Louise Pratt (WA, Australian Labor Party, Shadow Parliamentary Secretary for the Environment, Climate Change and Water) Share this | Link to this | Hansard source

I rise to support the Productivity Commission Amendment (Addressing Inequality) Bill 2017. It's an important piece of legislation before us because this growing trend of inequality in our nation must be addressed. That is why I am standing in support of this legislation today. Excessive inequality is a problem for any society and it is certainly a problem for ours. When our society is unequal, as Australia's certainly is, it means that people have an unequal ability to take part in social and economic opportunities, and it undermines the cohesiveness of our society as well as people's wellbeing. We also know that excessive inequality harms our economy.

As resources become concentrated in fewer hands, it results in reduced economic participation for the majority of people and it impacts on their wellbeing. Practically, this results in fewer new businesses started, fewer homes purchased and less purchasing of goods and services. It also leads to an increased dependency on government intervention to sort out our nation's problems. It is not difficult to see those issues within Australian society today. There are too many in our community with simply far too few resources. It impinges dramatically on their social and economic participation and, in turn, it limits people's capacity to contribute to their community and to our economy. We can see in this regard how things like stagnated wages growth is currently impacting on the Australian economy today. We can also see that this is a problem at a global level, too. What we have across the world is a widening gap between the highest and the lowest income earners in the most wealthy countries and this gap has been widening dramatically over the past 20 to 30 years. Those in the top 10 per cent of income earners are pulling away from the bottom at an increasing rate. I would really challenge those on the other side to decry that problem because they must recognise the reality of what a terrible thing this is for our globe.

My colleague on the other side of this chamber Senator Paterson, when I was paying attention to his second reading speech back in June, asked a question:

How much inequality is too much inequality and how much inequality is an acceptable level of inequality?

Well, I am happy to help answer that question for Senator Paterson. Students from underprivileged backgrounds, those who are especially talented and those who may require some extra educational support, are less able to access the educational opportunities necessary for them to achieve the educational outcomes that they need to succeed.

This is an unacceptable level of inequality in our nation. Indeed, such poor educational outcomes lead to poorer, long-term life outcomes in terms of employment, future job opportunities and lower long-term income for themselves, their families and their households. This is also an unacceptable level of inequality. Older Australians in our nation not being able to access the appropriate level of aged care later in life due to inequality of wealth is also an unacceptable level of inequality. Taking away the promise that a young Australian will have a better quality of life than their parents and grandparents is also an unacceptable level of inequality.

As a member of the Australian Labor Party, I am proud of our egalitarian values and Australia's egalitarian traditions. However, this is something that is at grave risk in our nation. The reality of income inequality in Australia comes as a shock to a great many people. Despite this idea that this is a value and that it should be a national priority, it is clear that Australia lacks the institutional oversight of these issues. Our history of addressing inequality is largely embedded in our unions, in the labour movement and in our industrial relations system. While we have a Human Rights Commission that can address discrimination, there is no oversight of economic inequality in our nation.

That is why we need a strong institutional basis to examine economic inequality in Australia's cities and our regions and to provide advice on those issues to government, as provided for in this bill—issues such as the effects of economic inequality on intergenerational mobility; access to social, economic, educational and other opportunities for members of the Australian community; the performance of our Australian economy; and the extent to which government policies affect economic inequality in our nation.

It is incumbent on the Australian parliament to ensure that Australians are lifted out of inequality, most importantly, because it is the right thing to do but also because it makes absolute economic sense to do so. In lifting people out of inequality, a government must have sufficient oversight and understanding of which areas of our society need help. Frankly, at the moment in our nation, we do not have the institutional oversight of these issues. An inequality report would provide that visibility to government and, in turn, would become an additional tool available to tackling inequality in our country.

The thing is, if anything, we have actually gone backwards on these issues. Equality of opportunity really should be an important part of who we are as a nation, or at least who we think we are as a nation. The concept that every Australian has equal opportunities to grow and prosper is at the core of our Australian values. The problem is that labour's share—that is, the working people's share—of national income generated by workers has been steadily declining since the 1980s. The share driven by labour of the whole national income has been declining for the past four decades.

