Senate debates

Monday, 2 December 2019


Productivity Commission Amendment (Addressing Inequality) Bill 2017; Second Reading

11:15 am

Photo of Jenny McAllisterJenny McAllister (NSW, Australian Labor Party, Shadow Cabinet Secretary) Share this | | Hansard source

I rise to speak on the Productivity Commission Amendment (Addressing Inequality) Bill 2017. I note that this is not the first time that I've introduced this bill into this chamber and, indeed, I encourage senators to consider the debate that took place on the last occasion that this bill was introduced, because it was a quite fruitful debate and one I think worthy of this chamber.

This bill seeks to place inequality firmly on the agenda of our country's most influential economic policy institution, the Productivity Commission, and it comes at a time when inequality in Australia is at a record high and when global leaders have been warning that inequality threatens the global economy. The Productivity Commission, as everybody understands, is tasked with providing research and policy advice on industry, industry development and productivity, and its scope is broad; it encompasses both specific industries and the productivity performance of the economy as a whole. It has significant influence, and most people could easily identify economic debates over the last 30 years where the commission's intervention has been decisive. It hasn't always been to people's liking, but it is a very influential institution.

We can no longer afford to allow this advice to be developed insensible to the significance of economic inequality. The commission actually has quite a long list of things that it is required to consider, and it's worth reviewing. In the performance of its functions, the commission must have regard to the need to improve the overall economic performance of the economy through higher productivity in the public and the private sectors. It should have regard to reducing regulation of industry, including regulation by the states, territories and local government, where that is consistent with the social and economic goals of the Commonwealth government. It's supposed to encourage the development and growth of Australian industries that are efficient in their use of resources, enterprising, innovative and internationally competitive. It's tasked with facilitating adjustment to structural changes in the economy and the avoidance of social and economic hardships arising from those changes. It's supposed to recognise the interests of industries, employees, consumers and the community likely to be affected by measures proposed by the commission. It's tasked with increasing employment in regional areas. It's tasked with promoting regional development. It's supposed to recognise the progress made by Australia's trading partners in reducing both tariff and non-tariff barriers, to ensure that industry develops in a way that is ecologically sustainable and also to ensure that Australia meets its international obligations and commitments.

That's a big long list, and it's a good list. I don't object to anything on that list. But it is a problem that one of the key things, one of the key public debates of the last decade, is not mentioned, and that is whether the distribution of wealth and income in contemporary Australia is fair and whether it is economically efficient. We can't afford to starve our government of credible, focused research on inequality. The Productivity Commission is, in fact, well-placed to apply substantial resources to generating this kind of analysis, and the bill would require the commission to do that. It would ask them to table an inequality report every five years, and it suggests that this report would be aligned with the Intergenerational Report. So, at the same time as we receive an important piece of policy advice as a parliament and as a public about how we are dealing with generational changes and the ageing population, we would also receive a report about how we are going with equality and inequality. Doing that would bring, I assert, valuable analysis to a debate that in fact is already raging.

This weekend, The Australian republished an article originally published in The Economist, and it's a very interesting article. It observes—I think uncontroversially—that, during the debate over the last few years, a growing consensus has emerged that, over the last four or five decades, the income of the top one per cent of income earners has soared relative to the rest of the population; middle incomes have stagnated; wages have remained broadly stagnant—that's certainly true in the Australian case—and the ability of the wealthy to invest their income in assets which have in turn appreciated in value and generated additional sources of income for those wealthy individuals; is exacerbating these concerns. The Economist doesn't actually reproduce these assertions uncritically. In fact, they go through each of those points and they reproduce arguments that are being made by economists around the world to contest those points. I don't agree with all of the information that's in that article. And I imagine that, later on in the debate, there'll be senators from the other side of the chamber who stand up and approvingly cite the rebuttals that are printed in The Australian. It's a good piece of writing. It's good to have a debate about these things. But wouldn't it be helpful if the Productivity Commission—one of the premier economic institutions in this country, a public sector institution tasked with supporting the parliament, the government and the Australian people to make good decisions about the future—regularly engaged with that debate. That would be useful, and that, indeed, is the purpose of this bill.

There are political reasons to tackle inequality, to tangle with it and get a grip on what it means. I think there is a credible argument that a sense of being left behind—a sense of being shut out of the economic benefits of our system—is leading to populism here and overseas. Regularly we hear employers say: 'Couldn't we just get back to evidence based policy? Couldn't we just make it all sensible like it used to be in the good old days in the eighties and nineties?' I hear that from business groups, but I think the reason that it is so difficult to engage in a conversation about reform is that there is not fundamental agreement about whether or not the economic arrangements as presently structured are fair. It gives rise to extremist voices—and I point to that general area of the crossbenches in the chamber—who promise all sorts of magic beans and all sorts of solutions to a disaffected community who feel that they are being left behind. That's not good for our politics, because those arguments and those promises are broadly fraudulent. They can't be delivered, and, if they could be, they wouldn't deliver the benefits that are promised. But it doesn't let everybody else off the hook. This parliament needs to engage with questions of inequality and questions of fairness.

