their families.

Under the Howard government we have come a long way from that barren landscape.

•  Australia’s GDP has been growing at around 4% with continuing strong projections into the future - one of the strongest growth performances of any nation over the last few years, and achieved despite the Asian economic crisis.

•  Inflation has averaged 2 per cent and interest rates still remain near twenty-year lows.

•  Consumer confidence is at a 5 year high.

•  Our productivity performance is the envy of many of our trading competitors and has enabled real wages growth to trigger improvements in living standards for workers and families.

•  The federal budget is in surplus and is on track to eliminate Government debt by 2002-03.

•  We have created more than 574,000 jobs in less than four years - many tens of thousands of them full time. In the last six months alone, over 166,000 Australians gained employment. And unlike the years of the Labor Government, over 75% of these were full-time jobs.

•  The national jobless rate continues to trend down - and is now approaching 7% - the lowest levels in nine years - getting better, but still too high.

Indeed, ACCI’s recent national survey of business conditions and other similar surveys have shown business confidence continued to grow with strong sales growth, increased profitability and improved exports.

Small a nd medium businesses have the best environment for at least a decade to grow, invest, plan, employ and add to the bottom line.

I was very encouraged to see that the National Institute of Labour Studies recently report that this improvement in productivity is "unparalleled in our recent history", with the most likely explanation being our commitment to microeconomic reform. It concluded that, and I quote:

"Australia can look forward to entering the new millennium in the best economic shape it has been since the 1960’s."

Isn’t that a good message? Doesn’t that encourage all of us to keep alert, to keep entrepreneurial and focus on ongoing reform.

Wouldn’t it be wonderful if in a decade’s time we could see a similar report card about our position in 2010 or 2020?

Not all Au stralians have yet shared fully in these relatively good times. As a government we want that economic success to permeate more fully into our workplaces, our communities and our families.

Ladies and gentlemen you have a government that is keeping its eye on the ball. We are maintaining the reform momentum in Australia. And doing so in a way that people, including those in regional and rural Australia can understand what we are doing and why we are doing it.

The success of policies already implemented must not give way to a contentment that makes us risk averse to further reform. Rather, the success of reform is a measure of how further success can be around the corner if the opportunities are grasped.

That’s why the Australian government has so quickly got back to the things that matter after the recent referendum - real things like lower and more competitive taxes, reforming social welfare, making workplaces more productive, building up local communities, attracting investment and creating jobs.

One of the central areas where reform is continuing for the benefit of business and the community, including small business, is taxation reform.

This is underlined by the Government’s approach to implementing the GST tax reforms and responding to the Ralph Review of Business Taxation.

A New Tax System

As many of you know, the GST package implements a new single, comprehensive ‘pay as you go’ system that will replace the five existing payment systems:

•  provisional tax,;

•  prescribed payments system;

•  reportable payments system;

•  pay as you earn; and

•  company tax payment and reporting system.

All will be gone.

32 separate payments will be replaced with four payments at quarterly intervals.

Small business will benefit from the boost in demand from significant tax cuts announced and a further extension of capital gains tax rollover relief and retirement exemptions.

The federal government recognises small business will need assistance in managing these big changes.

To help ensure a smooth transition to the new tax system, the federal government has established an advisory board and a GST Start-Up Assistance Office to deliver $500 million in assistance to small business.

This includes

•  a $40 million education and information program on enhancing GST business skills;

•  $320 million for direct assistance to individual enterprises;

•  $130 million to assist key industry and professional organisations to deliver information and assistance to their members; and

•  $7 million to train over 10,000 additional business advisers to best assist small business with GST transition issues.

In addition, immediate tax deductibility worth $175 million has been made available to small and medium sized businesses for expenditure on new plant or software needed to implement the GST.

$6 million is also being directed to the Area Consultative Committees, particularly those in regional Australia, to assist the ATO and the Start-Up Assistance Office disseminate information and facilitate small business education on the GST at the local level.

Business Tax Reforms

Implementation of the Ralph review business tax reforms will build upon the good work of the GST package for small business. The reforms will minimise the paperwork and compliance burden while effectively maintaining access to existing concessions.

The new Simplified Tax System for small business with a turnover of less than $1 million will include:

•  The ability to determine income and expenditure on a cash rather than accruals basis;

•  Over 75% of small businesses will no longer have to undertake an annual stocktake; and

•  Simplified depreciation will apply allowing assets costing less than $1,000 to be written off immediately and others to be included in a pool which can be depreciated at an annual rate of 30%.

