Event Jennifer Westacott interview with Fran Kelly, ABC RN Breakfast

Speaker Jennifer Westacott

Date Wednesday, 15 May 2019

Topics Wages, economy, workplace relations and Newstart

E&OE

Fran Kelly, host: Right from the start Labor said this election would be a referendum on wages and now its vowed to take action on its first day in government, if it wins. Opposition leader Bill Shorten says he’ll seek what he calls ‘a real increase to award rates’.

Bill Shorten, opposition leader: We will put a submission, we will prepare an argument, we’ll present evidence but we will do so through the agency of the Fair Work Commission. We would do so and we would expect the Fair Work Commission to consult with business and industry, as we would. What we want to do is get wages moving again, but we will take on board in our submission even before the Fair Work Commission makes a decision, the arguments about business and industry’s capacity to pay, staged implementation.

Fran: It’s not the only wages policy Labor’s pursuing. Bill Shorten today has revealed a plan to crack down on what he calls ‘wages theft’. They’re just some of Labor’s policies on industrial relations. There are also policies on tax and climate change that have business leaders on tenterhooks ahead of this weekend’s poll. Jennifer Westacott is the chief executive of the Business Council of Australia. Jennifer Westacott, welcome back to breakfast.  

Jennifer Westacott, chief executive of the Business Council of Australia: Thanks Fran.

Fran: Labor says the coalition’s tax policy show it is a friend to the big end of town. Is big business backing the coalition in this election?

Jennifer: Big business is backing no one. Our job is not to take a political side here. We’re not an arm of a political party. Our job is to argue for good policy. Policy that sees Australian’s living standards go up, their wages go up, their employment opportunities go up, by making a strong economy and that is because business is vital to that. We obviously argue for a strong business environment, for business confidence to get a resurgence because that is what is going to determine whether people have jobs, whether they have wages, whether we have the services that people need, that’s what we argue for.

Fran: Let’s look at wages for a moment. Today Bill Shorten is going to promise to set up a new tribunal to crack down on what he calls ‘wages theft’. It would sit alongside the Fair Work Commission. We haven’t seen all the details yet, but it would allow workers to pursue unpaid wage claims of up to $100,000 and to resolve those more quickly in a single day, is the idea, a one-stop-shop. Does business support that?

Jennifer: I think it is a sensible idea. People should be paid what they’re entitled to and I really urge businesses, large and small, to make sure people are being paid what they’re entitled to. But what we need is a comprehensive plan as part of an economic plan to raise wages. That’s about lifting productivity, that’s about lifting people’s skills, that’s about making sure the economy grows. I mean that’s the conversation we haven’t had in the election – how are we going to get the size of the pie to be bigger because you can’t get wages up if the economy falters, you can’t keep unemployment low if the economy falters. So, you know, this is fine to do that, I think it’s a good idea but long-term wages theft would be to deny people the sustained wage increases. If our economy, if our growth rate had a three in front of it not a two, people’s incomes would double over the next 50 years, so let’s get together on Monday morning, whoever forms government, we are happy to work with anybody to say, ‘how do we get wages up’. We all want that to happen, Fran.

Fran: I will come to that, I will come to the economy more broadly but Labor has a plan it says to get wages up on day one. The Fair Work Commission is currently having a hearing on the minimum wage, unions before it today I think arguing for a six per cent increase for the lowest paid workers. Business and industry submissions arguing for around 1.8 per cent. That is a big gap, why so low? 

Jennifer: Well, I think it is about the economy’s capacity to pay and what’s important about what Mr Shorten just said is that Labor has supported the role of the Fair Work Commission. They’ve supported the role of the commission to take into account the capacity of business to pay and the needs of low paid workers.

Fran: But it is arguing for above … Labor would, in its submission, that Bill Shorten says it will put on day one, would support an above inflation pay rise for about 2 million minimum wage low paid workers. 

