Senate debates

Thursday, 25 November 2021


Wages and Cost of Living

5:14 pm

Photo of Andrew BraggAndrew Bragg (NSW, Liberal Party) Share this | Hansard source

I rise to speak on Senator Gallagher's motion. It's always a pleasure to make some remarks on Australia's economic policy settings. I guess I'd have to begin by acknowledging the last contribution, which almost makes the point that the government could legislate jobs. Now, we live in a market economy where jobs are, generally, created by the private economy based on investment. I think maybe one in 10 jobs in Australia is located somewhere in the public sector, so the vast bulk of the Australian nation work in the private economy. The conditions that government applies in this space are a relevant consideration. And, as much as we may like the concept of a government sitting in Canberra, in a purpose-built capital far away from the real economy, legislating jobs, it doesn't work that way.

As a person who is committed to the principles of the market—but not unfettered markets, because we do believe in regulation where it is justified—I have to reflect upon what the big levers are that we would have here in Canberra to generate the likelihood of jobs growth. I don't think this is a particularly difficult exercise. We can go around and we can look at the work that has been done by various international groups, world banks and the like, on what actually determines a nation's competitive position—given that, for the past 250 years, and I imagine for the next 250 years, Australia will rely upon foreign capital. This is a country that cannot fund itself. And so, with a heavy reliance on foreign capital, we must always look at these things through the prism of where we stack up compared to other jurisdictions. I know there are mixed views about these things, but I think we have to look at the reliance on foreign investment going up over time as some of the most important data points here. Our tax settings, our tax complexity, our tax rates, our labour laws, the general dynamism of our policy settings, how fast we are to respond to changes—all these things are important. As a general principle, we have been committed to passing incremental tax reforms to try to incentivise the idea of private investment.

It has been a subject of much consternation—before I was in this place—that there should be a more competitive tax arrangement for companies; certainly, in this parliament, lower taxes for workers have been enacted, and there is always more that we can do there. As a general principle, most people would describe the tax system as very complex, and any attempt to try to simplify the tax system is always going to be time well spent. But perhaps the area where we could do the most to improve our competitive position would be to simplify the labour laws. I generally try and avoid making too many partisan and unnecessarily political comments, but there are many contributions made in this place that have been written elsewhere and that are designed to entrench the complex labour laws because it suits particular organisations. In fact, if we didn't have complicated, convoluted labour laws, we wouldn't need to have as many people working for registered organisations.

On this issue of trade unions, I think there is a very good case for trade unions to represent the interests of low-income earners, in particular—migrants and the like—but I do think that there has been too much power given to these organisations, certainly, in the law, by virtue of the complexity and, certainly, in politics, by virtue of one of the major parties being owned by that particular movement. I think that is a real problem and it has made it much harder for us to have a sensible debate about these things. The idea of a simple small-business award should be something that is easily done. Simple conditions that protect workers and could be applied across the economy could only be a good idea, but that is resisted. I think that is a real shame.

So you work through these things like the tax settings, tax rates, the labour laws and then, as I said before, there is a hard-to-describe factor which I generally try and think of in terms of how dynamic your policy settings are. Parts of our economy are being massively disrupted, as we speak. Unless we're prepared to deploy more policy in the payments and the digital assets space, we're looking at the prospect of Silicon Valley and perhaps other parts of the world controlling huge parts of the economy. If you think about the idea that the major tech companies in the US, which already have enormous knowledge of us as individuals, could get into banking and could, effectively, eat the Australian payment system, you really need to think carefully about what sorts of policy settings you want to have here and how quickly you can respond to these changes.

I have to say that, I think, this week in the House, there was a bill introduced which is going to offer the opportunity to people to use a corporate structure as a collective investment vehicle. This was a recommendation of Mr Mark Johnson, who performed a review of the competitive position of Australia's financial sector for the Rudd government. To their great credit, the Rudd government commissioned that review. It should haven't taken 11 years for us to enact that recommendation. If you look at a lot of the reforms that were enacted following the National Innovation and Science Agenda discussion around venture capital in particular, they occurred in three to six months. So we need to move more of our policy responses, which probably means pushing the official family a bit harder, from time to time, to the three to six months time frame rather than the 11-year time frame, because things will just move on.

Of course, this motion is about wages. For people who have looked at the budget papers, it is obvious that wages growth has been sluggish in recent years. There is a small wage increase projected by the Treasury. The Treasury secretary, Dr Kennedy, has said that that will be eaten by compulsory super. That is the position. Do I think it's a good idea to allow that wage increase to be eaten by compulsory super? No, I don't. But again, there are mixed views about this. I would prefer us to have a more flexible system where people could put it into super or take it as their wage, since it is actually their money. The superannuation idea, I think, is a sound idea. It could be improved a lot. It does distort this debate considerably. Some people would argue that that is not your wages; that is something that falls out of the sky. But, for anyone who has worked in a business, particularly a small business, this is a well-established cost of employment. For people who want to pursue a wages policy discussion, you have to look at all your settings including the superannuation settings.

I am very worried that home ownership is getting harder and harder for Australians, particularly for lower income Australians. I have long been an advocate of allowing people to have access to their super for a first home deposit. That is not a silver bullet. Anyone who argues it as a silver bullet is stretching the truth considerably. There are a range of factors which have led to the difficulty that many Australians face in acquiring a first home. This is an economic debate, which is a good debate to have, but access to a home is more than just an economic debate. The system we have in Australia, particularly when you look at the way people retire generally, is based around the idea that you will have a home, that you will get access to a home, because the reality is that a retirement on the pension without a home is generally going to be a very difficult retirement. For people who do have a home, being on the pension makes their retirement much more comfortable. These are always difficult things to go into, because there are great vested interests here, whether it's about making the labour laws more flexible or it's about how superannuation works, because the way that those laws work in relation to industrial relations and to retirement incomes means there are enormous sums of money at stake. I think sometimes that we could have a much better discussion if it wasn't for all the vested interests falling over themselves to give us their best view.

Ultimately, if you want to talk about wages growth, you need to have policies which drive and promote private investment, because you need to have the tension in the market that will ultimately lead to there being wages growth. As an advocate of foreign investment, I think that is a really key part. We need to maintain a competitive disposition. That is critical over the long term. It has always been the case that we rely on foreign investment. I often laugh to myself when I hear people say how terrible foreign investment is, because I think that they generally don't make themselves aware of the hugely positive role that foreign investment plays in the bush. There are so many projects in regional Australia which would never have been funded by domestic interests, and to finish on my old favourite, on superannuation, we've had super for almost 30 years, and our reliance on foreign capital has gone up over that period.


No comments