This bill aims to start to address those issues. We have a widened gap between the rich and poor in our country, and it is at a 75-year high, I'm ashamed to say. I can't believe that those opposite would not agree that we need to address the reasons why Australia is falling behind. There are some key steps in this bill that will allow us, as a nation, to take the next step. The time line of the inequality report to be produced is linked to the standard five-year release time line of the Intergenerational report produced by the Parliamentary Budget Office. Every five years, governments will be able to comprehensively assess the efficacy of the programs and initiatives that we have implemented that are designed to pull people out of poverty and to reduce inequality in our country. Governments will be able to quantifiably assess whether government measures are driving people into inequality should that be the case. To those opposite who think that a trickle-down effect works: you've got to take a look at the evidence, but you've got to have the tools to look at that evidence. The problem is: your policies make our current settings worse. What we've been doing for the last 40 years isn't working. What we need as a parliament is the tools to see what's actually happening.

This bill seeks to ensure that the Productivity Commission has regard to the need to mitigate the negative effects of inequality on our economy and in Australian communities. As Middle Australia is missing out on a growing share of income growth, it poses grave risks to the future of productivity improvements and overall growth in our nation. By ensuring that the Productivity Commission produces an inequality report, we'll be able to examine these issues, including the following three things. The first is established measures of economic inequality. Currently we simply don't have the data about economic inequality in our society, yet we expect our government to respond to these issues. In establishing these measures, we need to ensure that there are a diverse range of dimensions, such as geography, gender and age, when we are looking at issues of inequality, to fill in those gaps. We can also look at issues of people from CALD and Indigenous backgrounds and actually have real measures of where inequality sits in our nation. Average wages today are growing more slowly than productivity, contributing to this growth in inequality in our country. This in the short term threatens future productivity and growth in our country. Establishing more comprehensive measures of inequality would allow for a more effective policy process to respond to these issues.

Secondly, we need to assess the effects of economic inequality in our country. As I've outlined, economic inequality has a negative impact on our people. Economic inequality affects people's life chances and their ability to grow, to prosper, to meet their full potential and to use their abilities for their own good, for the good of their families and their households but also for the nation's good. So equality of opportunity is in our nation's best interests. Improving opportunity is not a zero-sum game. We are all better off if our society is more mobile. It's in our national interest to do this work. It's simply good economics. Ensuring that our growth potential is maximised in turn maximises the capacity for each individual to contribute. The OECD agrees, having pointed to the link between improved social mobility and economic growth. I also passionately believe in equality of opportunity as a matter of social justice, as a matter of fairness in our nation.

Thirdly, what we need to do as a country is assess the effect of existing government programs on economic inequality. Why is this important? I think it's a critical component of the policy development cycle. This is a broader concept, ensuring that all individuals can grow to their full potential and make the most of society's advances. It's about the right of people from disadvantaged suburbs to enjoy access to things like affordable health care just like other Australians who come from more privileged suburbs. But, as Senator Scullion would know, this is simply not the case around our country. The enjoyment of affordable access to health care is not a privilege that a great many people in our more impoverished communities enjoy. The opportunity for people from all walks of life to live in areas which have been well planned, cared for and invested in when it comes to amenity and public space is also a key measure of inequality.

Another key measure is that people are not unfairly disadvantaged when it comes to them trying to crack into the housing market. Here, we don't just mean crack into the housing market and start out as first home owners—and, increasingly, more and more people are marginalised from being able to do that. We also know that, increasingly, more and more people will retire with a significant mortgage. This is not just something that is instantly solved as you finally get it together to enter the housing market. This problem of high housing prices is following people right through to retirement.

Having said that, let me make a few remarks about a couple of policy areas which are crucially linked to addressing some of these issues and lifetime chances. These are important to me, because they're in my portfolio areas—namely, early childhood education and education funding, more broadly. It's been shown in our country that inequality of access for children from low-socioeconomic backgrounds to high-quality play-based early learning at preschool can have longer-term, negative educational outcomes. What we need is for our children to be on a level playing field from an early age, no matter what their background. I'm ashamed to say that the measures put in place by this government recently in changing access to child care certainly put us backward in that regard, where the most vulnerable families in our community were reduced from 20 hours of child care a week to just 12.