Over the last 12 to 18 months the Reserve Bank has been very consistent. At one point the governor called on workers to demand higher wages. This week we saw the government trying to remove the capacity of workers to demand higher wages through their unions through an extreme industrial relations bill that, happily, was defeated in this place. But the Reserve Bank thinks that we need higher wages. The Reserve Bank has repeatedly pointed to this as a problem in Australia's economy, a reason for the sluggish performance overall of the economy and a challenge to the retail sector, which recently has posted one of its worst results in terms of retail performance in the last couple of decades. The Business Council has helpfully written that, rather than being allowed to pool in certain cities or among certain citizens, the business community must ensure that the benefits are felt by all. That's the right approach, and I am heartened by that sentiment.

We can't forget that inequality is present, is important and is also not new. It was important before Brexit. It was important before Trump. It affected ordinary people's lives long before it affected our political system. It threatened families' security and stability before it threatened access to global markets. We shouldn't have to look to shock election results to find an imperative to address inequality, because the imperative to address inequality lies in basic fairness. It lies in supporting those families working harder for less, those families sandwiched between one generation who fear they may never be able to afford to buy a house and another generation who fear they will never be able to afford to retire. It's important that we deal with these challenges.

Australians, I think, like to think that we are removed from some of the challenges and some of the inequalities that we observe in other comparable countries like the United States and the United Kingdom. In some ways, we are. Income and asset concentration in Australia is a fraction of what it is in the United States. Thanks to an activist Labor government, the GFC did not hit us as hard as it did other countries, and that is in part because we entered the GFC with less inequality than other countries. During the 2000s, Australia's middle incomes grew strongly, unlike other countries in the OECD that experienced slow growth or falling middle incomes. As I mentioned, the Labor intervention—the stimulus—made at the beginning of the GFC prevented widespread joblessness and the inequality that came with that. We should be proud as a country of that intervention.

But none of this has insulated us from the broader trends that have been at play since the 1980s. And it's not just the result of high-income earners being able to negotiate better pay packages. These things reflect broader changes in the way our shared prosperity is divided. During the 1990s, wages decoupled from productivity growth, and this is the challenge that the Reserve Bank has been pointing to. How do we bring these things back together? Even though Australian workers are more efficient and productive than ever, we are not being rewarded for it in wages. The labour share of national income in Australia has dropped from 75 per cent in the 1970s to just 53 per cent in 2016. To be very clear, it means that investment pays better than work, at least if you can afford to invest. These dynamics weigh on our social structure and on our economy.

There are some people who sort of say: 'Well, so what? We ought to be focused on prosperity, not inequality.' This is to make a fundamental error about how our economy works. The dichotomy between prosperity and fairness is false. More equal societies grow more quickly. This is not just wishful thinking; it is the considered view of hard-headed economists in like the IMF, the World Bank and the Bank of England. On a microeconomic level, inequality creates barriers to people starting a business, going to university or participating fully in the economy. It also impacts on growth. Increasing the pay of low- and average-income earners boosts growth more than increasing returns to the well-off does. Households in these categories spend more of their extra income stimulating the economy. The OECD estimated that income inequality between 1985 and 2005 reduced economic growth amongst its member states by almost five per cent. Whatever excuses there might once have been for ignoring economic equality have dropped away. All the signs demand action: economics, political pragmatism and basic fairness.

This bill doesn't solve inequality. We need concerted action. We need access to education, we need to strengthen workplace rights, we need to make our tax system fairer and our welfare system fairer, and this bill doesn't do those things. It's a modest bill, but it establishes a first step to build the policy infrastructure to take those steps. It seeks to use the public service institutions that we have, the expertise that we have, to look at inequality and properly address it.

We have a proud tradition in Australia of innovative policy mechanisms to deliver on public policy. Medicare remains an extraordinary achievement. Globally, our superannuation system is much admired. Today we need to retool our institutions to address some of the challenges of our times. The growing disparity in wealth and income is surely one of them. The Productivity Commission is an institution that can help us with this challenge, and I commend this bill. This bill will make sure that the Productivity Commission is alive to one of the most significant moral and social imperatives of today: economic inequality.

