End of the phoney war ?

The period since Kevin Rudd became Labor leader reminds me somewhat of the phoney war in the early stages of World War II. The government has relied mostly on attacks over trivia (the dispute over the exact circumstances in which Rudd’s family was evicted from their home, the dinner with Brian Burke, the Anzac day predawn dawn service and so on) most of which have had little impact, and some of which have backfired.

There have been some substantive issues of disagreement, including the broadband plan, the Iraq war and Kyoto, but the government’s position on all these issues is one of disarray. They have no idea how we’ll get a proper broadband rollout, how to extricate us from Iraq or how to do anything substantive about climate change while still refusing to sign Kyoto. Particularly on the second and third of these issues, they’re happened by the fact that much of their activist base, which is by now taking its views directly from US Republicans, still clings to delusional beliefs that victory in Iraq/demolition of the global warming conspiracy is just around the corner.

With the release of Labor’s IR policy we’ll presumably see some real action. This is an issue Labor has to get right and one where the government strongly believes in the rightness of its own position. They’ve got some impressive employment numbers to back them up, but they haven’t managed to get over the fact that their policies are centrally based on “managements’ right to manage” which, from the perspective of the average employee looks more like “bosses’ right to be bossy”. Nor have they given any explanation as to how we are going to avoid the situation that has emerged in the US, where incomes at the top have soared while wages for many workers have been stagnant for decades.

Obviously, the government will be hoping for conflict between Labor and the unions over the concessions to business in Rudd’s policy, most obviously the requirement for secret ballots for strikes. I doubt that we’ll see much of this. It must be obvious to all that another couple of terms of Howard or Costello government could break the union movement once and for all. Now that Rudd’s policy is out there, the unions have no real alternative but to support it.

23 thoughts on “End of the phoney war ?

  1. Although the electorate does not appreciate it, it is only Labor’s Iraq policy that has any potential to do good for the country. The rest of their policies are either lies or silly.

    On broadband: Australia has some of the highest speed broadband anywhere in the Western world. Up to 24Mb/s on ADSL2+ with typical speeds around 8Mb/s. That’s considerably better than most regions of the US, and plenty fast enough for most internet users. Some companies are rolling out FTTH (Fiber To The Home), eg Verizon’s FIOS in the US, but they’re doing that for HDTV delivery not for internet (internet will benefit but it’s not the economic driver). So when Rudd and Labor jump up and down about high-speed broadband rollout they’re really talking about HDTV over fiber.

    Does Australia need to spend billions on fiber infrastructure so we can have more HDTV providers? I would suggest not. We already have decent HDTV OTA (Over The Air) that reaches 80%-90% of the population, and over satellite that reaches 100%. If we want more HDTV providers, a far cheaper way to do it is to license more OTA channels.

    On Global Warming: I predict Labor will talk big and do little, which given the widespread hysteria surrounding the subject is probably the right approach. One big difference between the two parties is Labor’s left won’t allow nuclear, whereas the Liberals will push it, so on this front the Liberals are a superior option.

    On IR: anyone who advocates removing “management’s right to manage” clearly is not interested in the economic health of the country. It’s time for the Unions and Labor to grow up on this subject.

  2. “They have no idea how we’ll get a proper broadband rollout, how to extricate us from Iraq..”

    Well the troops may well be home by Xmas, or perhaps before the next election
    which may only leave the bipartisan foreign ventures to be concluded

    As for broadband rollout I notice Telstra Chairman Donald McGauchie (Advertiser 18th p51) quoted at a Melb luncheon as saying Telstra is the only company ready to go with a $4bill high speed network almost immediately if there is a commercial return on offer.

    “We are ready, capable and able to do it.”

    “No one else is and we are ready to sign on the dotted line now.”

    Apparently all it needs is the Govt to cut a deal with Telstra and presumably negate any need to dip into the Future Fund for such a rollout. That will certainly be tempting between now and the election you’d think.

  3. I find it hard to imagine that Labor will be in real conflict with the unions (who else they are going to support?), or should I say that the unions will be in real conflict with Kevin Rudd (apart from allowing him to score a few cheap points). It’s quite suprising how everybody else seems to have deleted from the Labor show. Even Julia Gillard seems to have dissappeared, despite the big fanfare she was given at the start as part of the new “team”.

