Julia Irwin (Fowler, Australian Labor Party) Share this | Hansard source

For the first time in my memory, this year I did not hear the Treasurer deliver the budget. I was attending the IPU conference in Nairobi, Kenya, with my colleagues the member for Pearce and the member for Riverina. That meant that I did not catch up with the budget detail until some time after the budget was delivered.

It was very different from those days when I would sit with my grandfather and listen to the radio broadcast of Harold Holt announcing the government’s spending. My grandfather would anxiously wait to see whether there would be a few bob extra for the pensioners or whether there would be an increase in the price of beer or cigarettes. My parents would listen to hear whether there was some small amount of assistance for families with two children, like ours. There was no talk of tax cuts or changes to superannuation. Taxes were what you paid so that you could get government services, and superannuation was something that only a few people had access to. But if the Treasurer announced that there would be a few shillings increase in the age pension, my grandfather would spend the next few hours—if not days—working out what added luxuries he could spend the shillings on. He should not have bothered. The few shillings were eaten up in the higher cost of living.

So, when I got to look at the budget detail, like my grandfather I began by looking at what was in the budget for pensioners—and there it was: 98c a week in utility allowance. That is even less than the few bob pensioners got in Harold Holt’s day. For a family on a middle income, there was about $10 a week in tax cuts. But you would not have to spend too much time working out where that would go in the family budget. It has already been spent on higher petrol prices and mortgage repayments.

It is true to say that the importance of the budget is overstated in setting the direction of the Australian economy for the year ahead, but we can say that budgets have some role in influencing how people behave. If we increase the price of beer and cigarettes, we might expect people to consume less of those products. It is the same with the role of income tax and family benefits when it comes to how people participate in the workforce.

If I think back to those times, the 1960s, there were choices open to families when it came to work. At that time it was more likely that women would return to the workforce to help pay for a home extension, as my mother did, or a new car, rather than today, when two incomes are needed by a family to pay the higher mortgage. The child endowment of that time has been transformed from a family allowance to family tax benefits. I have to say that I have always found a term that included the words ‘tax’ and ‘benefit’ to be a contradiction of itself, but today that family tax benefit system is responsible for one of the highest marginal tax rates in our system. That is worth noting because we are told that the tax changes in this budget are designed to bring Australia’s tax rates into line with other developed countries.

We are told the reason that it is necessary is so that Australia can retain skilled workers and to provide an incentive to highly skilled and highly paid workers. So, if you happen to be on average income of up to $63,000 a year, you will be better off to the tune of $10 a week. But, if you are earning $250,000 a year, because you need more incentive to get out of bed in the morning, your tax cut will be $158 a week. Such tax cuts, even of $10 a week, would be welcome in any household. But when they come at a cost of a visible reduction in services then it is not surprising that so many people in middle Australia would prefer to see the money go to improving those services. I know that the people that I represent in Fowler feel that way.

I come back to the issue of incentives for people to participate in the workforce. I recently went through the exercise of calculating just what sort of incentive there is for people who have the option to work more hours per week. I hope—and I mean this—that my daughter will not mind me using her as an example. My daughter Rebecca teaches at a school in my electorate. She has a gorgeous two-year-old son, my first grandchild, Liam. Rebecca works three days a week. Liam goes to child care two days a week and on the third day he stays with his great nanna. Rebecca recently told me that she was thinking of going back to work full time, five days a week. But when we sat down and worked out the extra cost of child care, the loss of family tax benefit part A, the restart of HECS fees and the other extras, such as petrol and toll charges, the net benefit from working two extra days was a mere $80 a week. That works out at about $5 an hour.

Some families are so desperate for that extra $80 a week that they simply do not have the choice. But the question remains: what sort of incentive are we offering when the net pay from working extra days is $5 an hour? It seems the Treasurer thinks that incentives only work at the big end of town, when we have senior executives earning obscene amounts of $20 million or more. If the Treasurer really wants to increase Australia’s workforce participation then he really needs to take a fresh look at the whole idea of incentives. While young families face high child-care costs, while we have a family tax benefit system that pays $3,000 a year to stay-at-home mums of 17-year-olds and while we have a family tax benefit system that results in marginal tax rates of over 50c in the dollar, tens of thousands of young parents will choose to work fewer hours.

Australia has a much lower workforce participation rate than that of similar developed countries. But this budget does little to reduce the disincentives for mothers to rejoin the workforce or to work more hours. It is all about meeting the expectations of the big end of town. There is precious little for middle Australia. The big winners are those on the top of the income tree. I began my speech by reflecting on the 1950s and 1960s and what a different country Australia was then. It was a time when families had some degree of certainty about their future. Their employment, wages and conditions were guaranteed by an industrial relations system which allowed them to share in the rewards of our nation’s productive capacity. Our society was more equal in that era than at any time before or since, but that is rapidly changing.