11:30 am

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

I want to talk today about the Productivity Commission Amendment (Addressing Inequality) Bill 2017, which purports to stand for inequality, and I want to preface all my comments this morning with our contrasting views of how this can be achieved. We are very much of the view that we, as Australians, should always be striving to grow the pie, to create more opportunities for every Australian, rather than trying to divvy up or slice up an existing pie or potentially a smaller pie. Where we stand today on inequality is fairly clear. The Gini coefficient and also the HILDA data show that over the last couple of decades inequality has been fairly stable in this nation. In fact, on some indications, it has actually reduced over the past few years.

When I talk about no policies for growth, what I really mean is a smaller overall pie, fewer opportunities for Australians to have a good life. Now, the first place I think we should start on this little journey is with Labor's tax policies. In the last election Labor's two centrepiece policies were a new housing tax, which was proposed to create more houses, if you can believe that logic for more than a millisecond, and the now infamous retirees tax. The Master Builders Association commissioned some economic research into the housing tax, which showed it would have resulted in 42,000 fewer homes across Australia, 32,000 fewer jobs, $11 billion less in building activity and overall, frankly, a weaker economy.

The managing director of SQM Research, Louis Christopher, also looked into this absurd housing tax. He said:

In short, if Labor's Negative Gearing policy is legislated in its current form, we expect a rise in rental yields which will occur through a combination of … falling dwelling prices and, eventually, a rise in rents.

Basically, what you would have seen were higher rents. Higher rents will often result in more and more difficulties for lower-income Australians, who have a smaller buffer in which to pay that higher rent. SQM expected that if the housing tax policy had been legislated by a Labor government, there would have been higher rents of between seven and 12 per cent over the 2020 to 2022 period, and in New South Wales it would have been 10 per cent higher rents in Sydney. So there would have been higher rents from that tax, which was proposed to create more houses, which is just hilarious.

Labor's other primary tax was a tax on retirees, basically an unfair and retrospective tax that would have hit 900,000 people with changes to dividend imputation, which could never have been foreseen. Labor, during the election, said that people were 'overinvested in Australian shares', which is basically saying that people shouldn't invest in Australian companies. This tax, the retiree tax, was designed by the industry super funds to create more market share for these funds at the expense of other types of superannuation funds. There's a fund called Australian Super, which during the election campaign said the imputation changes would have 'no material impact on net investment returns'. So the whole of the superannuation sector would have had significant changes but, of course, not the industry super funds—which is just fascinating, isn't it? Former leader Bill Shorten said last week:

We misread the mood about franking credits. In hindsight there were a lot of people who felt vulnerable.

And rightly so. Because the franking credits policy, or the retiree tax, would actually have affected a lot of quite vulnerable people, people who would have scrimped and saved for their retirement only to see this retrospective and unfair tax come into place.

Then we go on to industrial relations, which we spent a lot of last week discussing. Labor can't even support laws which would have upheld the integrity of large parts of the economy. Labor, frankly, have given a green light to the CFMMEU—which has already seen fines of over $16 million have no impact on this union—which has no regard to the law and which basically treats these court fines like speeding tickets. There's another union called the NUW, which has spent $650,000 of members' money on botox, tattoos, cruises, divorce lawyers and weight-loss surgery. So that's all good, apparently. But, of course, unions occupy a privileged position in this nation, where they have a monopoly on representation of workers. What we're saying is, like any other organisation, they should follow the law. The law is, obviously, far too weak.

If you want to talk about banks, that's good: we'll talk about banks. The banks have had a royal commission, they've had a bank levy, and we've put in place the BEAR regime—so, basically, you'll see longer jail sentences and steeper financial penalties for banks, compared to the ensuring integrity bill. If you can't even do the right thing by workers, and if you can't do the thing by the people of Australia, who expect good governance in all institutions, whether it be a bank or a union, then you can't really say that you're seriously concerned about inequality. Why on earth would people want to invest in some of these sectors? If you're a small business in the construction sector, where you're seeing a 30 per cent premium because of the lawlessness of the CFMMEU and other unions, why on earth would you be investing in that sector?

That takes us through industrial relations. Of course, in this area we are interested in an ideology-free discussion, because we're not owned by anyone. That's why the Attorney-General and Minister for Industrial Relations has today put out an issues paper looking at, again, where we can improve things—in this case today, how we can actually work together and how workers and business owners can work together. That is because we're interested in collaboration and in doing the right thing by all Australians. We're not owned by anyone. We're not actually controlled by vested interests.

