Is ScoMo this stupid? IR changes will crush wages

Could it be that hubris has overcome the ScoMo Government already? Via the AFR:

The briefing, for MPs who entered Parliament in 2016 and 2019, was held when Parliament sat the week before last and was organised by Liberal MPs Tim Wilson, Jason Falinski and Andrew Bragg.

It was designed to inform MPs from the perspective of small and medium business as to what ACCI considered were the flaws in the system.

One of the biggest pushes emerging from the backbench is to exempt small and medium business from unfair dismissal laws…Other targets are the enterprise bargaining system and modern awards.

…Queensland Liberal-National Party Senator Amanda Stoker, who has been campaigning on IR since she entered Parliament in March 2018, used a speech at the CPAC conference in Sydney on Friday to make a case that is widely held by her colleagues.

“The most obvious area of productivity improvement is in industrial relations,” she said.

If there was ever a suicidal policy for ScoMo this is it. Even ineffectual Albo could muscle up on this. The number one issue confronting households – that is, err, voters – is historically weak wages growth. The reasons why are as obvious as they are ignored:

  • the mass immigration supply shock;
  • the collapse on industrial relations standards into a wild west visa/wage theft frenzy;
  • the rise of the unregulated gig economy;
  • weakened unions and a wages hostile government;
  • rise of monopolies;
  • rise of low paid services industries.

All of these will be made worse by “reform” to awards, EBAs and unfair dismissal laws.

I used to support some of these changes but given they are already destroyed by the mass immigration economic model we now need to repair them instead if wages are ever to rise.

Moreover, this will do nothing for productivity. Indeed, it will make it worse. If labour becomes the plaything of capital then there will be no need to invest for productivity gains in anything. Capital will just hire and fire at will, import cheap foreign labour and dispense with it at will, gutting wages and hollowing out middle classes while substituting it with an endless flow of underclass coolies from offshore. The entire economy will be crushloaded and dumbed down into a cheap labour, low value-add funk.

Consider, why install an automated car wash when you can boost profits more easily by exploiting a dozen visa hungry Indians that will pay you to work?

That does not boost productivity and incomes. It destroys productivity and concentrates income in the hands of the few.

Australia does have a productivity problem but it is with capital not labour:

The policy fix is easy:

  • remove taxes that promote capital misallocation such as negative gearing and franking credits;
  • revitalise competition policy by breaking up oligopolies;
  • boost R&D policy;
  • install full bore gas reservation to crash energy prices;
  • slash immigration to repair education standards, as well as drop land prices;
  • reform federal state, relations to reduce horizontal tax mismatches;
  • pursue a weak AUD policy by all means possible.

Voila! A lean and mean tradable machine with higher productivity, profits and income growth as tradable sectors of the economy boom.

But if you’re in the pocket of business, and your intellect has collapsed into businessomics, then increasing the profits of incumbent rent-seekers is a lot easier than actual national interest reform.

Until wages collapse and you’re thrown out of office.


David Llewellyn-Smith

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