The government’s extreme industrial relations laws have set Australia on the road to the American model of industrial relations. While this government crows about measures of increased wages during its term of office, there are already signs that we are heading down a path of lower wages and living standards for a large proportion of the Australian workforce. Just so that members know what is in store for us, the American system means minimum wages of just $8 an hour. In the US, average wages have gone backwards over the last five years. Of course, the US took the lead in making tax cuts to the wealthy and high-income earners. But the old trickle-down theory just is not working. The benefits of productivity growth are almost entirely going to the wealthiest proportion of the population. Today, we see senior executives earning 500 times as much as average wage earners. In a world where raw material and energy costs are rising, labour costs are under intense pressure. They are the one area where corporations can increase profits. So, rather than allowing surpluses to trickle down to workers, everything is being done to restrict wage increases.

This is happening in three ways. Outsourcing has become the strategy of a large part of our manufacturing and even service industries. Manufacturing jobs in Australia have been shrinking at an alarming rate. It may come as a surprise to some members, but my electorate of Fowler has the highest proportion of its workforce in manufacturing industries of any electorate in Australia. In Fowler, close to 20 per cent of the workforce depend on manufacturing for their employment. As we see on almost a daily basis, manufacturing jobs are being lost to low-wage countries.

But pressure on Australian wage earners is not limited to outsourcing. We now have a new term to contend with, and that is ‘insourcing’. While Australian jobs in the manufacturing industry have been sent overseas, we are now finding that, in industries such as building and construction, heavy engineering, health services and hospitality, overseas workers are being brought into Australia to do the work that Australian employers are not prepared to pay Australian workers a decent wage to perform. All our education and training facilities are unable to provide sufficient graduates to fill the vacancies. There was a time in Australia when employers wanting to recruit workers in remote areas, all for different jobs, would pay a premium to get the workers they needed. Unfortunately, that is changing; now we have insourcing. If an employer needs workers and cannot get any takers at base award rates, they can bring them in from overseas. We even have apprentices being recruited from overseas. This has never been the Australian way. It definitely has never been the Australian way. We have not at any time in the last century taken in large numbers of guest workers, but now it is open slather.

In throwing out the industrial relations system that had served Australia for over 100 years, this government has changed more than just workplace relations; it has changed the nature of Australian society. We no longer think of things such as a living wage. What was once the basis of a fair and equitable society has now been destroyed. It will not happen overnight, but it is happening faster than many people expected. We have already seen the Spotlight case. And, if you look at the advice being given to businesses in Australia, we can expect to see a lot more Spotlights in the next few months.

In March this year, Anthony Longland, a Freehills partner, told a law finance conference in Sydney that employers with low-entry barriers should strongly consider using the opportunities for restructuring their employment arrangements available under Work Choices or have their competitors beat them to it. He went on to say that start-ups in low-entry barrier industries could use the new employer greenfields agreements to set up employment arrangements that have no penalty rates, no shift allowances and extremely limited hours provisions. Longland told the conference:

They might be able to get a significant advantage over you in terms of labour costs ... There is real responsibility… on current employers in that sector to guard against that by looking to the opportunities available under the Work Choices legislation.

So that is the writing on the wall for employers. The expert advice is to cut penalty rates, to abolish allowances and to take Australia back into the Dark Ages of industrial relations. As for the protection of workers’ rights, Longland told the conference that protected conditions under Work Choices were really ‘a smoke and mirrors exercise’. The provisions were protected but not protected because they could be forgone if they were specifically overridden by the terms of the agreement. That is exactly what we have seen in the Spotlight case. It is no wonder that Australians are not feeling as relaxed and comfortable as they were a few years ago. And, I might add, more than a few members opposite are not looking as relaxed and comfortable as they were a few months ago either. We see that quite often in question time.

While I began by looking back to the 1950s and 1960s, I do not for one moment suggest turning back the clock to those days, but the measures taken by the government in this budget, when taken together with its extreme industrial relations changes, definitely turn the clock back to the 1850s and 1860s. For over 100 years Australia has run a unique experiment in linking working conditions to the building of a fair and equitable society. Our history of social and economic development shows that the experiment has been a great success. In concluding, I state that we need to build on the history of the last 100 years, not tear it up and go back to a system that has been shown to fail in every country where it has been followed.

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