Then we go on to Labor's trade policies, where Labor failed to do a large trade deal in office. They inherited the China FTA, they inherited the Japan FTA, and they couldn't do these deals because the unions said no. They said: 'No, you can't do those trade deals. We're not interested in more work, we're not interested in more investment; we're just interested in running an isolationist, closed-shop economy.' Labor had six years and they failed to do those two trade deals. Within 14 months of coming to office, we have been able to do trade deals with China, Japan and Korea, because we're not hung up on ideological concerns—like the Labor party is—about investor-state dispute settlement. The Department of Foreign Affairs said that Labor's trade policy at the last election would:

risk undermining a key element of our comprehensive strategic partnership and delaying the benefits of (the trade deal) to Australian farmers and businesses.

Our record is expanding the coverage of trade agreements from 26 per cent to 70 per cent, and we want to get to 90 per cent. In the last two weeks we've signed a new trade deal, known as the RCEP deal, and just last week the Senate passed new trade agreements with Indonesia, Peru and Hong Kong. So, while we're always looking to expand markets and to expand opportunities for Australian businesses to export into these markets, thereby creating new work, the Labor Party's record has been absolutely dismal. Everywhere you look, you see a smaller and smaller market with fewer and fewer opportunities for Australian workers.

Then we go to small business, where we have put in place practical measures to improve the opportunities for small business. In the area of government procurement, the Commonwealth now pays invoices within 30 days. But we want to do still better in this space. At the BCA dinner a few weeks ago, the PM said:

A recent example is our commitment to pay invoices to small businesses that use e-invoicing, not 20 days, within 5 business days, 5 business days. That’s where we are going now … Cash flow is king for any business – particularly small business – so this is an enormous incentive for small businesses to switch to e-invoicing.

We're also looking to award more small businesses with government contracts, and under our government, under the stewardship of Senator Cormann, the total value of Commonwealth contracts awarded to SMEs has gone from $12 billion in 2017-18 to $16 billion in 2018-19, which is a 29 per cent increase.

Overall, we're always trying to grow the pie. The Labor Party wants to talk about inequality, but a smaller pie which is cut up without being grown will always be a more unequal and less prosperous nation. That's why we've always been committed to tax cuts for small businesses and people—giving people back more of their money—and completing trade deals, like we have with a whole slew of nations. This has been a golden era in creating new exports for Australian companies. And we're also committed to better governance. We think that every organisation, be it a bank or a union, should be working for its constituents. We're not owned by anyone. Certainly we're not owned by unions or banks, unlike our opponents. We do think that the only way to grow the pie and to reduce inequality is to show a commitment to less tax, less regulation, ultimately a better market for Australian exporters, more trade and more investment. We're committed to the private economy doing well and creating more and more opportunities for small businesses and workers.

11:42 am

Photo of Rachel SiewertRachel Siewert (WA, Australian Greens) Share this | | Hansard source

I rise to speak on the Productivity Commission Amendment (Addressing Inequality) Bill 2017. This bill is a relatively short bill on a very important issue. It will require the Productivity Commission to:

… undertake research on inequality and its effects on the Australian economy and community, and report to the Minister …

Another amendment in a different section is to:

… mitigate the negative effects of inequality on the Australian economy and the Australian community.

It talks about tabling the report, but it also talks about the contents of the inequality report, which I think goes to the heart of this extremely important issue. It says:

An inequality report is to assess:

(a) economic inequality in Australia's regions and cities; and

(b) the effects of economic inequality on:

  (i) intergenerational mobility; and

  (ii) access to social, economic, educational and other opportunities for members of the Australian community; and

  (iii) social, economic, educational and other outcomes for members of the Australian community; and

  (iv) the performance of the Australian economy; and

(c) the extent to which current Government policies affect economic inequality.

It's really important that we get this sort of information because we continue to have these arguments in the public sphere about whether inequality has increased or decreased. The fact is that we have very significant inequality in this country. The last time we had this debate—and we heard it raised again this morning—there was the issue around the Gini coefficient. You can take the Gini coefficient at two points in time and say, 'Oh, look, it's the same.' The fact is—and I mentioned this in my contribution during the last parliament when this bill was introduced—the way that the Gini coefficient is quoted in the debates on inequality at the moment misses the impact of the global financial crisis and the efforts that were taken in this country to ensure that we avoided the worst impacts of the global financial crisis.

But I want to go back to the very important issues that the report would be required to talk about. First, let's look at inequality in Australia's regions and cities. We know that inequality has a significant impact in the regions. There are a number of people on low incomes living in the regions. Some actually go to the regions because rents, supposedly, are cheaper. But rents are going up in some of these locations and the cost of living is much higher. These sorts of issues are extremely important.

