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Issue #1695      July 29, 2015

Strategy for a failed system

On August 26 there will be a National Reform Summit of representatives from employer organisations, the Australian Council of Trade Unions (ACTU), academics, the Australian Council of Social Service and other community organisations. The Murdoch and Fairfax media have put aside their own bitter competition to jointly sponsor the Summit.

“In view of the failure of current leaders to agree about the way forward, it is time to broaden the policy debate beyond Parliament to enable the wider community to settle on a reform level that is politically acceptable,” says economics writer Bill Carmichael in an article promoting the Summit in the Financial Review. (“Ankle-deep political reform must leave the policy shallow end”, 15-07-15)

His statement reflects the failure of the Abbott government to implement its policies for a major restructuring of the economy and role of government. There is growing frustration in big business circles with the government and impatience with the Senate which has blocked some bills.

The government has not even revealed its planned industrial relations legislation or tax reform agenda. Company taxation has not been slashed. Financial, superannuation and other reforms are still in the pipeline and details are unlikely to surface until the eve of the next election.

The main areas of concern to big business are covered by the four themes to be discussed at the Summit:

  • Fiscal sustainability – budget surpluses while slashing company taxes and spending on social security, health, education and other services; and privatisation. Focus is on cutting not on how to increase income.
  • Sustainable retirement incomes policy – phasing out the age pension.
  • Tax reform in a modern federation – increasing and expanding coverage of GST with the federal government ceasing to provide any funding for education, public housing, community and other services, and whether to make changes to negative gearing and taxation of superannuation.
  • Productivity and workforce participation – individual contracts, abolition of minimum wage and penalty rates, unrestricted use of overseas workers, union-free workplaces, no right of entry for union officials, and other anti-union measures to be able to increase exploitation of workers and hence profits.

Craig Emerson, who held trade and competition portfolios in the last Labor government, is one of the initiators of the Summit. He said, “The idea is to make good reform easier and opposition to good reform harder.”

The other initiator is Nick Carter who is the director of the Liberal Party’s Menzies Research Centre. Carter and Emerson have worked together on preparations for the Summit.

Apart from opening speeches from PM Tony Abbott and Opposition leader Bill Shorten, politicians are excluded from participation in the Summit.

“It would also test the opposition’s understanding of the challenges facing the economy and its preparedness to confront them,” Carmichael said. A strange comment considering the Labor Party will not be part of the discussion, apart from Shorten’s opening speech.

But in many respects it is about how far Labor would be prepared to go in not opposing the next round of major restructuring and changes to the role of government. It is also a question of whether Labor would be prepared to implement such policies if in office and whether it could bring the trade union movement with it.

In effect a carrot is being dangled by big business and the Murdoch and Fairfax media if Labor wishes to gain their support in the next elections.

1983 Accord

Comparisons are being made with the Prices and Incomes Accord signed between the ALP Hawke government and the Australian Council of Trade Unions (ACTU) in 1983. The Accord was based on the phoney premise that the then economic crisis could be solved by co-operation with employers, that the class struggle could be dispensed with.

The Accord ushered in a period of cooperation with employers, wage restraint and compliance as Labor introduced a program of economic restructuring (economic rationalism) contrary to ALP and ACTU policies. This program later became known as neo-liberalism. If the Liberals had attempted to introduce the same policies they would have met with strong resistance from the trade union movement. But under the Accord there was little resistance.

The ALP government effectively did the work of the Liberals and did it “better”: floating the dollar, reducing tariffs, competition policy, privatisation, decentralisation and erosion of awards, enterprise agreements, real wage reductions, trading off concrete conditions to pay for a wage rise, suppression of struggle by union leaders and much more. In return for the losses suffered by workers (employers’ gains) the government introduced Medicare and later superannuation.

In effect the union movement abandoned the class struggle for class collaboration with the expectation of many that employers would do likewise.

Employers on their part had no intention of abandoning their interests, they never let up for one minute, continuing to pursue maximum profits by increasing the exploitation of workers.

Sucked the blood out of workers

In 1987, the Victorian Branch of the Australian Amalgamated Metal Workers’ Union ran with the headline: “Do the employers want co-operation?” in a newsletter (April 28) to its members.

It continued, “Despite the proven efforts by metal workers to improve productivity … and reduce industrial action the employers just want more and more blood.”

“Despite almost four years of wage restraint, including discounted wage increases, and no extra claims, the employers want more and more,” the newsletter said.

While AMWU members were cooperating, the employers were refusing to negotiate a wage claim and making more and more demands on the union to agree to longer hours, abolish holiday leave loading, cut overtime payments back, etc.

The reality is that under capitalism the economic interests of workers and employers are diametrically opposed. One worker’s wage rise is one employer’s cut in profits and vice versa. Wage rises do not destroy jobs, they eat into profits. That is why employers oppose them.

The ALP government delivered the structural reform that big business wanted with minimum resistance from the trade union movement. So it is not surprising now, with the Abbott government’s failure to deliver (regardless of reasons) what big business is after, that the possibility of another social compact or Accord is being examined.

This time, the employers have become involved. But they are not interested in giving away very much. “What we’ve said upfront … is that we all understand we have to give a bit,” Australian Chamber of Commerce and Industry’s CEO Kate Carnell said.

No prizes for guessing what the ACCI expects workers to give but in return for what? It will certainly not be for anything that hurts the profit bottom line. The recent trade-off of penalty rates for a few extra dollars in the base wage by the South Australian branch of the shop assistants’ union is one possible example.

Under the old Accord, workers ended up trading off hard won conditions for wage rises with employers making a profit out of the deal! What might be called a little bit of give by employers and a big take by employers.

This August gathering is going to apparently rise above partisan politics! It will dispense with ideology:

“We have got to a stage where there is so little discussion about the national interest and so much discussion about vested interests,” Emerson said. (“Forum a wake-up call to warring politicians”, Sydney Morning Herald, 13-07-15)

Social compact

The Accord was between a Labor government and the ACTU. The employers came along to the 1983 Summit organised by Labor PM Bob Hawke but never signed onto the Accord.

What is being planned now is a new tripartite Accord or social compact between the ACTU and either a Labor or Liberal government! ACTU president Ged Kearney appears to be seeking consensus with Labor or Liberal.

In her opening address to the ACTU Congress held in Melbourne in May 2015, Kearney said, “… whether Labor or the Liberals are at the helm, we need a new social compact that continues to deliver a fair distribution of national wealth for all Australians.

“A new social compact for the new economy and the workforce of the future.”

In an address to the National Press Club, Ged Kearney also advocated the concept of collaboration: “The IR debate in Australia is about a lot of things – wages, productivity, output, rights – but at its heart it is about people.

“It does not have to be about productivity or profits at the expense of fair and decent wages and working conditions.” (17-03-2015)

Employers are not interested in “fair and decent wages and working conditions”. As the experience of the Accord demonstrates, all that employers are interested in is maximising profits.

Whatever agreements are reached around the table, the trade union movement will still have a fight on its hands to defend wages, penalty rates, trade union rights, collective bargaining and working conditions. The class struggle will not go away.

Next article – “A turning point in history”

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