Visibility on inequality in our communities and inequality of access to education will enable governments to establish that level playing field. Visibility of inequality would be reported on by the Productivity Commission to allow communities and family centres right across the country to better understand the level of inequality that affects their families, their communities and the children that they seek to serve. They are the kinds of measures they need. Early childhood and family centres will have, through this kind of reporting, access to the information they need in making application for future funding from governments. People will be able to say: 'We need this early childhood intervention here in this community', because they've got the data and demographics to back it up. I know, from talking to current bureaucrats and communities, that they have to scratch around at the moment to try to find the evidence base to demonstrate access to these programs when they can see the poverty right in front of them. They can see the need, but government says: 'Show us your data. Show us your information.' And we are scratching around for that effective information.

Every one of our children should have the same access to educational opportunities, regardless of their postcode and irrespective of their parents' wealth. It should be, I believe, the right of every Australian child to access high-quality and affordable educational opportunities.

The case for equality of opportunity in our country is a strong one. The case for government intervention to improve equality of opportunity is also strong. That is why I'm supporting this bill today. We on this side of the chamber pride ourselves on being part of that national narrative that says we are the land of the fair go. But a very sober analysis tells us that we have a long way to go and that we are going backwards. I commend the bill to the Senate.

Linda Reynolds (WA, Liberal Party) Share this | Link to this | Hansard source

I, too, rise to speak on Senator McAllister's private senators' bill, the Productivity Commission Amendment (Addressing Inequality) Bill 2017. What I have just heard from those opposite in this debate is what I would characterise as nothing short of left-wing ideological hubris. For Australia, not just is it great hubris and arrogance for anybody in this place to say they have a mortgage on moral compassion; but this bill is about much more than that. It's not about reducing the cost-of-living pressures on Australian families, it's not about reducing the cost of energy prices, and it's certainly not about economic growth and jobs. It is simply about another big bureaucracy. Somehow you can wave a magic wand and, by doing more studies and more surveys by the bureaucracy, that will change inequality.

But it is not only about that. More importantly—and, perhaps, more sadly—for Australians, this issue of inequality is all about Labor's re-election in two years time. At the last election we had 'Mediscare'—remember that? In 2014 we had the mother of all scare campaigns, and now we have 'inequality'. It is very clear from what the Labor Party are doing already that the next election will employ the same tactics of fear, division and envy—just as they did on their outrageously incorrect campaign that lied—instead of actually inspiring, motivating and talking about positive policy, directions and the things we actually need to do in this country to grow our economy, reduce inequality and raise wealth, which is about economic growth and about jobs. Those opposite have a long, sad history of the politics of envy. Far from developing and locking in social cohesion, they are actually the enemies of social cohesion, because what those opposite have just said again is all about pitting Australian against Australian. There is nothing cohesive, there is nothing positive and there is nothing redeeming about the strategies of those opposite.

Sadly, for Australia and for all Australians—and for Australian democracy, I believe—the ALP is clearly taking the low road once again. Their tactics are not only those of 'Mediscare' from the last election; we can clearly see we are going to be hearing one word, 'inequality', over and over again between now and the election. This is straight out of the playbooks of Corbin and Sanders. It's: 'Let's find an issue and a word that can be as divisive as possible.' But it's not just about division and the politics of envy and that base level of scaring people anymore; it's actually also a huge lurch to the left, which is, as I said, straight out of the playbooks of Corbin and Sanders. A big new department and bureaucracy to tell us what is wrong without providing any way of implementing change for growth is a complete and utter waste of time. What've they done? They've picked a single word, and I guarantee, Australians, you will be hearing that word for the next two years. As Medicare was at the last election, it will become their new mantra, over and over again. They will continue to demonise those on this side of the chamber—we're the nasty opposition; you're the only ones who care about Australians. Of course, everybody who is in this chamber is here because they want to leave Australia in a better place. The difference is we disagree fundamentally on how we actually get there.

To channel the great Maggie Thatcher—and it is clearly inherent in this bill yet again—'The problem with socialism is that you eventually run out of other peoples' money.' That is something that those opposite time after time clearly do not understand. Again Maggie Thatcher said, 'There is no such thing as public money, only taxpayers' money.' The last speaker was again talking about expending all of this money, as if somehow that will fix all social and economic problems in this country. Of course it won't. The question is: where is the money going to come from?