I particularly want to go to the impacts of inequality. I have been chairing the inquiry into Newstart, youth allowance and other payments. So far, we have held hearings in seven different places around Australia. We have been in regional centres, as well. What I want to touch on is the lived experience that we're hearing about from people living on low incomes, in this instance Newstart and youth allowance. In the first instance, we've heard about the impact on families, and particularly on children. They talk about children being kept away from school on some days because their parents can't afford to send lunch. They talk about children not being able to participate in school activities, which we know are a very important part of the education process—not being able to go on school camps, for example. We hear about children who cannot engage in social activities, such as going to a child's birthday party, because they can't afford to pay for a present for the child to take. We hear about children not being able to host birthday parties. If you can't put food on the table under normal circumstances, how can you pay for a party for your child's school friends? These things are impacting on children's education.

We all know that even public schools now are requiring payment of fees. In most cases, they say these are voluntary, but even not being able to pay voluntary fees has been impacting on the family. It has an impact on the way they feel about themselves and it can stigmatise people. I've also heard of children being excluded from certain activities because their parents haven't paid their so-called voluntary fees. That all has an impact on how the child grows up. I would argue that if they're missing out on some of those foundational requirements for their education, it also has a significant impact on intergenerational inequality, let alone their not being able to enter either university or our vastly underfunded and, I would very strongly argue, undermined TAFE system. So, growing inequality in this country is severely impacting on education.

On the subject of people's capacity to participate in social activities, one of the issues that people spoke about a lot in giving us their lived experience with trying to exist on low incomes is the isolation that people feel. Research is clearly showing the devastating impact of isolation on a person's wellbeing. People are unable to participate in a variety of social activities and they talked also about being stuck at home because they can't run a car. In a lot of cases they can't afford it, particularly if its breaks down—that's it. Very often, they can't afford bus fares.

Then we come to the issue of the impact of inequality on somebody's health and wellbeing. What we heard from people talking of their lived experience is that you can forget about any dental treatment, because the public waiting lists are so long and they simply can't afford to go to the dentist. We know of the impact that poor dental health outcomes have on people's health, to begin with. We also know that if their teeth go unattended it can have an impact on their sense of wellbeing. Also, quite frankly, it can impact on their capacity to find work, particularly if they are unhealthy as a result of their lack of dental treatment.

We also have heard of people not being able to afford their medications. This is a really, really significant issue. We heard of people having to choose between being able to eat and use their insulin, for example. So people are making a choice between whether they eat, or skip a meal or a number of meals, in order to be able to afford their medications. We heard of parents choosing to ensure their children got their medication and not themselves. This, of course, plays into people's health. It becomes a barrier to good health, a barrier to employment and has a significant impact on their wellbeing.

We also heard about the impact of the fact that people are missing meals. There is such a thing as 'nutritional poverty'. In other words, people are buying calorie-dense, often unhealthy, food because it actually fills your stomach and it means you're not going hungry and your kids aren't going hungry. This is a very significant issue and it is a growing issue—and I will come to the issues around Foodbank in a moment.

There is also the issue—and people have spoken about it—of access to affordable housing and the fact that housing is more and more difficult for people. I think there is a lack of understanding by the government about the impact of unaffordable housing and the fact that people are spending a very high proportion of their very low income on rent, and the impact that has on the other issues I have just mentioned such as their children's ability to participate in school and social activities—that is, for people to be able to afford health.

The growing digital divide and digital poverty is also a huge issue. For example, the government is shifting—and wants to shift even more—it's mutual obligations under the compliance program to digital. So people have to have a computer or have access to the internet so that they can participate in the employment process to try and find work and also to meet their mutual obligations. So if you can't afford the internet, if you can't afford a mobile phone, a tablet or a laptop, it is yet another barrier to employment. It is yet another area where you can then be subject to the compliance framework. Again, it is all part of the inequality in this country which then plays out very strongly into intergenerational mobility.

We are hearing more and more about intergenerational poverty. It is created by wealth inequality and income inequality. We need the Productivity Commission to look at those issues. One of the areas that is included in this bill, which is very important, is the extent to which current government policies affect economic inequality. That is particularly important because government keeps denying that its policies are having a direct impact on equality in this country. You only have to look at the government's flat refusal to increase Newstart and youth allowance. The impacts that I've just described are people's lived experience—homelessness as a direct result of not being able to keep a roof over your head because Newstart isn't high enough. There is a direct impact—the increasing demand on Foodbank, for example. We heard during Anti-Poverty Week of the increase in poverty in this country and the role that payments such as Newstart and youth allowance play in that increase in poverty. But that's not the only flaw in the government's approach—for example, the disability support pension. I've got to say, the previous government also played a role in the situation we're seeing at the moment, which is an increasing number of people being denied access to the disability support pension, when they really should be on that pension. They are now struggling to survive with a disability, with a vulnerability, on Newstart. Again, yet another barrier to employment, and it's increasing inequality.

