Many People Have Nothing To Celebrate On The Economic Front In 2021

One might think animal spirits had gripped the Australian economy as a flurry of better-than-expected economic figures hit the newsstands before Christmas.

But Australians cannot let the political and bureaucratic class off scot-free for the devastation they have caused in 2020, or for their unwillingness to engage in serious reform which will underpin our future prosperity.

The Australian Bureau of Statistics' November labour force numbers showed that 90,000 Australians had secured work in the previous month, bringing the number of employed people one step closer to the pre-lockdown level Australians are desperate to return to.

And the Mid-Year Economic and Fiscal Outlook brought further good news.

Australia's economic recovery is going much better than expected only two months prior when the 2020-21 budget was released, and the federal budget deficit will be around $16 billion smaller than first thought.

The MYEFO is like a mini budget, usually released halfway between the annual federal ­budget, and provides an update on government revenue and ­expenditure.

It also contained improved outlooks for the unemployment rate and economic growth going forward.

For Australia's political elites, Christmas had come early.

After plunging the country into its first recession in almost 30 years, negatively impacting six million jobs, forcing children to stay home from school and away from friends, and keeping families separated by inane hard border policies, they're hoping that mainstream Australians will be content with the good news and reward them politically for "keeping us safe".

But don't be fooled. Australia has a long and tedious path back to economic prosperity, and current policy settings and an unwillingness to ­engage in necessary reform will only hold Australians back. For the 942,100 Australians still out of work, and the additional 1.3 million who cannot get enough hours, premature financial fanfare is insensitive.

And for the business owners who have been crippled by lockdowns, there's nothing to celebrate.

Australia's premiers have engaged in a reckless and devastating act of economic, cultural, and social self-harm.

While major lockdown measures have finally been lifted for the most part, they are likely to be reimposed if a few cases of coronavirus emerge, as in South Australia last month, presenting a real threat to the economic recovery.

Quite simply, businesses can't make plans to invest in new equipment or hire and train new staff if they might be forced to close shop at any moment.

That's why new private sector business investment is now at the second lowest level ever recorded at 10.3 per cent of GDP, according to the ABS.

But to Australia's political and bureaucratic rulers, this doesn't matter.

At the beginning of the pandemic, Prime Minister Scott Morrison insisted that we were “all in this together”, a phrase that became the unofficial slogan for those insisting that Australia should lock down. But as Institute of Public Affairs research shows, between March and September 607,000 private sector workers lost their job while almost 20,000 new bureaucrats were hired.

Politicians and bureaucrats are completely detached from the real economy which their edicts effect.

When they forced businesses to close back in March, they immediately put hundreds of thousands of Australians out of work, and forced millions more to take pay cuts.

But they refused to demonstrate any shared sacrifice, ignoring an IPA poll which showed 74 per cent of Australians wanted politicians and senior public servants earning more than $150,000 a year to take a 20 per cent pay cut.

There is little hope for an economic recovery based on structural reform that will turbocharge the economy because political and bureaucratic elites have no skin in the game.

The private business investment statistic quoted above is dire for working Australians. Business investment is the key to productivity gains, which ultimately underpin wage growth.

Without making Australia a more attractive place to do business, it will be impossible to arrest the decline in private sector business investment, which is in the longest-running structural decline on record.

Australia's corporate tax rate is the equal second highest among the 37 countries in the OECD, and the minimum wage is the highest in the world.

According to the World Economic Forum's 2019 Global Competitiveness Report, Australia ranks 80th out of 141 countries for the burden of red tape and 111th for hiring and firing practices.

These issues can only be addressed through structural reform, which was necessary before coronavirus came but is now vital considering the ­carnage lockdowns inflicted on ­Australians.

Good news found in the MYEFO and labour force numbers must not overwhelm the effort to hold politicians and bureaucrats accountable for the damage they have done.

And it should especially not let politicians off the hook for engaging in the structural reforms needed to ensure that all Australians can experience the dignity of work and the prosperity they deserve.