  4. On IR: While there has been much discussion in the media about Rudd’s policies on unfair dismissal my main concerns are about his ban on strike pay. The whole idea of joining a union is as a form of mutual aid for workers who may sometimes have industrial disputes, which should include things like strike pay. I see the ban on strike pay as an attack on workers economic freedoms, as well as freedom of association. This ban would also distort labour markets in favour of employers, something which governments seem to like to do. Sooner or later unions should extricate themselves from Labour Party politics and get back to the business of representing their members.

    On Global Warming: I too suspect that both Labour and Liberal will do little. Johnny did not support emissions trading until he had to be dragged kicking and screaming by business who wanted certainty, so i suspect that the Liberals policies will be weak. Labour policies on climate change will probably be based on those of the National Emissions Trading Taskforce. The caps suggested in their discussion paper was rather low. It seems that policy makers are not learning the lessons from the first phase of the EU Emissions Trading Scheme, for which the carbon price has plummeted (at the time of writing) to 0.55 Euro. Part of the reason for the low price was that governments allocated too many emission permits. When the allocation plans were released prices dropped by about 50% to about 15 Euro, the further decline suggests that market mechanisms work more cheaply and efficiently than predicted for reducing emissions. While it is not a bad thing to have a low carbon price, it is a strong reason for much tougher caps. Part of the reason for the low carbon price in Europe is large size of the market, making it more ‘deep and liquid’ – a strong reason why we should sign up to the Kyoto protocol.

    With Australia’s incredibly high per capita emissions there are strong arguments for reducing emissions by 80% by 2050, instead of 60% (Labour’s policy). This would be the case if we want to stabilise emissions at 550 ppm or less and have some sort of global convergence in per-capita emissions. What matters more at the moment is how much we reduce emissions now, which will probably be cheaper than making deep reductions later. Later there may be better technologies, but there are also increasing marginal abatement costs. There is much ‘low hanging fruit’ to focus on now.

    The emphasis by Howard on nuclear and unproven clean coal technologies are an example of ‘picking winners’, something warned against in the Stern review. It is better for technology policies to be more flexible. I therefore think that Labour’s support of mandatory renewable energy targets is more economical and sensible than nuclear power. This is especially the case when considering the externalities associated with nuclear power such as waste, water usage, and risks. If emissions caps are too timid then mandatory renewable energy targets will become very important.

    On Broadband: It will be interesting to see what role Telstra plays in all of this. I find it ridiculous that we spend more on phone/internet than we do on energy at the moment. Especially considering that phone plans (with and without Telstra) generally include about $30 per month on line rental which goes to Telstra. The ‘big copper network’ (a natural monopoly) that we are renting was created with public funds and should remain in public hands, carving up Telstra may be a good way to do this. Doing so could decrease costs for households and business, which would have economic benefits. I’m sure the Liberals would be idealogically opposed to such a move, and I suspect that Rudd would not want to upset Telstra shareholders.

    Labour and Liberal have quite similar policies in all of these areas. If smaller parties such as the Greens and Democrats are smart, they should suggest strong policies that differentiate themselves from the major parties in these areas.

  5. ‘Management’s right to manage’: it does seem that to some people there are two sides to every contractual dispute except in the case of the labour contract.

  6. melanie,
    There are normally at least three sides in an employment contract – if not four or more (employee, employer, government, union). Workchoices was an attempt (not wholly successful) to reduce the effects of participants 3 and 4 – with some real emphasis on 4.
    On Rudd himself – the government has been (IMHO) shadow boxing, to assess Rudd’s reactions and they are not too worried about a little collateral damage. They showed his weaknesses and his strengths. The weaknesses seem to be in his reaction to pressure – the way he handled the Burke thing was poor, while his strengths seem to be in credibility. As PrQ has rightly observed, this was the phoney war period. Look for the real action to come.

  7. Management’s right to manage is at least as important as workers right to work, once the unions start to take on management roles (through strike actions, work to rule, secondary boycotts etc) work is wasted. In the construction industry their sole purpose was to slow the job down and give the workers more work, or less work for more money. That maybe fine for those employed but for those unemployed the opportunity is denied and unions are renown for running a closed shop.