While people would argue that this bill is not about lifting people out of inequality and addressing inequality, I'd argue that it would strongly assist with that, because it would point out what the current impact of inequality is. It would start trying to properly measure the degree of inequality and also specifically look at what role government policy is playing to worsen that. One would think that they would then look at that information and want to do something about it. For example, let's look at Newstart and what the government could do to address inequality by addressing Newstart. That would be of significant assistance in addressing inequality in this country.

I remind the chamber of some of the basics about poverty. Of all Australians living below the poverty line, 53 per cent relied on social security as their main source of income, hence the importance of these payments. This shows that our current rates of income support payments are keeping people below the poverty line. There are currently over 700,000 children living in poverty. The Foodbank hunger report 2019 found that the number of people seeking food relief has increased by 22 per cent over the last 12 months. It also found that 42 per cent of people experience food insecurity because they are living on a low income or pension. The Anglicare Jobs availability snapshot 2019 highlighted that it is taking people, on average, five years to find work.

Newstart is not a transition plan. It is not a transition payment anymore, because, over the last 25 years, guess what? The world has changed. Australia has changed. There are fewer jobs available. It's not so easy to find another job if you fall out of employment. Over 40 per cent of people that are on Newstart have a partial capacity to work. Those things do not suit well a system that is based on the concept of 'it is a transition payment' when, on average, people are on Newstart for 156 weeks. That is not transition in anybody's imagination.

We've seen the number of sick or disabled people on Newstart skyrocket over the past few years. We now have over 300,000 people on Newstart who are sick or disabled. As I said earlier, people are being forced to choose, literally, between eating and taking their medication. They will space that out and prioritise their children. If you look at the replacement rate, Newstart is the second-lowest unemployment payment in the OECD. We have obligations internationally under the Sustainable Development Goals. The first goal is to end poverty in all its forms everywhere. This sets a target for all nations to halve the proportion of people and children living in poverty by 2030 according to national definitions—of course, that would be better if we had a definition of 'poverty'.

This is an important bill. I'm not pretending that it would solve the issues of inequality. I'm not pretending that it instantly solve the massive wealth inequality issues we have or the massive income inequality issues we have in this country. But it would certainly help us to force the government to look at which government policies are driving or helping to drive inequality and which policies could help to address inequality in this country. It would help end this constant toing and froing about whether inequality is growing or not in this country and help us to focus on the things that matter in terms of addressing inequality in this country. The Greens will be supporting this bill.

11:59 am

Photo of Tony SheldonTony Sheldon (NSW, Australian Labor Party) Share this | | Hansard source

I rise with a great deal of pleasure to support the Productivity Commission Amendment (Addressing Inequality) Bill 2017. It seems absolutely practical to turn around and make sure that we've got a system that is tested, properly reviewed and researched to look at what's happening with inequality within our society. This is a significant and important piece of looking to make sure that the policies and strategies being implemented by government and civil society are performing in the direction that we want. We want to raise the entire community. We want to raise the standard of the community.

I listened with great interest to some comments from the other side of the chamber a bit earlier in this debate. Somehow, the ensuring integrity bill not going through is hampering equality. I find it amazing to hear suggestions that paying wages and superannuation is somehow a detriment, when the cost of building is 30 per cent higher, as alleged by the MBA, and, at the same time, the MBA and the intent of this ensuring integrity bill are actually hampering the voice of working people to stand up and argue for better conditions across a whole range of industries. I find it also of great interest when the suggestion is put, again from the other side of the chamber, that we need to expand the pie and create a larger pie. That's something that I'm sure many of us in this chamber would agree with. But how about we start looking at the fact that $6 billion has been stolen in wage theft from the construction industry? What contribution is that having to inequality? I would say it's substantial. What about the 2.2 million people on visas working in this country, the vast majority of whom are getting paid substantially less than they're legally entitled to? What about the migrant task force dealing with the inequality for migrant workers that has a whole series of recommendations that the government has yet to implement? What if we start putting a system in the Productivity Commission which has to start rating the government's performance? Our job in this chamber should be to grow equality and the performance of the economy.

I looked with great interest at the government's suggestion on how we deal with inequality. It is really intriguing. What the government has decided to do with inequality—and there are many examples over the last seven years of their term, as inequality continues to grow—is not support weekend penalty rates on numerous occasions. What the government did about inequality was not support—on numerous occasions—having an inquiry into the banking industry, which was hampering the economy growing. What's really quite amazing is that, regarding how we deal with inequality in more modern times—I'm talking about now—the government has turned around and decided that we need to review modern awards. We know that's all a code for turning around and taking away people's rights, for taking away their wages and taking away the sorts of incomes that actually deal with the issue of inequality. They're not suggesting—nowhere in the media are they suggesting—that we should say that wages should be increased under the modern award system in any substantive way to deal with the issues of inequality. Also, they want to look at unfair dismissal laws and protections. We also know that's code for 'how do we wipe out people's protections?' When you argue for equality, having dismissal protections means that people can't be victimised or are less likely to be victimised. People have more opportunity to turn around and have a voice. That is the quiet Australians, but what the government are really saying when they talk about the 'quiet Australians' is that they want to 'quieten Australians'. They want to silence Australians.