Let's have a look at this issue of inequality in a bit more detail. It's not the first time that the ALP has run this flag up the flagpole. In fact, in 2014 we had a community affairs Senate inquiry on this exact issue. In 2014 we had a community affairs majority report by the Labor Party. It was absolutely full of the same invective and inflammatory rhetoric, which was designed to do nothing more than leverage political advantage for the Labor Party at election time. The problem with their analysis of inequality back then in 2014 was it absolutely ignored the facts. I point out to those in this chamber that just because you assert certain things over and over again does not make them true. Let's actually have a look at some of the facts on this issue and at some of the things that we identified in the 2014 report and where they have progressed from 2014 to this year.

When looking at inequality firstly you actually have to look at the facts. We found that the opposition consistently in that 2014 report conflated the concept of income inequality with wealth redistribution. They are two completely different concepts, which I think were deliberately conflated to press a point. Wealth redistribution is a political philosophical concept of how you redistribute wealth. Obviously both sides of the chamber have very different opinions on that political philosophy, and that actually drives a lot of our policy positions. But that is very different from a measure of income inequality.

First of all, when anyone listening and anyone in this chamber start to hear those opposite talk about the issue of income inequality and inequality they should start to look at the facts. Are they talking about income inequality, which is already quite effectively measured, or are they talking about a left-wing concept of wealth redistribution from the nasty wealthy to the poor? That is the first thing to actually understand. They conflate it and they correlate it, but correlation is not causation—a bit of an inconvenient factual truth for the Labor Party. Those opposite did it in 2014 and we are hearing them doing it yet again.

What should we expect as we go forward with this debate and discussions on inequality? What should we expect? Let's have a look at what they did in 2014 in this report. The report made numerous sweeping statements about inequality in Australia, without providing evidence of such. As I said, the Labor Party report regularly conflated income inequality with wealth redistribution. It was replete with emotive and unsubstantiated arguments, as with facts and figures, and frequently discarded the significant evidence of Australia's overall egalitarian economic context.

As I said, there was also a tendency throughout their report to conflate income inequality and wealth redistribution. As one distinguished professor noted to the committee at the time, 'Of the tendencies that are harmful to sound economics, the most seductive and the most poisonous is when you focus on questions of distribution.' He said:

… of the vast increase in the well-being of hundreds of millions of people that has occurred in the 200-year course of the industrial revolution to date, virtually none of it can be attributed to the direct redistribution of resources from rich to poor. The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparent limitless potential of increasing production.

One thing that was studiously missing in the majority Labor report was the evidence from almost the majority of submitters, who stated that the best way to decrease income inequality was—guess what; surprise, surprise—through employment, jobs and empowerment. But, of course, that was a bit of an inconvenient truth that was omitted largely from the report from those opposite. The majority report also failed to note that substantial tax and transfer systems were already in place in Australia which seek to alleviate poverty—something here we believe strongly in and work very hard to achieve but, again, a little inconvenient truth for those opposite.

In terms of the facts and measurements of income inequality itself—putting wealth redistribution aside—there are already a number of different statistics and measurements which can be used to measure inequality The report consistently disregarded the fact that income is not the only measure of equality. It is one very important measure of equality but not the only one. For example, Treasury officials actually said that income inequality measures typically do not take into account the effects of in-kind transfers, public health, subsidised medication and education, which are, of course, very important factors in working out income inequality—particularly globally.

According to an ABS statement in 2014, the Survey of Income and Housing showed that, if in-kind transfers are taken into account, the average real disposable incomes in Australia for those at the bottom two deciles have grown by as much as the top two deciles between 2003 and 2010-12—slightly different from the rhetoric in the majority report from those opposite. But, also, submitters to the inquiry made this point: that, overall, average incomes, including even in the lowest socioeconomic bracket, have risen over the last two decades, even as the gap between the richest and poorest may have widened.

Mr Acting Deputy President Whish-Wilson, we have a statistic—a bit of information in there—that will be of particular interest, I think, to you as a Tasmanian. The report noted in 2011-12, while Tasmania recorded the lowest mean net worth at $600,000 or 17 per cent below the national average, Tasmania at the time, despite that, actually had the lowest Gini coefficient, which actually meant that Tasmania was more equal than any other state. Again, two very different statistics and information—and clearly the Tasmanian situation showed that there is no direct correlation. You can have one but also have the other, which is completely at odds with the rhetoric from those opposite.