Modern Labor's Forgotten Workers

What ACTU boss Sally McManus said about blue-collar workers at the National Press Club a few days ago doesn't quite compare with Hillary Clinton describing Donald Trump's supporters as a "basket of deplorables".

But the comments from McManus, nonetheless, provide an insight into the priorities of the ACTU and show how far removed from the opinion of mainstream Australians the union movement has become.

The ACTU used to help Labor get elected to government.  In 2007 the ACTU's campaign against WorkChoices was pivotal to Kevin Rudd's electoral success.  Today unions might still provide Labor with the money and the arms and legs for election campaigns, but the policy preoccupations of the unions' leadership increasingly reflect the concerns of a far-from-representative cohort of the Australian population.

To be fair, McManus was not talking about blue-collar workers as such, for in the context of the debate about the Labor Party's policy on climate change, McManus described the focus of the as-yet-undeclared Labor leadership aspirant, Joel Fitzgibbon on the employment of blue-collar workers as "narrow" and "old-fashioned".

McManus said "Climate change is not an issue that affects just one group of workers ... In many different ways, a whole lot of industries like our tourism industry and others, are going to be affected by climate change.  So whenever we narrow our thinking and we have some idea, old-fashioned idea actually, of blue-collar workers, we are really narrowing who are talking about because climate change affects everyone."

McManus might think the idea of "blue-collar workers" is old-fashioned, but there's at least one million Australians employed in blue-collar jobs.

It's difficult to imagine Scott Morrison talking of blue-collar work as "old-fashioned", which goes some way to explaining the extraordinary result of an opinion survey reported in these pages on Monday.

In a poll in eight Labor-held seats in suburban and inner-regional areas in Queensland, NSW, Tasmania and Western Australia when voters were asked which party was represents "working Australians" 46 per cent of voters said the ALP and 38 per cent the Liberal Party.  That's not an overwhelming outcome for Labor, given it regards itself as the party of the workers.

There was another interesting survey reported this week.  A poll of 1000 Australians conducted by JWS Research showed that Labor's climate change wars are fascinating to party insiders but not very relevant to anyone else.

When people were asked to name three issues that personally interested them and that the Australian government should focus on only 19 per cent of those surveyed replied "the environment-climate change".  Or put another way, climate change is not one of the three most important issues to 81 per cent of Australians.  That is hardly the sort of finding one would expect given the media attention devoted to the topic.

Hospitals, health care and ageing, the economy and finances, and employment and wages are the issues Australians are focused on and will be for sometime yet.

The Morrison government is not one for enacting sweeping philosophical ambitions or developing grand narratives of political economy.  However survey results such as these demonstrate the scope for the Coalition next year and beyond to reshape the country's political and policy landscape.

The development of an agenda for industrial relations reform that's presented, not as a productivity-enhancing measure as was WorkChoices, but as a way to get more Australians into work should not be beyond the capacity of the Coalition.

Similarly, if the Coalition does decide, as it should, to try to repeal the legislated increases in the superannuation guarantee, it will face a ferocious onslaught from the Labor Party, the ACTU and the superannuation industry ― but it's a fight the Coalition can win if it is presented as a necessary response in a post-COVID world.

While Labor spends its time talking to itself about climate change and to the 19 per cent of Australians concerned about the issue, the Coalition is talking about jobs.

In all likelihood if Australians were surveyed and asked to name one economic policy of the ALP they would say opposition to tax cuts.  The reality is that at the moment, as Labor MPs such as Fitzgibbon, and Chris Bowen have basically acknowledged, Labor has nothing much to say to the workers of Australia, whether they're blue collar or not.

Will The Australian Way Of Life Be A Long-Term Coronavirus Victim?

COVID-19 has consumed the public's attention for almost six months, but the economic crisis caused by devastating lockdowns has started to shed light on a nefarious threat to the Australian way of life.