You've only got to see the sorts of results that are happening in our society now because of inequality. A very important address by Chris Bowen at the Macquarie University Economics of Health, Inequality and Behaviour conference held on 11 November looked at: 'Is inequality our biggest health risk?'

At that conference there was a focus on the importance of the social determinants of health in policy design. We know from recent work of Professor Philip Clarke and Guido Erreygers that the average life expectancy gap between the bottom 20 per cent of population and the top 20 per cent in socioeconomic terms is six years in Australia. Wealthy people live six years longer than poor people.

In 2007, Professor Clarke and Professor Andrew Leigh, in the lower House, presented a paper that further reported on the widening gap of inequality, and it is not reducing. The latest Australian Bureau of Statistics data in 2018 said death rates for residents, for example, in Rooty Hill in Western Sydney were nine people per thousand. This is three times more than the death rate for advantaged areas in Sydney like Crows Nest. Analysis of some ABS data by Macquarie University's Professor Nick Parr shows a 14.5 per cent reduction in death rates for the most advantaged 10 per cent of Sydney areas over the last six years. This is triple the average improvement in the most disadvantaged suburbs. One of Western Sydney University's professors for urban planning, Nicky Morrison, recently said:

Where you live shapes how easy it is to buy healthy food, use active transport and make social connections. The concentration of food deserts is particularly pronounced within Sydney's western suburbs, which compounds the problem of lower socio-economic groups eating poorer diets leading to associated health problems.

And while we know food deserts aren't the sole key driver, we know that this, in conjunction with conditionality of income, hours of employment and many other factors prone to those in the western suburbs increase nutrition inequality and lead to those residents being sicker and dying sooner. We also know that people in rural and remote areas of Australia are 13 per cent more likely to be inactive. They're 50 per cent more likely to drink at risky levels, and they're 69 per cent more likely to smoke. And those people are 40 per cent more likely to wait 24 hours for an urgent GP appointment. All these factors lead to a gap in life expectancy between the city and the bush which is, at is worst, 15 years.

Productivity is dramatically affected when so many Australians' poor health because of their wealth, or more accurately lack of wealth, is impacting on their lives. The amendment required the Productivity Commission to consider the importance of mitigating negative impacts of inequality on the Australian economy in the Australian community.

A recent study by authors Craig MacMillan, lecturer in economics at Macquarie University; Daehoon Nahm, senior lecturer of the department of economics at Macquarie University; and Michael Dobbie reported on 20 March 2018 said:

Over recent decades in Australia union membership has fallen from 40% of the workforce in 1990 to 15% in 2016 and so unions might seem less relevant in making a difference to what we earn. But our research finds that union members do earn higher wages per hour than non-union members.

It starts all coming together, doesn't it, about the ensuring integrity bill taking away the hand of representational rights of unions, democracy, voice of working people and the government's plan to turn around and go after awards. But the authors go on to say:

This is because union members have more experience with their current employer, in their occupation and in the labour market generally, than non-union members.

The study used data from the Household Income and Labour Dynamics in Australia, HILDA, Survey from 2001 to 2013. From a sample of 80,000 workers, it showed that male union members earned 12 per cent more per hour than non-union workers and that female union members earned 80 per cent more per hour than female non-union workers. They explored the pay differences and how they could be explained between the two groups, and they went on to say:

In economics, the more knowledge and skills a worker has, the higher productivity and wages they'll have.

That's the presumption, but they went on to say:

However formal education didn't seem to factor in as a decider of differences in wages between unionists and non-unionists in the study. Rather, these findings suggest that when unions negotiate collective agreements for members they are concerned about employment security, as well as wages and this is a deciding factor.

It also went on to say that the majority of union agreements also had particular workplace training requirements in them, which added to productivity:

This data found there were training initiatives in 80% of union negotiated agreements, compared to 52% of non-union agreements.

This goes clearly to the argument that if the government were actually thinking about what is in the interests of productivity and what is in the interests of dealing with issues of inequality then they'd not only be studying it and requiring the Productivity Commission to report on it but implementing policies that brought the question of inequality into the very fine detail of the opportunities to turn around and deal with that inequality. Of course, the government, as they say, are doing the opposite.