There is one other significant issue which the Labor Party at the time in the majority report completely failed to do—as they are doing yet again here in the chamber today. What they didn't note is the budget context and the relationship between income inequality. Treasury, themselves, stated:

In light of the current budget situation and Australia's ongoing current account deficit, prudent fiscal policy is required to ensure that we grow the economy to support employment growth and address inequality.

The report from those opposite, again, conveniently failed to take account of the debt and deficit context and assumed that policy changes, such as increasing welfare payments, can be implemented without any cost—clearly ludicrous, which is why I am sure you did not put it in the report because it completely undermines the arguments then and, again, your arguments today. Coalition members at the time, including me, rejected the majority report, because we noted that burdening future generations with debt is also a very damaging form of inequality.

Let's have a look at where the statistics are today. We've heard a lot of assertions about income inequality and related issues, but we have been very short on the facts. Let's have a look at what the situation is today in terms of income inequality. Roger Wilkins, deputy director of the Melbourne Institute who prepares the HILDA survey—the Household, Income and Labour Dynamics in Australia survey, which is widely regarded and used—firmly rejects the notion of growing inequality. He said, 'If anything, inequality has actually been declining.' This is particularly the case when we take into account Australia's progressive tax and transfer payments system and our experience post GFC. Let's look.

Universally, the internationally recognised Gini coefficient is used to measure household disposable income. Based on the HILDA data, guess what? It decreased. Between 2011 and 2014, right before this report, evidence showed that that had actually decreased.

Jenny McAllister (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Under a Labor government.

Linda Reynolds (WA, Liberal Party) Share this | Link to this | Hansard source

What has happened in 2016, Senator McAllister? I know this is going to be terrible news for you, with your nice 'Corbynista' style policy here. The fact is the 2016 census data showed—this Gini coefficient based on gross household income—guess what? Income inequality has declined from 0.382 to 0.366 since 2011. On the facts, it is actually declining. Not surprising we don't hear that from those opposite because it actually contradicts their narrative. So, let's have a look at some more facts from the ABS and other credible sources.

Between 2006 and 2014, the largest fall in household wealth occurred in the richer households, with the measure for the top one per cent of income earners falling nearly 10 per cent, while the lowest 10 per cent in society had an actual increase of 25 per cent. So, again, that directly contradicts your mantra that income inequality is actually getting worse. Between 2001 and 2014, the HILDA survey did show a small decline in that coefficient, but now it is declining even further. So where income has been constrained in families, the government's safety net does provide great value. According to the ABS, the poorest 20 per cent of households, on average, receive cash transfers and social service benefits more than eight times what they pay in tax. I will say that again: the poorest 20 per cent of households, on average, receive benefits and cash transfers more than eight times what they pay in taxes.

According to the OECD, in an analysis released in 2015, while income inequality has risen in most OECD countries over the past three decades, in Australia it has increased by substantially less than most OECD countries—that is over the last 30 years. Also, in 2015, the Productivity Commission itself found that 40 per cent of families paid no net tax after taking into account their transfer payments like family tax benefits. So already 40 per cent of families pay no net tax. By contrast, the top 10 per cent of income earners pay almost 50 per cent. So the top 10 per cent of income earners pay 50 per cent of personal income tax. The top one per cent pay 17 per cent of all tax received. I think this is paying a pretty fair share. To then say their tax rate should be increased even further is nothing more than a lazy, cynical tax based on envy and division.

