29 September 2020 

Union extortion ransoms jobs

The militant CFMEU's demand for higher pay in the middle of a pandemic means stimulus funding earmarked for construction projects will create fewer jobs.

Quick quiz. Which giant of Australian politics said this? “I always had this view, however a hard view and a tough view, that the real gains you make out of society come from the productive capacity of the nation.”

The answer might surprise you. It wasn’t John Howard or any former Liberal minister. It wasn’t a productivity commissioner, or a business-aligned think tank.

It was none other than Bill Kelty, former Secretary of the Australian Council of Trade Unions, and one of the key players who helped deliver the landmark “accord” between government and unions in the Hawke and Keating governments.

Kelty was speaking at a 2012 address to the ACTU in which he warned union leaders that when unions demand too much for too little in return, you might get inflation but workers don’t make any real gains.

Real gains, he said, “can’t be secured from inflation, they can’t be secured by words. They come from the real growth, the real goods and services, the real business of a nation.”

Australia’s economic recovery will depend on securing and increasing our productive capacity as a nation, not on extreme union demands. Just like in the Hawke-Keating era, we will only succeed if unions, governments and employers work constructively together, cooperating for the good of the nation.

The recovery is now being set back by the industrial dispute at the nation’s ports, which has gridlocked NSW’s Port Botany. As Scott Morrison said yesterday, this is “ the militant end of the union movement effectively engaging in a campaign of extortion against the Australian people in the middle of a COVID-19 recession.”

But the MUA isn’t the only militant union “holding the country to ransom” as the Prime Minister puts it.

The CFMEU would do well to heed Kelty’s wise warning, in light of their determination to push a construction sector employment agreement that threatens to do more harm than good for construction workers in NSW.

Demanding wage increases of 5 per cent per annum – when through the year CPI in Sydney is at negative 1 per cent (to June) – as well as what is effectively a nine-day working fortnight, is not reasonable and is completely out of step with the expectations of a nation fighting its way back from the brink of pandemic-induced economic catastrophe.

More importantly, these demands don’t come with any real productivity increases, as the NSW Building Commissioner has noted, so they fundamentally fail the Kelty test.

At a time when economic activity and business and consumer confidence are at perilous lows, both here and abroad, NSW must be ready to compete for scarce local and international investment dollars. Our construction sector won’t be on anyone’s investment radar if exorbitant increases in labour costs are baked in with no productivity upside.

By the same token, massive amounts of stimulus at the state and federal level are set to be poured into construction activity over the coming 12 months.

In NSW alone, we have a guaranteed $100 billion infrastructure pipeline over four years, including a $3 billion Jobs and Infrastructure Acceleration Fund to get shovels in the ground as quickly as possible.

The point of any stimulus is to reinvigorate our economy by creating jobs and get Australians working again. To achieve that purpose, stimulus funding must reach as far and wide as possible, not line the pockets of a lucky few.

With the unemployment rate approaching 7 per cent and NSW wage growth flat for the June quarter, now is not the time for powerful unions to be demanding pay increases of 5 per cent a year. Now is the time to make sure workers and businesses can sustain themselves.

Failure on this front threatens to set Australia up for prolonged economic stagnation and that’s not in the interests of workers anywhere.

Our top priority right now is to get as many people back into work as possible, because the most generous wages and entitlements don’t mean a thing if you don’t have a job.

To put it bluntly, from a NSW government perspective, higher labour costs mean our investments simply don’t go as far. The result is fewer jobs created for the same investment, and fewer projects delivered – fewer schools, fewer hospitals, fewer new roads and rail lines. In short, fewer of the public facilities when we need them most and with less value-for-money for taxpayer dollars.

Wearing my hat as NSW minister for small business, it is clear to me that having met with so many small business operators who are barely hanging on for survival, including in the construction sector, a massive hike in labour costs would be the worst thing possible. It will bring even more job losses for both the construction sector and other parts of the NSW economy. This is not what our economy needs right now.

Now more than ever, every sector and every union should be working together to chart a fair and sustainable path back to growth.

In the current environment, it’s hard to see the CFMEU’s demands as anything more than a cash grab at a time when the people paying the wages can least afford it.

Hon Damien Tudehope MP is NSW Minister for Finance & Small Business

This piece was published in the Australian Financial Review on 29 September 2020