Jennifer: But they’re also saying, and I think this is very important, that they want to hear from business about the impacts of that would be because unless we get that sustained change in productivity, unless we get the economy to grow, what we don’t want to see is that people get a wage rise but other people lose their jobs. Or people get a wage rise and prices go up for consumers, so we need a comprehensive plan. What’s good is that Labor has supported the Fair Work Commission, the role of the central umpire, that’s hugely important and that they’re going to listen to businesses’ capacity to pay.

Fran: Can I ask you about another Labor policy, its plan to boost the wages of childcare workers. How does that sit with you?

Jennifer: What I am concerned about here is-

Fran: Do you see that there is an argument there for a special intervention?

Jennifer: I see it as an argument for that sector, here’s the problem, we’ve had a wage setting system that has served the country pretty well, incomes in this country have doubled over the last 40 years, real incomes. And we’ve got to be very careful that we don’t undermine that very very good wage setting system by a series of one-off changes. So what we need to do is getting everyone back on the table on Monday morning, whoever forms government, and say, ‘how do we make sure that the enterprise agreement system is working for everyone. How do we make sure that we stay to its principles, that it’s about an enterprise getting ahead and the workers benefiting from that through better pay and better conditions. How do we make sure we deal with sectors of the economy that are not getting ahead? How do we make sure we deal with the fairness side of this?’. Because that’s what really has to be done, Fran. So, one-off decisions, well let’s make sure that we get the actual whole system working well.

Fran: The answer you just gave then, sounded a little a similar to the answer we got from the ACTU secretary Sally McManus earlier this week when she was talking about enterprise bargaining. She says the union doesn't want the whole system scrapped but she does want it fixed and that includes letting some workers in some industries bargain across the sector not just at a business enterprise level. Let’s listen: 

Sally McManus, secretary of the Australian Council of Trade Unions: Well, they’ll fix that bargaining system, they’ll make sure that-

Fran: How?

Sally: Well, that everyone can access bargaining. At the moment we see enterprise bargaining dropping off every single year, less and less people on it, which means less and less people getting access to fair pay rises, so giving people the option to be able to bargain across the sector if they need to, not everyone will want to take that up, but those small workplaces and those areas of hyper-competition are those type of places where it should be.

Fran: That’s Sally McManus speaking to us earlier, saying not for all and not everyone will want to take it up. But definitely the ACTU wants a return to the option of pattern bargaining.

Jennifer: Well, we need to be very clear, when we last had pattern bargaining in this country in the 70s we had lots of strikes. And I don’t think Australians want lots of strikes. Look, I think we all need to get the facts back on the table here about what’s working and what’s not working. The enterprise agreement system, which is fundamentally about an enterprise working out its market, its competitors, how it needs to get ahead, its technology, how it becomes more productive, in line with the people who work there. And making sure that in that agreement, they get the benefit of productivity through higher wages and better conditions. What we can’t have is a union in one part of the country, in one enterprise saying to another enterprise with a completely different operating environment, you’re going to have exactly the same conditions, and the last time we had that, it did not work it just produced a lot of strikes. Now, if we want to fix the enterprise agreement system, we need to retain its core but we do need to look at things like low paid workers, we do need to look at those sectors-

Fran: So, there are some special cases, special carve-outs?

Jennifer: Absolutely, and I’m happy to work with whoever forms government and the ACTU to say, ‘what are we trying to fix here?’

Fran: So, on day one would you have the ACTU around that table as well?

Jennifer: Absolutely, because none of us can do this without each other, business is vital to this, they are vital to this, whoever forms government is vital to this. We’ve got to go back to a kind of working together, getting the evidence on the table about what’s working, what’s not, what’s actually happening in the labour market and make sure we fix those problems together. At the same as we try and work together to grow our economy, increase our productivity because without that none of this is going to happen.