Coming back to the bill and to the regulation, it will achieve absolutely nothing. Those opposite are choosing to waste time with token ideas rather than actually getting on with the job of addressing real inequality, which is what this side are actually doing. This bill is nothing about reducing the burden of the cost of living. I challenge Senator McAllister to say how this bill, by creating more paperwork, will actually make a single difference to one Australian. It will not lift any of the burdens of cost-of-living pressures. It doesn't deal with energy prices or with the creation of jobs, whereas this side of the chamber are doing everything we can to reduce the cost of electricity and provide more gas to the nation. We are securing more gas supply, which will ease the cost-of-living pressures on this nation. We're also creating more jobs than ever, as you've seen over the last few months. We are now creating more jobs every single month, and that is what we on this side of the chamber believe will reduce inequality. It is through jobs. It is through educating children for the jobs of the future. It is not about left-wing ideological measures such as those proposed by those opposite. So, for all of those reasons, I do not support this bill and I urge the Senate to reject it.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Well, that was a rather extraordinary contribution from Senator Reynolds, that the wish of the Senate to discuss inequality in all its forms and to get the Productivity Commission to review that on a regular basis is somehow left-wing ideological hubris or left-wing arrogance. I think people should look in the mirror when they make those allegations about simply wanting to discuss it. But, if the government simply wants to deny that there is income inequality or inequality in our community, I think they really do so at their peril.

I think that to run up some statistics to prove that there is no inequality in our system defies any sense of reality. You only have to talk to anyone in this country to know that they see inequality every day of their lives. They experience inequality every day of their lives. I do think it is very problematic for people in an incredibly privileged position like we are—who are probably in the top half of the top one per cent of all wage earners in this country—to simply, in here, pronounce judgements across the community that there is no inequality and this is all a political stunt by the Labor Party. Again, I think you do so at your peril. This is from the government who wanted to cut billions of dollars from the pensions.

Now, we know that people living on pensions struggle. There is certainly inequality in people relying on either pensions or other forms of welfare. There is inequality there. If the government had their way, they would have cut $2.4 billion from old-age pensions in one of their latest budget iterations. We know that people who don't own their own houses are being pushed further and further out into the outer suburbs of the big cities just so they can afford some of the cheaper rents. But, of course, with the cheaper rent comes higher transport costs and less access to a whole range of services which people need. That drives inequality in our community. Senator Reynolds made the startling observation that people on welfare receive more from the taxpayer than they pay in tax. Yeah, that's true: they're on welfare; it is actually self-evident. I don't know how that argument suggests that there is no inequality.

A decade ago, 600,000 working families relied on support from the government to bring their household income up to the poverty line—not above it; up to it. That was a decade ago. It's worse now. The taxpayers in these situations are actually subsidising crummy employers who provide crummy jobs. That is one of the things that we ought to be addressing. People who work in this country ought to be working for wages that can sustain them and allow them to live in reasonable means. If that's what Senator Reynolds describes as left-wing ideology, well, I'm guilty of that; I'm proud of that. We know that in this economy, right now, the wages share of GDP is going down. The profit share of GDP is going up. Not only is the wages share going down; wages themselves are either stagnant or in decline. It is so much so that the Governor of the Reserve Bank has said this is a major structural problem for our economy now. Yet, the government seems to think that everything's fine—that there is no income inequality.

This week, we have seen CBA executives not grant themselves some bonuses. Because they have been engaging in some criminal activity, they are not going to pay themselves some bonuses. From memory, a year's bonus was worth $2.3 million. There are some families in this country that will never earn that much in their lifetime—never. Yet, the government says, 'There's no income inequality in this country. Again, it's the politics of envy.' I think just those bonuses are obscene, but those bonuses are on top of wages of some $10 million a year. Wages at the top end have been increasing at a far higher rate than wages at the bottom end.

Post-war in this country, in the '50s and '60s, we actually had a narrowing of inequality in this country. We had good jobs. We had a fair day's pay for a fair day's work. We had good regulations. We had employers that respected the right to provide to their employees good-quality jobs, long-term jobs. But since the 70's, it has been going backwards, under not just conservative governments but also Labor governments, too. When we were in government, I wished we had done some more things that would have structurally addressed some of these problems.

Labour compensation, as a share of GDP just in the last two quarters, has reduced. In the year ending March, the total quarterly nominal GDP grew by over $31 billion. But just $3.1 billion of that, only 9.9 per cent, was reflected in higher wages compensation. In other words, of each dollar in new GDP produced in Australia over the past year, less than 10 cents found its way into increased labour compensation. That proportion was the smallest of any non-recession 12-month period in Australia's post-war history. The link between GDP expansion and workers' incomes has never been weaker. That's from research done from The Australia Institute and the Centre for Future Work. None of that academic work has been challenged.