One of the important things in this Productivity Commission recommendation is to produce a report every five years on the state of inequality in Australia and its effects. This is part of a larger debate in the world about the measures and impacts of inequality. The World Bank, the Reserve Bank and the IMF—those three radical institutions; well, not so radical, but they are maybe having a radical thought for some on the opposite side—talk about stagnant wages and the fact that wage income is not increasing being a substantial downward pressure on the economy, that there is a need for capacity for people to turn around and earn more. You do that by people having a voice. You do that by what had been considered for many decades as obligatory in civil society in this country: the involvement of government, employers and worker representatives. But we find this government, rather, drowning out the voices of the World Bank, the Reserve Bank and the IMF by saying, 'How do we put more impediments into that voice realising wage increases?'

How do we actually deal with the inequality question? They have failed to turn around and look at the most fundamental ways of making sure that workers are properly dealt with. We've had 2.2 million temporary visas, with many of those workers having their wages thieved—being underpaid and exploited—and what was the answer from the government? Over a short period of time they've substantially increased the amount of temporary visas which have come into the country. We're part of the larger debate in the world about these measures and impacts of inequality—what is measured and what matters. How you measure inequality matters greatly. The Productivity Commission's work often sets the national agenda. Its research informs government opinion and the national narrative around issues of importance. Currently, we're not taking inequality into account. The commission is leaving out a significant piece of the puzzle.

The report from the three academics I mentioned earlier looked at these fundamental questions about better performance, higher training, higher skills, higher wages and more job security that are prevalent in union agreements in comparison with non-union agreements and where agreements don't exist. They came to the fundamental conclusion that not only is being in a union good for equality but, if you look at these other reports and recommendations, it's also good for the entire economy. Equality and the economy benefit from proper productivity and proper wages being paid. They benefit from the fact that we can have a better system for making sure that workers get paid an appropriate income and have appropriate job security. It means the Productivity Commission can actually road-test by research the decisions and policies that are made both within civil society and, incredibly importantly, by government—people within this chamber and the House.

Wealth inequality in Australia creates a host of policy problems. It affects our health. It affects educational outcomes. It affects happiness and satisfaction in work and life. It also affects economic management, reducing consumption and demand for goods, adversely affecting economic growth. The OECD, in its figures from 1980-2010, predicted that there would be a 5.5 per cent lack of economic growth across the world because of this inequality question. These are significant impacts on the livelihood, the fairness and the capacity of people to look after their families. As previously raised, Newstart is another area of inequality where the government again has sat on its hands. It doesn't have a policy of turning around and actually dealing with inequality—in actual fact, let's keep growing the pie!

Growing the pie without equality, without measuring it, doesn't grow the pie in any substantive way if inequality hasn't been dealt with. If you can't look at the inequality questions that we have presently within the community, if you can't look at it in the abstract, research based, figurative way carried out by the Productivity Commission rather than just concentrating on all the other intangibles then you are not dealing with the fundamental question about what our obligation is in driving for a better society within Australia. It raises serious questions about any suggestion that this bill should not be supported. It raises serious questions about accountability. It raises serious questions of transparency. It raises serious questions about the government's policies. It raises serious questions about the policies the government is presently pursuing.

In much of the debate on the ensuring integrity bill many senators spoke about the effect of that bill on stripping away workers' rights—an opportunity to talk about a particular instance with armoured car drivers and inequality, and the consequences of driving conditions down and driving well-paid union jobs into unsafe, non-paid union jobs. I can also touch on the bus industry, the virtues of equality of power and what the consequences of that bill would be. Workers who had been working in buses under assault from individuals in the community put bans on areas, which would have been illegal now under this act and would be reason to deregister a union. One example was in Western Sydney. A bus driver of some 15 years, a grandfather, was driving his bus up a hill with a large number of passengers on his bus—by all accounts, a happy, jovial fellow, well respected by his local community, well respected by his fellow bus drivers—and he looked up to see a barrel of fuel, set alight, roll down the hill on to the bus. One of his colleagues, only months later, had a star picket thrown through the bus window as he was driving the bus, not only putting his life at risk but all those passengers, those young kids who were going to school. I'm proud to say that the union put bans on those areas until it got a proper response from the community, the politicians and the police that it had been calling for for a very long time. That would be illegal under the bill that was being proposed. The unions would have been deregistered over that. Union officials would be terminated from their positions because they had the audacity to stand up and say: 'We need a solution. We need a solution now.' They aren't make-believe examples; they're real-life examples of why laws have to be appropriate. This country is sleepwalking into a crisis of inequality. I reject the new normal, and it's only the new normal if we let it be.

Debate interrupted.