    Management’s right to manage is also important in the home, otherwise the kids have spent the house money and its baked beans for the next two weeks.

  8. “On broadband: Australia has some of the highest speed broadband anywhere in the Western world. Up to 24Mb/s on ADSL2+ with typical speeds around 8Mb/s.”

    lol. That’s the funniest thing I have read today.

    A person I work with cannot get broadband at home in Australia. He lives in across the road from his place of work which happens to be the headquarters for one of the big multi-national IT companys with approximately 3000 IT professionals on site. This is in the Sydney metropolitan area in a suburb with a median house price of over $700,000.

  9. Kevin Rudd is being tested but his Industrial Relations plan offers a great deal more than the Coalition Government which is not to be trusted at all on this issue. Nick Minchin has said that there is more to come and AWAs are not protecting mandatory conditions – at least this is the story that has come out this week.

    Julia Gillard may be in the background at the moment but so are the other members of the shadow cabinet. The strategy is no doubt to give an opportunity for the Australian people to get to know Kevin Rudd better – which has had its hiccups but is certainly introducing him to people who otherwise may not consider him eg Kerri Kennealy’s audience of housewives.

    The Labor policies coming out are considered and offer more of a vision than Howard’s frontbench which seems shrill and lacking substance. Alexander Downer seems like a Billy Bunter when he blames Al Quaeda for the sectarian violence in Iraq and Howard seems churlish when he contradicts the British Consul who says that Iraq is not part of the war on terror. The death toll is far worse than in the American university but is treated casually by the Howard government.

    Broadband is an issue and the Howard government seems to recognise this by upping the subsidy for rural rollouts having recently reduced the subsidy.

    There will be a huge spending program by the government in the lead up to the election. Business however will hold onto its funds as the taxpayer will be spending plenty – the government made sure of that last year. Unions and unionists will see that the only way to get rid of Howard is to support Rudd and his policies even if they do offer less than they like – however they are fairer and will offer a better future for the nation.

  10. Hear hear John! Enough playing petty games… do we care about the future direction of our country or a little TV stunt?!
    In my books, whoever engages least in rubbish politics like that will get my vote.
    mugwump, you should check your facts before calling policies ‘lies’ or ‘silly’.
    “Up to 24Mb/s” does not mean that fast broadband is reasonably affordable or widely available. While the speed is ok, it is widely acknowledged that we could be doing much better. Having just spent time in the US, there are so many additional online services that become available at higher speeds, it’s definitely worth the extra investment from a personal leisure perspective, but the business benefits are a particular windfall!

    On Global Warming, Labor may talk big and do little, but that’s a whole lot better than minimising the issues and doing nothing. Even better, Labor might talk big and act big, and build the foundations for Australia’s economic prosperity in the low-carbon world of the coming century, rather than holding tight to technologies of yesterday which may drive us to ruin. Check out the latest MDB news… about time we started acting on climate change and saving lives, jobs, and profits in our agricultural sector, wouldn’t you say?
    On nuclear, if you’re so keen, put your hand up and volunteer to bury the waste in your own backyard.
    On IR, there’s no ‘removal of management’s right to manage’. If management can do its job fairly and well there should be no issues with managing. But no-one has a right to manage unfairly and tyrannically, and everyone has a right to a safe, fair and pleasant workplace. I just don’t buy that democratic union representation means that we’re ‘not interested in the economic health of the country’.
    Work is part of life, not just a means to an end of enjoying your non-work ‘life’ more. I don’t subscribe to the ‘work/life balance’ paradigm – for me the whole thing is life. If you are unfairly worked to the bone at your place of employment just so that you can earn the profits to splurge in your evenings and weekends, that’s not going to make anyone happy. Work hard and earn all the money you want, that’s fine by me, but work should be under good and pleasant conditions and you should be happy there. Unions help that process. And if you’re really stuck on the money thing, everyone knows that happy workers are more productive workers. Unions exist to monitor and correct bad management.

  11. Suddenly this site has speeded up and stopped giving error messages. I hope it’s not temporary.

    Andrew R: there are still only two sides to the contract – the employer and the employee, plus there is a regulator. The regulator/arbitrator is needed because in any system in which people act rationally, there will be attempts to band together in order to increase bargaining power. Please do not forget that industry associations were always there alongside the unions – both lobbying government and attempting to influence the arbitrator.

