Event: Tim Reed interview with Ross Greenwood, Business Weekend, Sky News
Speakers: Ross Greenwood, host, Business Weekend; Tim Reed, president, Business Council of Australia
Topics: Cash rate increase, Same Job, Same Pay

E&OE

Ross Greenwood, host, Business Weekend: In this tighter economic environment what troubles business is the government's industrial relations law changes that could make things even worse. In a rare show of solidarity eight business groups that come together to campaign against the so called Same Job, Same Pay legislation, which seeks to ensure that labour hire workers are paid the same rates and given the same conditions as full-time workers at the same company. One of those pushing against this legislation is Tim Reed, president of the Business Council of Australia. I spoke with him also earlier this week.

Tim Reed, president, Business Council of Australia: I don't envy the Reserve Bank, they are in a fairly precarious position. Their overall objective is to make sure that inflation comes back down to that target 2-3 per cent. That is very important. It is important for households, but it's also important for businesses because it allows much greater certainty for decisions to be made. But the increase in interest rates will hurt businesses, particularly small and family businesses. Many of them use a credit card as their working capital, they’ve perhaps drawn down on their family mortgage to be able to fund an expansion of their business over the past couple of years. As those interest rates flow through, that is going to be a direct hit to their family budget. For bigger businesses, it does raise the cost of capital and that makes it more difficult to get investment. We know how desperately Australia needs investment, so that we can keep new jobs coming online, and we can have better paying jobs coming online. So, I don't envy Phil Lowe and his job, but certainly it's going to make it a more difficult environment for business.

Ross: So, going to the Same Job, Same Pay legislation does that, in your opinion, only increase the pressure for wages to rise in the future?

Tim: Look it does a few things. The first thing I would say is the Same Job, Same Pay legislation is not well understood in the community. It is not well defined by the government at this point in time. Part of why these business groups, and we are a part of them, have been coming out and speaking over the last 48 hours, is we'd really like to get more clarity and more definition on that. It's just not fair that somebody that has 20 years’ experience in a workplace cannot be paid more than someone who has been there for two weeks. We should be able to reward employees that commit themselves to jobs, that build skills, build knowledge and build professions so that they can be paid for the investment that they've made. This legislation, as it's currently framed – or as we understand it might be framed, I should correct myself there - brings into question whether that can happen. There is no doubt that those things will take away from flexibility in the workforce, and taking away from flexibility adds to the cost of business. So, when you layer on interest rates, when you layer on the Fair Work ruling last week that you referred to earlier, and then you layer this on. It becomes a more and more difficult environment to make investments and a more and more difficult environment to create jobs and as we see unemployment go up, everyone will be unhappy with those circumstances.

Ross: Okay, so in the past week, the unions have named four companies: BHP, Qantas, CIMIC and Qube – some of those are members of the Business Council of Australia – as businesses that have created their own subsidiaries, which are labour hire subsidiaries, to try and bring down their own wages. Is this reasonable, and this is the argument of the ACTU, to you as to why the Same Job, Same Pay legislation should go through. How do you respond to that?

Tim: Well, again it comes down to what's labour hire? If BHP employ someone on a permanent basis is that labour hire? We would really like to see definitions around this. Most of those businesses that you refer to have EBAs that have been negotiated with the unions. Those employees are then employed on those conditions. They will vary from some employees who might be under different conditions with those same businesses. These are very large businesses and very complex businesses that you're talking about. They compete in different product categories with different countries and different companies. So, the industrial relations framework that we have in place does allow for one employer to have multiple EBAs. It does it for a really good reason, so that they can be competitive in different markets. So, I can't talk to the specifics of any of those companies. But I would say that they are some of Australia's best employers, they are employers that people love to work for and we see that through multiple lenses. So, I'm not quite sure what the trade union movement is speaking about there or referring to, but what I will say is having less flexibility will create less jobs and lower wages.

Ross: All right, so then take me to one other aspect of this, because a business is either growing or it’s shrinking. What the use of labour hire companies does is give the ability to be able to grow your workforce fast, or to be able to shrink it if you need to. Now, that was where flexibility was not built into most of the industrial negotiations and Australia's industrial laws in the past. That's how employers have broadly got around it to create the flexibility they need?

Tim: Absolutely, there’s lots of seasonal businesses, to your point, there are businesses that at some point in time might really take off and it's a way for them to rapidly bring people on before they make the commitment of permanent employment. It is a commitment that most Australian businesses take very seriously when they put on a permanent employee. We've got to have some flexibility in the system. We've got to understand that economies grow at different paces in different locations and different product categories at different points in time. This ability to leverage labour hire, allows businesses to respond quickly and take advantage of market opportunities when they're there. Again, that's good for everyone. That's great for workers, because it creates new opportunities, it allows people to be trained, it allows new people to enter the workforce. So, taking this away is a lose, lose. It's a lose for workers, and it's a lose for employers.

Ross: Because it actually strikes me Tim, that if I'm a person who is working for a labour hire company, but I actually was preferring to go and get a full-time job. There's lots of them out there at the moment. There's labour shortages, for goodness sakes. But for some reason people choose to work for labour hire companies, it's not as though they're going in there with their eyes closed. They understand what they're going into when they when they make those contracts?

Tim: You're 100 per cent right, Ross. I mean, there are more job vacancies than there are job seekers at the moment. So, if people didn't want to be employed in this mechanism, there are lots of opportunities to go out and find other employment mechanisms. Now, some of them might not be available in the locations or for the skills and so on that people have. But nonetheless this need to keep flexibility so that we can keep driving investment and keep employment growth on a positive trajectory just shouldn't be underestimated.

Ross: All right, so then take me to this legislation. What do you think the chances are of it getting through the parliament? I mean, clearly, you've got a very significant lobbying behind it, trying to defeat it right now. But what do you sense?

Tim: So, the first thing we really want to do is make sure that Australians understand what's being talked about here. This isn't about men and women being paid the same rates for doing the same work. That's something that we're very supportive of and with the name that this has been labeled, ‘Same Job, Same Pay’ our research says most people think it's about equal pay for men and women doing the same jobs. That's not the case, that is something that we're highly supportive of. What this is about is having less flexibility for people with more experience, for people who work harder and produce greater outcomes, being able to be rewarded for that. That's the risk, so that risk in the legislation, we would love the Minister to come out and confirm that that won't be the case. That labour hire would only be somebody who is being employed from a contracting business separate to the business itself, much like you just described a few moments ago. If we can get that basis of this debate to be informed in those areas, it'd be a very constructive thing. What we saw last year was that the IR legislation passed both the House and the Senate and the government can obviously pass it in the House and with two Independents, and the Greens can pass it in the Senate. And so, our expectation is that the government has done all of their work to try and line up those votes. So, what we really want Australians to do is to engage with their local politicians and let them know how worried they are about this. Because no one should want a less flexible labour market that leads to lower jobs, higher unemployment and lower wages.

Ross: Tim Reed, president of the Business Council of Australia was good to chat to you many thanks for your time today.

Tim: Thanks, Ross. My pleasure.