The Capital Gain s Tax (CGT) reforms have significant benefits for small business with:

•  75% of any capital gain on an active asset for small businesses exempt from CGT;

•  the remainder will be subject to simplified and expanded rollover and retirement provisions;

•  an exemption from CGT will be available for active assets held for 15 or more years where the taxpayer is 55 years or older and intends to retire or is incapacitated.

And company tax rates will be cut from 36% at present to 30% in 2001.

Simply speaking, the Government has produced taxation packages that reinforce our commitment to business by

•  lifting compliance burdens from small business,

•  stimulating consumer demand,

•  rewarding enterprise and effort, and

•  giving business more time to do business.

Small Business Initiatives

The Government has not neglected its other small business commitments. In fact we have taken every opportunity to improve Government programs and introduce new initiatives to benefit small business, including:

•  fair trading and franchising industry reforms, including a mandatory Franchising Code of Conduct;

•  the Small Business Enterprise Culture Program was launched in July this year to meet an election commitment to small business to provide additional funding for skills development initiatives, mentoring services and to support women in small business;

•  the Indigenous Small Business Fund (ISBF) was launched in October as part of the Indigenous Employment Policy to produce a sustained improvement in indigenous employment prospects around the nation principally via the private sector;

•  the Regional Assistance Program has been overhauled with special emphasis on encouraging sustainable small business growth and employment in Australia’s regions;

•  the Business Incubator Program which helps better unlock small business potential and produce the employment and enterprise results needed, particularly for our regions.

Small Business and Workplace Relations

Many of us know how small and medium businesses have been the engine room for employment growth in recent years. Small business is considerably affected by workplace relations policies. Yet one of the great policy failures of the Australian industrial relations system for decade upon decade was the way that it dealt small business and its employees out of the regulatory framework.

Small and medium business were locked into collectively determined awards, negotiated by neither themselves nor their employees. They had no say, no way out, and year upon year had to pay the price of someone else’s deal. At the flick of a union officials finger they could be the victims of secondary boycott disputes, they wore the red tape and regulation like yokes around their neck - and in the dying days of the Keating government they were given the coup de gras - a job destroying unfair dismissal law.

I am very pleased that the gains we have made to the workplace relations system in Australia since 1996 have taken some of these shackles off our small and medium businesses.

No longer does small business have to pay the price of someone else’s deal. Under our federal system small business and its employees have access as equal partners in the system to individual and collective agreement making, equal access to remedies against unlawful industrial action or secondary boycotts, the benefit of award simplification, unqualified rights of freedom of association and union membership, and a less burdensome unfair dismissal law.

And I am pleased to say that your Chamber played a big part in arguing the case for employers, including small and medium businesses to get access to this new framework of rights and opportunities.

However, as I mentioned earlier - there can be no resting on one’s laurels. We should not underestimate the task of overturning the culture of exclusion that small business and its employees had in the system for decades. It is more than a three or four year job. This is especially so when actual trading small businesses are focussed on all of the competitive pressures that affect business success - not just workplace relations issues.

Threats to Workplace Relations Reform

Yet, incredibly before even many small businesses have fully participated in a workplace relations system that ninety years of experience told them to be wary off, there are those who want to turn the system back to how it was.

That threat comes from a num ber of sources. One of the biggest threats that has appeared on the horizon in the past twelve months are the State Labor governments in Australia.

I say so not in some theoretical sense. Its not that State governments could just go backwards in respect of people they employ. No, State governments, apart from in Victoria, are all responsible for their own set of regulations about workplace relations that affect the private sector.

This is particularly a problem for small business. The small business sector is one of the largest groups of employers who remain tied down by State industrial relations awards and laws.

It is also a real cause of concern, particularly if we focus (as we must) on the national task of reducing Australia’s unemployment rate further. It is not in the national interest for the sector that has been overwhelmingly growing the jobs (small business) to be the very sector that is caught up in the reverse ideological spiral of State Labor governments to re-regulate their industrial relations systems.

This is, sadly, a classic case of policy making at its worst. At election time State Labor governments sprout the mantra of a 5% unemployment target, yet in government do not apply the policy rigor required to meet that objective. They do not stand against vested interests that seek to take workplace reform backwards, and load costs and red tape back on the small business sector.

Unemployment does not come down as a result of industrial relations deals done in the pub with cardigan clad union bosses. It comes down by governments making the hard policy decisions that create the framework for the private sector to grow real jobs and be confident enough to employ our 674,000 unemployed people.