    Neither side is in the business of charity or the so-called national interest. Each side is bargaining from the point of view of self-interest (or collective interest). The recent IR laws simply shift the balance of power in favour of the employers. This may or may not have the unintended side-effect of improving national economic performance.

    Nevertheless, people who work for a firm have a stake in the performance of that firm. They do not deliberately lead it to bankruptcy (incompetence or lack of foresight among managers is usually the cause of that – the perfect foresight of economic theory is an unfortunately unrealistic assumption) because they also need to hang on to their jobs. Even unions can see that! It is also very possible that people who feel they have a stake in their firm’s future will work more productively than people who simply feel oppressed by bossy bosses. Certainly we tend to assume that employers work hard because they have a stake in the firm – why not workers?

    I don’t want my argument to be confused with support for the Painters and Dockers or other corrupt union bosses. At least until recently the most unionized sector of the Australian workforce has been the public sector – not known for its corruption, but possibly an important factor in sustaining morale among public servants, academics and the like. Besides, sometimes slowing down work can be good for productivity since there are in fact physical limits to human energy expenditure.

  12. I am not convinced by the analogy to the phoney war. Politics is a game in continuous play, and the evidence who suggest to me, not that the government has been shadow boxing for effect, or has been running with trivial issues (which despite appearance may be important to some voters), but rather that the government has been off its game. Is because Kevin Rudd is the most effective opposition leader it has faced, or are its tactics by now too well understood?

  13. swio, a person I know cannot get broadband in Virginia, US, and they live atop one of the fattest fiber pipes in the country.

    There are people in South Korea living in cardboard boxes under bridges that cannot even get dialup. Yet South Korea has the fastest broadband on the planet.

    But your mode of argument is the Australian/60 minutes way: if one person cannot get broadband then the whole system must be shot. Ray Martin told me so.

  14. Gillard has made some points about the proposed new regime, for instance,

    “…. we are looking of course at having collective bargaining, enterprise bargaining – enterprise bargaining that may involve unions and union members, enterprise bargaining if there is no union member at the workplace that would proceed without a union.â€?

    Which I assume means that if there is A union member the collective/enterprise bargaining occurs with the unions in. Maybe this means nothing, but there is a view that one of the reasons for the decline in union membership is the legal environment changes which reduced the legal rights of unions to be directly involved in any workplace matters, and of course severely harmed by a reduction in collective bargaining. The CFMEU are fun, they don’t approve of enterprise bargaining at all and their solution is unionisation (compulsion implicit) and pattern bargaining, a tactic that Julia insists will not be available to unions, though how it is to be prevented she doesn’t explain.

    Julia again,

    “That can be a very flexible way of making arrangements. As can for some industries, the making of common law contracts offer a very flexible way forward.

    When those agreements come to an end they can transition to another industrial instrument, to a common law contract would be one option. To a collective agreement would be another option� April

    “JULIA GILLARD: Well, a third more than 30 per cent of our workforce is currently covered by common law agreements. They offer a lot of flexibility and they’ll be part of Labor’s industrial relations arrangements. Then, of course, you can have very flexible award conditions, you can have very flexible collective agreements.
    Oh, Barrie, let’s get these statistics in some sort of perspective. 2.4 per cent of the Australian workforce has Australian Workplace Agreements. That compares to around 30 per cent on common law agreements, 20 per cent on awards only, 40 per cent on collective agreements. These are at the margins of our industrial arrangements.â€? March

    Now if I were working for the University of Technology Sydney, for example, I would be told,
    “No. An AWA is not the same as a contract of employment. At UTS an AWA does not replace an individual’s common law contract of employment. All employees have an individual common law contract of employment with the University.
    A contract of employment will set out an individual employee’s relationship with the University in terms of employment status (for example, continuing / fixed term / casual), salary and other key terms and conditions of employment.
    An AWA provides for other terms and conditions of employment and is an alternative to having terms and conditions covered by a Collective Agreement.�

    So all employees have a common law contract in their world while in the ALP only 30% of employees do. So what is a common law contract of employment for Julia, and exactly who currently qualifies in her terms as being so employed? Couldn’t be an attempt to make it look like there is an easy an already very popular alternative to the dreadful AWAs, hence claims that we will be returning to the bad old days of restrictive work practices at the behest of unions are furphies?
    What is Rudd and Julia’s new system? There do seem sufficient rewards for most unions to avoid huge spats. However small business was never happy, big business is sounding more displeased the more it looks, and there are predictions of mayhem in the state federal roles. Hope they have got this a little better drafted than it seems so far. A phoney plan, the real one yet to be presented?