Across a number of measures, from home ownership to employment, young Australians have seen a decline to their economic and social wellbeing in recent decades.  These declines have been compounded by the government-imposed lockdowns introduced in response to the coronavirus, which have disproportionately impacted young Australians.

As we look towards the economic recovery, there is a risk that a generation of young people will be the propertyless serfs of our feudal future.

This threat has been gaining traction for decades and addressing it must be a priority of policymakers.  There are several deep economic, social, and moral issues posed by the emergence of a class of propertyless serfs.  From a moral perspective, there is a growing number of Australians who have been excluded from the way of life that has made this country so great, namely access to the dignity of work, reward for effort, homeownership, and the ability to start and run a business.  From a practical economic perspective, a gaping hole in employment opportunities, upwards mobility, and wealth creation will emerge from the simple fact that it is near impossible for the small businesses of the future to be started when their potential owners do not own any assets.

Asset ownership is central to the Australian way of life and to the economic prosperity and stable democracy that Australians have traditionally enjoyed.  Business ownership provides an egalitarian ladder to economic prosperity;  regardless of education or wealth, Australians can start a small café or become a carpenter.  Additionally, small businesses provide owners and employees with a tangible stake in the economy and their local community, which in turn lead to an interest in seeing that community and economy governed in a sensible, democratic manner.  The same is true of homeownership, which in addition to providing a place to live and financial security throughout life and into retirement provides a sense of community and place.

Australia has historically been a nation of homeowners.  Homeownership underpins the Australian way of life by providing a stake in our system of capitalist, liberal democracy.  By giving people a tangible interest in that system, homeownership provides stability and prosperity.  As former prime minister Robert Menzies explained in his 'Forgotten People' speech, "the home is the foundation of sanity and sobriety;  it is the indispensable condition of continuity;  its health determines the health of society as a whole."

Similarly, Sir Albert Arthur Dunstan, the 33rd premier of Victoria, explained in 1943 that homeownership is a "symbol of achievement, purpose, industry and thrift", and that the homeowner "has a stake in the country, and that he has something worth working for, living for, fighting for".

However, while a full 54% of Australians born in 1947-51 were homeowners by between the ages of 25 and 29 years old, today only 37% of those born between 1987 and 1991 became homeowners upon reaching the same age bracket.

And within the portion of households that own a household, a concerning divide is emerging.  In 2013-14, 67% of households owned the home they lived in.  This was comprised of 53% who owned only the house they lived in, and 13% who owned multiple houses.  By 2017-18, these figures were 50% and 16%, respectively, meaning that while the portion of households that owns one house is declining, the portion that owns multiple houses is increasing.

This is a dangerous trend which gets to the heart of how the structure of the Australian economy has changed over the past 40 years or so.  While mainstream Australians of old could afford to buy a house, start a family, and start a business, the chances that young Australians today will ever have these opportunities are growing slim.

The political class that has overseen this structural shift must pay attention.  A generation of propertyless serfs who do not own anything will not support a system based on property rights and ownership.  This can be understood as a lack of 'skin in the game', to use Nassim Nicholas Taleb's thesis:  young Australians are being denied the opportunity to develop some 'skin' in the 'game' of our robust, capitalist liberal democracy.

This poses a serious moral issue in that we are at risk of having a generation of disenfranchised renters that undermine the health of society.  Additionally, it risks entrenching intergenerational wealth inequality and creating a structurally inegalitarian economy, as this generation will have no equity to draw on when starting the businesses of the future.  Small business ownership is another institution central to the Australian way of life which provides a means for upwards mobility.

Some may argue that businesses of the future will be less capital-intensive and that a generation of renters will still be able to establish businesses and move up the income and wealth ladders.  Following the thesis set out by Jonathan Haskel and Stian Westlake in Capitalism without Capital, they may argue that the costs of establishing a technology start-up are often miniscule, requiring only the ingenuity of the founder and a laptop.