And re-regulating is just what the Labor States are doing. One should not forget that during the 1990s, both sides of politics at a national level acknowledged that the national interest required a change in the traditional policy direction of workplace relations; a move away from the rigidly centralised and prescriptive system of arbitration and award regulation by industrial tribunals, to a modern system which primarily focussed on workplace productivity and agreement making underpinned by minimum safety net standards.

Yet, that accepted objective is under serious challenge. Labor States are now moving to set up two classes of workplace in Australia - those in the flexible federal system and those stuck in rigid centralised State systems. It reflects badly on the lack of national or Party leadership by the federal Labor leader Mr. Beazley. Just allow me to give you a snapshot into what the Labor States are dong, and planning to do.

In 1997 the then Queensland Coalition enacted State legislation complementary to the Commonwealth’s Workplace Relations Act 1996 . This resulted in a seamless operation of workplace relations laws in that State - with the added advantage that cost, duplication and complexity of two different systems was reduced for the benefit of employers and employees alike. This also had the effect of allowing Queensland workplaces, whether in the federal or State systems, to benefit from the increased flexibility’s which were made available by a more decentralised workplace relations system.

However, in the past 12 months the Beattie Labor government in Queensland has rushed through new industrial relations laws that eliminate the harmonisation between State and Federal systems; neutered the effectiveness of individual workplace agreements under State laws; threw out the right for small business to be exempt from unfair dismissal laws for the first 12 months when employing new employees; created new rights of entry for union officials in small business; allowed union preference laws to be imposed across all workplaces by arbitral fiat; abolished the Queensland Employment Advocate; allowed protected industrial action over multi employer agreements; allowed union intervention in non union workplace agreements; and paved the way for small business contractors to be declared as employees and roped into the union award system whether they like it or not.

And yet that government sought election in 1998 on a 5% jobs target in the State. It’s no surprise that the recent labour force figures for October showed that Queensland, once a low unemployment State was moving higher and higher above the national unempl oyment rate.

The implications of these changes are far reaching. Even this week the Beattie government is reportedly spending $363 million of taxpayers money on extra wages for State government employees through a single award based agreement - not affordable productivity linked workplace bargaining.

And note - the Federal Labor spokesman for industrial relations, Arch Bevis, says that the Queensland Labor legislation is the template for a future federal Labor government!

In Tasmania, the Bacon Labor government appears to be heading down the same road of retreat. When in Hobart a few weeks ago I pointed out that the proposals in their draft Industrial Relations Bill did nothing to promote productivity or workplace bargaining. In a State with an underperforming economy, the State government seems to be comfortable that their unemployment rate can be addressed by continued migration of young people to other States - not by serious reform.

I have pointed out that the draft Bill proposed in Tasmania entailed new union rights of entry to Tasmanian businesses (whether employees in the business want the union there or not), a new Keating style unfair dismissal law with a reverse onus of proof on employers and small business, and the abolition of the enterprise agreement focus of the system. I note that the Tasmanian government last weekend indicated that it was having some second thoughts in a second draft Bill. Unfortunately that second Bill is still hopelessly deficient, with its continued union barriers in the way of an enterprise or workplace focus in the system. This is particularly so where so many businesses in Tasmania’s regional economy are small lightly unionised businesses. It’s made all the worse by noting that the Tasmanian State workplace relations system was already more centralised than the systems in other jurisdictions before the State Labor government started on its tawdry deal with the local Trades and Labour Council.

New South Wales is another Labor State where regressive workplace relations changes are on the agenda. In May this year the Carr Labor government released policy proposals which are a shift in the balance from co-operative workplace relations to the local State Labour Council agenda. That agenda included a proposal for non union workers in New South Wales to be forced on an annual basis to pay a fee to a trade union that they are not a member of in order to pay the union for its past 12 months of activism in the industry. The fee would be comparable to annual union membership fees.

Can you imagine ACCI convincing a government to advocate the idea of a compulsory tax on every business in Australia that is not a member of ACCI to fund ACCI’s activities?

Its such an outrageous proposition, borne out of blindness by the union movement to see a service oriented future. It deludes itself into thinking that survival and relevance can be attained by compulsory unionism, union preference and taxation of non-unionists.

A government worth its salt would not let that rabbit out of the bag. It certainly would not have done so beyond its State party conference. Yet that’s what the Carr government has done. It is sending all the wrong messages to the union movement and the community about how accommodating the government will be to a regressive agenda.