  15. Melanie,
    There may only be two signatures on a contract of employment, but there are vastly more stakeholders than that. You yourself said that “regulators” are in there – that is one part of the government. Thanks for the addition of the industry associations – that makes five parties identified.

    All of those parties, and more, will be pursuing their own, selfish, interest – and that is the way it should be. If the balancing of the power of any of the parties gets too strong, then businesses fail and people become unemployed. If the structure itself is wrong then they will not be able to find alternative work.

    Workchoices was not designed to try to ensure that no-one ever loses their job – it was, AFAIK, an attempt to ensure that, when you do lose your job, someone else has the confidence to hire you. Whether it succeeded in that or not is up to the electorate to judge.

    The same things were being said a few years ago when Latham was leader. The government is taking a bit more time here as they have more time. Complacency from the ALP would be folly.

  16. […] policies himself as the embodiment of balance and reasonableness. John Quiggin detects a transition in federal politics from a phoney war about character issues to a more substantial debate on policy, to Labor’s […]

  17. Workchoices is an unfair system. The spending of lots of money saying it si wonderful doesn’t change people’s experience or understanding of how their rights have been stripped at a time that big bosses are taking plenty of profit for themselves. Housing is increasingly unaffordable and there are more homeless people on the streets than 10 years ago. The government is trading in human lives with the USA. Women have lost many of the gains of equal pay.

    It might have been the economy stupid at the end of the eighties. People know that the current Federal government isn’t taking them to the right so much as taking them down. An understanding is developing that the private economy feeds, houses and clothes the family whilst Workchoices offers no choice but low pay and poor conditions and rob families of time together.

    Meantime Kevin Rudd builds his Mojo whilst his opposite number can’t find his – and it shows – watch Howard’s right shoulder..

  18. For a phoney war a hell of a lot of ammunition has been expended; I don’t think phoney wars are meant to incur collateral damage (e.g. 2 minsters) either. There didn’t seem to be too much fakery occurring during the hyena-like performances of the govt during Question Time throughout March. I get the impression of a too-long-entrenched government that thought any impudent challenge to its presumed right to govern could be flicked aside.

    I suspect voters are responding Rudd’s seriousness and attempts to at least address the ‘big issues’ affecting them (e.g. climate change, IR), instead of belittling the worries that punters harbour on these matters. The latter approach is one that Howard is still taking. Good policy takes months and years of careful consideration in conjunction with stakeholders, not grand visions of nice big round numbers jotted on the back of an envelope, that end up coming across of half-baked attempts to get the electorate’s attention. Given the govt’s desperation to turn the opinion polls around and the short lead-time to the election this tendency might become even more pronounced as 2007 grinds on.

    If this is the battleground on which the ‘real war’ will be fought then it won’t be within the government’s comfort zone. Beyond ideological obsessions embodied in projects like WorkChoices Howard has never been big on the “vision thing”. By contrast I would suggest that big-government nation-building projects (such as water plans, greenhouse strategies) are more of a natural ALP strength. They appeal to that party’s base and (I admit having no proof of this, just an instinct) the electorate might tend to look to Labor to more capable of implementing these schemes. If so, then the times might be turning to suit Rudd …

  19. AR:

    Given recent history, including the last election I doubt whether any Labor supporter will be complacent because of the opinion polls. My guess is the polls indicate the mood of the election, and given the time the government has been in office and the credibility that Rudd remains, despite the “opposition research”, the search for the effective wedge, and the smears, they are not surprising. Nor is it surprising the John Howard would want to keep on – he would not be Robinson Crusoe in that regard -but a new Liberal leader would have changed the electoral dynamics.

    I am sure the tacticians in the government camp, following the US Republican Play Book and established conservative practice, will keep up the smear, fear, attack and wedge phase as the main game, the key to winning the election this time around, as last time. It is a significant that it has not worked so far, but I do not expect the effort to stop.