Fran: It’s 16 minutes to eight, our guest is Jennifer Westacott, she’s the chief executive of the Business Council of Australia. Let’s go to the economy, you’ve made the comments today, it’s in your pre-election statement too, you want workers to be better off, wages to lift but these can’t be achieved without accelerating economic growth. Now, in its latest monetary statement, the Reserve Bank, revised down economic growth for this financial year to just 1.7 per cent, is that falling economic growth an indictment of the coalition’s economic record? Do you see much difference between the chances of lifting growth under the policies of either parties at the moment?

Jennifer: Well, both of them have got pro-growth initiatives in their election commitments. What we need, though, is a much more comprehensive view about how do we grow the size of the economy.

Fran: Let’s talk about that. How do we do that, productivity is always a word used.

Jennifer: Sure.

Fran: What does that mean apart from getting more from an individual worker?

Jennifer: Well, it means doing things differently. It means driving investment, it means doing things with new technology, it means lifting output, it means people working with better machinery, better equipment, fundamental to that is business confidence and business investment. Now, business confidence yesterday in the NAB survey is the lowest it’s been for three years. So, day one on Monday, whoever forms government, has got to restore business confidence. We have got to-

Fran: How does that happen?

Jennifer: I think we have got to put the anti-business rhetoric behind us, I think we have got to work together on well, what are going to be the elements of lifting productivity. In terms of the things that people have announced, infrastructure, skills, let’s get those things happening.

Fran: How do they compare do you see the major parties, we’re at a time of comparison in an election campaign.

Jennifer: Well, it’s not for me to make an election judgement. It’s for me to say whoever forms government on Monday business is going to work with them to say, ‘in your election commitments let’s make sure that the implementation of them is done in a way that drives economic growth, that drives productivity, that maintains our competitiveness. One thing I would say that has been missing in the debate is how we make the pie bigger. But we have got to do something about investment on Monday, we have got to do something about the fact that investment is as low as it has been in the 1990s, we’ve got to do something about-

Fran: Does that mean more tax breaks for investment, more investment in skills?

Jennifer: Certainly, more investment in skills, we’ve been a massive advocate for investment in skills. Labor has an investment allowance, we think that is a good idea, we’d like to see them bring it forward from 2021 if they form government, we’d like to see their budget look at that, whether or not it can be brought forward. But a lot of this Fran is about, I think as of Monday, ending some of the divisions in our society, getting people back around a table together to solve some of these problems about how do we get our economy to grow and how do we make sure we get the fairness stuff done, what are we doing about Newstart, why won’t we do an inquiry into entrenched disadvantage, what are we doing about Australians who just cannot get ahead, I reckon that’s Monday morning’s meeting.

Fran: And one of the key issues of this election campaign is climate change and has been climate change. Business has been calling for certainty on climate and energy policy. You, on the face of it, haven’t been too happy with the coalition’s efforts on that front, to date. Labor has put forward a policy, now you know the details of it, what do you think of Labor’s policy?

Jennifer: Well, we don’t know all the details of it, there are some very important things missing in Labor’s policy, on both sides of politics, there is some big gaps in the policy. What we need on Monday is a commitment that we’re going to deliver a comprehensive energy and climate policy and that’s got the following elements: A serious effort to reduce emissions, a serious effort to reduce emissions by putting a price signal in that sees technology change, a serious effort that sees us manage the transition without sending the economy backwards, a serious effort that sees us get people’s prices down, and a serious effort on securing reliability. That’s what we need. Business wants to work, and we always have Fran, we’ve been at every single one of these tables – the table often changes, it turns into a coffee table sometime, there’s not much room for negotiation – we have always been there trying to get a durable lasting outcome. We cannot afford in this country another false start on climate change and energy policy.

Fran: Jennifer Westacott, thank you very much for joining us.

Jennifer: You’re very welcome, thank you.

Fran: Jennifer Westacott is the chief executive of the Business Council of Australia, she’s ready for a sit down meeting on Monday morning with whoever wins government.

Download the Business Council’s  Plan for a stronger Australia here.