No wonder when I was in Sydney last week I was briefed on the myriad of industrial action being taken in that State by unions seeking their pound of flesh out of the Carr government. In just the past 50 days in New South Wales the community has seen industrial action by rail workers, bus drivers, local government workers, nurses, teachers, mining workers, school cleaners, national parks officers, water board workers - and I am even told - parking inspectors.

And the so-called reform proposals don’t stop there. They also include powers for arbitral tribunals to regulate small business contractors, retrospective operation of awards, prohibitions on termination of employment, expanded union coverage of workplaces and expanded union rights of entry. And there is even a proposal around to filter employment during the Sydney Olympic games through union hiring, with all of the implications for freedom of association.

Let me now briefly turn to Victoria. Although it is early days for the Bracks Labor government there is already much that could be said, all cause for concern. We have a minority government appointed that showed its colours early - in its how to vote cards in the recent election that included a Victorian ALP membership form that that required a new party member to undertake that if the new member was an employer they would follow the party rules to employ union members only in their business!

More serious are the policy threats that the new government presents. We already know that on the very day the government was sworn-in they were encouraging militant unions in the building and construction industry to take industrial action at mass meetings. We already know that industrial action commenced within days of the new government being elected in a number of sectors, including the health sector. We already know that the manufacturing industry in Victoria is facing a grave threat of industry-wide industrial action in 2000 - with not one word of dissent from the Bracks government. We already know that Victorian government employees have had their choice to negotiate legal individual Australian Workplace Agreements unilaterally taken away from them because of the governments pandering to the ideology of public sector unions. We already know that the Victorian government has recanted on factual evidence the previous government gave to the Australian Industrial Relations Commission to help it assess the implications of a union log of claims on 35,000 small businesses in that State.

And if that’s not enough, we know that the Bracks Labor government was elected on an industrial relations policy that contemplates, incredibly, the introduction of a seventh system of industrial relations regulation in Australia, with new awards, new industrial relations tribunals and new unfair dismissal courts - at a cost of tens of millions of dollars in additional red tape, government employees and administration.

This is the sort of industrial relations policy you devise when you don’t expect to get into government. No wonder the new government is already soft shoe shuffling around that ridiculous notion of recreating yet another layer of workplace relations regulation in Australia. Last week I was pleased that the new Minister acknowledged, albeit with qualifications, support for a national unitary system. It is hoped that common sense will prevail.

This is a bleak picture of regression in workplace relations reform along the whole of the eastern seaboard. And State governments in South Australia and Western Australia have, in the last couple of years, become saddled with hostile upper houses with myriads of minor parties and independents blocking the path to further reform. As South Australia told the Workplace Relations Minsters Council last week, their very good proposals to bring about some greater flexibility into the State workplace relations system are domiciled, too comfortably domiciled , in their States Upper House. Western Australia, having paved the way with an effective system of individual workplace bargaining in the early 1990’s, is still to legislate even for award simplification - a measure the federal parliament enacted three years ago.

A Coherent National System?

With workplace reform being gridlocked in a number of States and regressive reforms being introduced or considered in others, we need to assess the implications of this changing landscape. There is no doubt that whilst State governments were the standard bearers for much of the good workplace reform in the early 1990’s, that avenue to complement federal microeconomic reform has fast disappeared. Indeed, gains of the past will be setback if we stand idly by.

The Federal Government cannot simply do that and accept this mixture of regression and impasse.

What we need is a coherent national framework of minimum standards to be established for the conduct of workplace relations. The Victorian experience between 1996 and 1999, where a single system was (and still is) established, shows that it can be successfully done.

The idea of Australia having six or seven efficient regulatory systems able to work to common economic and social objectives of national interest is fast passing a use-by date. In Australia we do not have one set of workplace relations laws. We have six. A ll changing at different times, according to different philosophies and political timetables. All adding cost, complexity and entrenching vested interests and third party involvement in the workplace.

If we were designing a sensible framework for Australia’s workplace relations, one that small business could participate in and make sense of, we would not do this. Yet we expect employers and employees to make sense of this. No wonder so many of them cannot. No wonder they feel like outsiders in a system that is too big and remote for them.

I know that ACCI has long supported rationalisation of State and federal systems through a cooperative approach based on complementary legislation. This indeed has been the approach I have pursued since becoming Minister, with some success both in terms of systems and service delivery. However, the goal of complementary legislation appears unachievable in this new political dynamic I have painted. It now appears that if we are interested in the objective then a different approach is required.