On average, each hour of work in Australia's economy produces about $90 of value added. When adjusted for inflation, labour productivity has grown by almost 20 per cent over the last decade—a 20 per cent increase in productivity. Real wages, however, have grown only six per cent over the same period—less than one-third as fast as real labour productivity. With real labour productivity growing faster than real labour compensation, this implies that the share of produced output paid to labour must be declining—as night follows day. The labour share has declined by a cumulative 11 percentage points of GDP since the mid 1970s. The erosion of the labour share since the peak represents the redirection of about $200 billion of annual output from workers to other economic stakeholders. By far the major beneficiary of that redistribution has been the private corporate sector, which has increased its share of GDP by about 10 percentage points over the same period, reaching 24 per cent of GDP in the March quarter.

While we have those figures demonstrating my earlier comments that the profit share of GDP is increasing, the wages share of GDP is going backwards and we see employers taking advantage of the current industrial relations settings to drive wages down. I have seen and heard from workers, unions and employers how this is taking place. One of the most insidious ways it is taking place is simply the labour-hire, contracting-out scenario. A good example is a dispute that happened at Carlton & United Breweries in Victoria not so long ago. The company contracted out its maintenance workforce. It simply organised another company to contract for that work, at 65 per cent less wages, and awarded them the contract. Overnight, those workers, one of whom had worked at that company for 40 years, were simply left without a job. The company had a replacement workforce ready to go. That was done to drive down wages. I wish it were a lone example, but it is not.

We look at ExxonMobil, one of the biggest multinationals in the world. They had their offshore cleaning contractors and catering contractors, who go and clean the quarters on the oil rigs and the drilling platforms, simply contracted out. Exactly the same work still had to be done, but they simply changed the contractor to people who paid less. All those people were simply left without a job, and the people who were brought in to replace them were paid less. It was simply a way for that company to drive down wages and to put those savings in their corporate pocket—no regard for the devastation that that caused the individuals, no regard for having quality jobs.

Here we are in a situation where employers will come up to you proudly, as if it is a badge of honour, and say, 'We pay the award.' Well, just in case you didn't know, paying the award is the lowest legal minimum wage you are allowed to pay in this country. And that's a badge of honour? 'We pay the lowest legal wage we have to pay in this country,' and they see that as a badge of honour! Why many of them see it as a badge of honour is that a lot of their competitors aren't even paying the award. They pay below the award—illegally, but they do that. So the ones paying the award say, 'Well, we're paying the award; you should give us a medal for that.'

When we have award reliance increasing, and bargaining going backwards, which is the situation we're in now, when we have contracting-out and labour-hire arrangements being put in place simply so wages and conditions can be driven down every time a contract changes, we have a situation where work becomes precarious, insecure, the quality of the jobs is poorer and the wages and the remuneration that people get are less. That is what is happening in our economy at the moment. These are not just isolated instances. This is happening all over the place. It is broad. The framework that allows that to happen is the Fair Work Act. It is no longer fit for purpose and needs to be addressed.

We have a situation where noncompliance with legal obligations is rife. We've all heard of the 7-Eleven situation, of the Domino's situation and of many other companies that have exploited their workers—in ways that are sometimes actually legal but in many cases are not legal—and exploiting the existing environment to ensure that they can pay the least amount possible and workers are exploited. That needs to be addressed.

We have a noncompliance situation where the Workplace Ombudsman, who is the statutory body to deal with noncompliance, now has, I think, near 800 staff—I think it is a terrible indictment that there are 800 people—but they can't keep up with the workload. There seems to be an insatiable need for people to investigate noncompliance of the Fair Work Act and other industrial instruments. Unions used to play that role and they should again, but the Fair Work Act has made it nearly impossible for unions to be involved as they used to be when it comes to investigating noncompliance. As a result—and I make the direct correlation—of union membership being down and the lack of ability for unions to do time, wages and book inspections there has been an increase in noncompliance across the board.

I know government members celebrate the decline of union membership, but that is doing untold damage to the wages, conditions, the living standards and the benefits enjoyed by working people throughout this country. It needs to change, and denying and ignoring the fact that there is income inequality in this country is not a way to address that. That should be acknowledged, and the government ought to be working with us to look at ways to address that problem for the good of all Australians.

Debate adjourned.