    All the phases in the political game have their significance, but I doubt that the phase we have recently witnessed leads necessarily, if at all, to an engagement with policy question for the electorate at large. With the last election in mind, I do not recall much attention been given to what became the Work Choices Legislation, nor time given for full consideration of its implications and ramifications in the legislative processes. Evidence I consider of the degradation of the democratic process in general, for which a change of government is unlikely to a change. In fact, I suspect that Kevin Rudd might become the Tony Blair of Australian politics.

  20. >> (the government … hasn’t…) ” given any explanation as to how we are going to avoid the situation that has emerged in the US, where incomes at the top have soared while wages for many workers have been stagnant for decade. ”

    I’ve always thought ” incomes at the top soaring, workers wages stagnating” was an axiom of the liberal party, (current incarnation of at least), avoiding it would be anathema.

    Not that I’m suggesting The Other Mob have been immune to I’m Alright Jack’ism: I don’t recall the Union Movement showing much concern for The Health of Company Profits per se.

    The withering MDB, and issues CO2, none-too-subtly drawing anxious attention to the fact that our economy, (indeed our whole social ecology), is subtantially coalectric, might yet put an end to the dominance of “Free Market” ideologue quacks, their fellow-travellers of convenience, and their nauseating nostrums. (nostra?)

    Some real effort and talent might yet get put into urgent genuine management of the national estate with an understanding that there can be no sustainability without equitability.

    Where’s a J.K. Galbraith, or a Nugget Coombs, when we need one? Ken Henry under Rudd?

    Cheers all.

  21. wmmbb,
    Does “…might become the Tony Blair of Australian politics…” mean that he is going to take us into Iraq? I think that one has already been done.

  22. On “management’s right to manage�, the opposing views expressed on this matter may share more common ground if we distinguish between (i) industries that are highly competitive, and (ii) industries where firms earn significant above normal returns. It’s likely that there is little industrial relations law can do to enhance the position of employees working for firms that operate in highly competitive industries (which would be the case for almost all small businesses). Employees are unlikely to get a return that is more than, and less than, the employees’ marginal contribution to productivity, no matter what the rules on worker participation in management decisions are. (This is not to say there is no room for laws on OH&S, etc.)

    If there is scope to enhance worker participation in management decisions, it is likely to be confined to industries where (i) firms that enjoy a degree of market power (i.e., freedom from competitive constraints) and (ii) where there is significant firm or industry specific human capital. Perhaps I’m wrong, but proponents of “management’s right to manage� seem to assume that the only capital that matter to a firm or industry is physical capital. The assumption is that there is no such thing as firm or industry specific human capital. This must surely be wrong. A firm’s competitive edge often lies in its unique culture that is difficult for rivals to replicate, and this can only be a function of firm specific human capital. Where firm specific human capital is significant, providers of human capital are vulnerable to ex post exploitation by management. In this case, industrial relations law (if properly designed) offers management a capacity to make credible ex ante commitments to providers of human capital.

    Willem Buiter commented in the Forum at the Financial Times:
    “The term ‘stakeholder’ is popular in some circles and deeply unpopular in others, because it points to the possibility that parties other than the owners or shareholders of a company could share in the residual control or decision rights over the company. Economic theory suggests that in the interest of efficiency, all those who have a stake (an investment or net open position) in a company and possess private information relevant to the success of the company should be involved in its management. Since the traditional economic model of the firm viewed labour as a variable factor (the worker has no (human) capital at stake in the firm that employs him/her), and did not view the worker as possessing private information relevant to the performance of the firm, this model of the firm offered no efficiency arguments for involving labour in managerial decisions. More modern theories of the firm view the employment decision as, in part, an investment decision by the worker, and one that is costly to reverse. So the worker is a stakeholder. In addition, in a modern knowledge economy, information relevant to firm-wide performance is widely dispersed throughout the work force. These two features together make, in principle, for a managerial role for labour. The nature and extent of this role, and the institutional mechanisms through which it is expressed can, of course, range from full co-determination and worker control of a board that has veto power over certain strategic decisions (including de-listing) to the ‘right’ to be told ex-post what has been decided by others.�

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