I meant to do a May Day post on Industrial Relations, and particularly Labor’s proposal requiring employers to grant new parents 12 months unpaid leave, in the absence of “reasonable business grounds” for refusal. It’s hard to analyse a policy like this in terms of labour market microeconomics. A standard equilibrium analysis would suggest that some firms might voluntarily offer family-friendly conditions, but the number of such firms would be smaller than the number of employees who would prefer them (since there is less cost and trouble for employers in being family-unfriendly) and this is what we see.

Assuuming there’s a general social consensus in favour of assisting families with children, an obvious question is whether business should be expected to carry some of the burden. As this graph of the profit share of GDP shows, there shouldn’t be a problem of affordability.

Of course, there will always be marginal firms, but if you can’t make it with profits at current levels, probably you shouldn’t be in business at all.

From the viewpoint of the average member of society, depending mainly on labour income, the case for accepting a substantial profit share rests on the assumption that incentives to seek profit will ultimately benefit everyone. It’s hard to make this case when conditions like parental leave haven’t improved substantially in decades and other conditions, such as rights to weekends and public holidays, are going backwards. The long term interests of business would be better served by a less aggressive pursuit of short-term goals.

Following Kevin Rudd’s launch of an IR policy including 12 months unpaid parental leave for each parent of a new baby, the Sunday Telegraph ran Glenn Milne’s story* under the headline “Rudd Caves: Unions win child-friendly industrial relations coup”. Given that Rudd has been pushing the family-friendly line hard since the day he was elected leader this seemed OTT even for the increasingly absurd Tele (still running global warming delusionism I note). Apparently someone else thought so – the online edition is running with “Rudd goes to bat for workers”

Update Monday 30 April Milne’s story in the Oz goes back to “Caves”. This is just silly. All these people seem to be living in the 70s when union-bashing was good politics (compare the vendetta against student unions, settling scores from the same era). Supposing that the Labor party structure had no union representation at all, I doubt that the policy would have been much different. It’s obviously necessary for Labor to fight the government on WorkChoices. Given this, it’s hard to see how the policy could have been much more moderate than it is without being open to attack as purely cosmetic.

* Note that standard practice, presumably followed here, would be for the headline to be written by a sub-editor without reference to Milne.

One of the few real debates at the (generally tightly controlled) conference concerned a proposal under which couples could register their relationship to protect property rights, pension entitlements and so on. This proposal is somewhat less than a civil union, since there is no associated ceremony, and is explicitly claimed not to represent gay marriage. A couple of states have already implemented the idea. A striking feature, mentioned in the debate but not in newspaper reports is that registration is available for people in a carer-dependent relationship rather than a partnership.

As this comment notes, the proposal is very conservative by international standards, but the only opposition within the conference came from the right, and it appeared from the debate that most gay and lesbian organisations have been willing to accept the proposal. In part, this is because it delivers most of the substantive benefits of civil unions, while neutralising most (not all) of the religious opposition. But it also reflects the more general view that anything is better than another term of the Howard government, which has pushed nasty wedge politics on this issue and on many others. Although Labor is way ahead in the opinion polls at present, similar leads have evaporated in the past, and no-one seems willing to risk upsetting the applecart and getting the blame for yet another loss.

I managed to miss the crucial moment, but Labor’s National Conference has just voted to scrap the three mines policy, which was adopted at the last Labor conference I attended (in 1982, IIRC). I can’t say I have any regrets about this. The policy was a grubby compromise when it was adopted, and it didn’t improve with age. The idea that restricting Australian exports of uranium could constrain nuclear proliferation might have made some sense back in the 1970s when nuclear power was expanding rapidly, but it has long since ceased to be relevant.

That said, the news on nuclear proliferation has nearly all been bad lately, after a period in the 1980s and 1990s when a number of countries (including Brazil and South Africa) turned away from seeking nuclear weapons. The insistence of declining powers like Britain and France on maintaining their nuclear power status, and the success of India and Pakistan in gaining acceptance of their nuclear weapons has set the scene for a disastrous expansion in the set of nuclear-armed states, which will, surely lead to nuclear weapons being used, either by a government or a terrorist group, sooner or later. The only hopeful sign is the possibility that North Korea will disarm, though the recent agreement gives the rest of the world nothing better than the position that had been reached back in 2001.

The related ‘news’ is Howard’s announcement of plans for an Australian nuclear power industry. It’s hard to see this as much more than a stunt, since it’s most unlikely that any plants will be operational before about 2030. Even that possibility is conditional on a whole range of necessary conditions, including a return to nuclear power in the US and Europe, the successful completion of research on a new generation of plants (Howard’s announcement includes a contribution to this project) and, most importantly, some permanent resolution of the debate over what to do with nuclear waste.

Given the absolute need to respond to the global warming problem, we shouldn’t rule out the nuclear option. But neither should we engage in the kind of winner-picking implicit in the statements we’ve heard lately from Howard and others.

I’ve been attending Labor’s National Conference (more on this later), as an observer, mainly because I spoke at a “Fringe Conference” event on the topic of federalism. Amazingly, around 40 people turned out at breakfast time to hear me and Bob McMullen on this exciting topic.

A more substantive cause for surprise is that this is an issue (the only one I can think of – maybe others will suggest examples) where the major parties have swapped positions in the last 30 years. When the Whitlam government was elected in 1972, the view that the states were obsolete anachronisms and the Senate a collection of “unrepresentative swill” was pretty much unchallenged among Labor supporters, and this was even more true after 1975. Yet now it’s the Howard government that wants to bring the states entirely under the heel of the Commonwealth and to render the Senate a rubber-stamp.

In part, this is the effect of elections that have produced long-lived Labor State governments and an even longer-lived Liberal Federal government. If the position were reversed, I imagine old views would reassert themselves. But, on the Labor side at least, the change goes much deeper than election outcomes. As Labor has been forced to defend the achievements of the past against neoliberal attacks, the benefits of the checks and balances provided by democratically elected upper houses and a federal system have been more deeply appreciated. And the fact that the states (and also local government) are the natural providers of the services central to a social democracy has become more and more evident.

If Labor wins (and it’s notable that no-one I’ve met here is counting their chickens on this – even the formulaic references to a Rudd Labor government are matched with negative references to what a re-elected Howard would do), there’s a real chance to fix at least some of the overlap and duplication that plague our system at present, and to make talk about co-operative federalism correspond more closely to reality.