That is why on a number of occasions recently, I have floated the idea of moving to a more simple, rational system through the use of the Commonwealth corporations power to underpin our workplace relations system. It is a proposal which has some intrinsic benefits for both employers and employees. Those benefits (if we are being objective) should cross, at least in part, political divides.

The benefits would include:

•  a nationally coherent framework - at least for corporate Australia and its employees;

•  a simpler, fairer and more secure safety net of minimum wages and conditions; and

•  an end to the complexity and cost created by paper disputes, ambit logs of claim, dispute findings, notional interstateness, competing award respondency and dual registration of organisations.

There would be a continued role for awards and the Commission, unions and employer bodies, but under a different statutory framework. The focus would continue to be on enterprise and workplace agreement making, w ith the underlying protection of a national safety net. It would not be based on dispute creation and dispute manufacturing.

There are many issues associated with such a proposal. It is not federal government policy at this time. However to progress an objective assessment of the proposal I have asked my department to establish a special project team that brings together people with high level legal and policy skills, tapping into private sector and academic constitutional legal expertise.

We will also be actively seeking the views of key national business organisations such as ACCI in that policy development.

I am looking to release a series of discussion papers on these and related issues early next year. This will encourage a meaningful debate on the system as it moves into the next century.

One of the key issues will be the costs - to employers, employees and governments - of maintaining the current fragmented approach of workplace relations regulation.

Another will be ways under which such a national unitary system can better devolve more service delivery to the local levels and into regional communities and our small businesses.

More Jobs, Better Pay Reforms

In the interim, the policy reform process at a federal level has not stopped. Further reforms to the legislative framework have been introduced into Parliament in the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999 . The Bill is currently before the Senate. It is important that our electoral mandate for its passage is recognised if we are to take full advantage of the economic gains we have made.

The reforms are aimed at building on policy objectives already achieved (such as our success this year in retaining youth wages), entrenching the benefits of structural reform, encouraging employment growth and further developing a flexible and adaptable labour market.

Small business will benefit, in particular, from the initiatives aimed at further decentralising the workplace relations system, streamlining agreement-making processes, improving service delivery by the Commission and reducing the regulatory burden in awa rds.

The Bill also proposes amendments to unfair dismissal laws to deter unmeritorious claims and to introduce more rigour into the assessment of claims. The previous Labor unfair dismissal system discouraged new employment and was replaced with a fair go all round system. These changes are part of that new fairer system. The Government is also continuing to pursue a specific permanent exemption for new employees of small business from unfair dismissal laws, and to require 6 months’ continuous service before a new employee of any business could make an unfair dismissal claim -proposals blocked at least three times already by the Labor Party and the Australian Democrats in the Senate.

I urge ACCI and its members to continue its active work in advocating the case for these reforms over the coming weeks and months.

ACCI Survey of Small Business

Governments may not employ people in small business but we do set the economic and regulatory framework for positive outcomes.

We can see positive results when we look at the indicators provided in ACCI’s recent initiative, the new release Survey of Small Business which provides detail about economic conditions and the level of confidence within the Australian small business sector.

This important new business indictor has found a solidly, optimistic outlook for Australia’s small businesses with rising expectations for general business conditions, sales, profits and employment.

It also represents a very useful tool to assist policy makers and government better understand the important small business sector particularly highlighting as it does the comparative performances and prospects between small, medium and large enterprises.

I have long argued and represented the view in government that small business often needs to be approached differently by government when making decisions and implementing reform - because its needs, reactions and attitudes are often very different from larger enterprises.

It is pleasing to see we now have a good gauge of those differences.

It is also pleasing to see the positive response to Australia’s sound economic fundamentals and the achievements of the Government in implementing far reaching, productive change.

It gives me great pleasure this evening to formally launch the ACCI Survey of Small Business .

Conclusion

The Federal Government has demonstrated its commitment to policies and programs which promote the prosperity and the prospects of Australian workplaces, including small business. We do so because that is good for our country.

We remain focused on that task as one of the central ways to better living standards for Australian workers and our families.

We remain opposed to policies that compromise the ability of small business to get on with the job of employing Australians.

Our challenges are ahead of us, we are not content with past achievements.

I am pleased that the Australian business community and ACCI continues to provide such strong support to us in these mutual endeavors.

 

 

 

jy  1999-11-24  12:25