While appealing, this will not be the case.  Australia rode the sheep's back and now rides in the bed of a Caterpillar 797F.  It will always be essential that entrepreneurial Australians can draw on a stock of assets to start a new business, and if recent history is anything to go by, capital intensive businesses in the resources industry, along with those that support it, will be essential.

Besides, the alternative is a return to the feudalism of the past where only an entrenched oligarchy has the means to start businesses.  Ensuring widespread asset ownership is essential to preventing the reordering of Australian society along the highly structured order of the feudal pyramid, where there is no room for a prosperous middle class, but plenty for destitute serfs.

A generation of Australians are at risk of never obtaining this stake in their country, of never obtaining this culmination of achievement, purpose, industry and thrift.  Without the home to live, to work and to fight for, what will this generation of serfs have?

You’re Only Focused On Case Numbers, Dan? Here Are The Shocking Stats Showing Why Lockdown Must End Now

On 10 October, during his daily press conference, Victorian Premier Daniel Andrews said, "The only numbers I'm focused on is [COVID-19] case numbers."

We knew this already.  That's why Victoria has been subject to the cruel and indefinite lockdown measures that have crippled the economy, caused countless businesses to close for good, and kept school children from seeing their friends for months on end.

What Andrews' admission does not explain, however, is why there has been no nuance in the policy response to the legitimate public health threat posed by COVID-19.  Back in March when very little was known about the new disease, governments responded by implementing blanket lockdown measures to halt the spread of the virus.  The idea was to "flatten the curve" to buy time to ensure that adequate healthcare and contact tracing personnel and infrastructure were in place to deal with community transmission.

Much more is now known about COVID-19, including how it spreads and which population groups are most at risk after contracting it, which treatments are more effective than others, and that over the longer term effective contact tracing systems are far more important than blunt tools such as lockdown measures.

However, the Andrews government has refused to implement a more sophisticated approach to dealing with coronavirus.  It has pursued an unrealistic elimination strategy which was never going to be achievable.

Daniel Andrews' refusal to consider anything other than confirmed case numbers is a concerning admission.  No politician or policymaker should ever advocate policies based on a single consideration.  Since the beginning of the lockdown in late March, I have been highlighting the limitations of such an approach by drawing attention to the social, economic, psychological, and mental and psychical health impacts of lockdown measures.

Here are some other numbers I think Dan Andrews should be aware of.

Lockdowns have thrown 696,000 Victorians out of work, according to the Australian Bureau of Statistics data.

Since March, 135,400 young Victorians (aged 15-19 years old) have lost their job, according to the Australian Bureau of Statistics data.

In the June quarter alone private sector wages declined by $1.9 billion while public sector wages increased by $88 million, according to the Australian Bureau of Statistics data.

Victorian government and public sector debt is approaching $150 billion, or $22,600 per Victorian, according to my analysis of Victorian Budget figures.

Between September and October alone, more than 350,000 Victorians sought access to Medicare-funded GPs, psychiatrists, psychologists and counselling treatments, according to The Australian.

Calls to the support lines of Beyond Blue are 77 per cent higher in Victoria than across the rest of the country.

The number of people hospitalised after attempting suicide is currently up 6% on last year.  For those aged 17 and under, the number is up 31.3%, according to The Australian.

Of Victoria's 79 local government areas, 51 currently have no active cases.  Only one LGA has more than 20 active cases.

There is not a single patient with COVID-19 in intensive care in all of Victoria.

Daniel Andrews' reckless elimination strategy has destroyed Victorian jobs, businesses, and livelihoods.  Zero COVID-19 cases mean zero hope for Victorians.

It's time to end the lockdowns and let Victorians live.

A Target Of Zero Cases Means Zero Jobs, Zero Freedom And Zero Hope. Here’s A Better Way

Australia needs a COVID-19 reset.

After seven hard months of social isolation, economic pain and despair about the future, the time has come to change course.

COVID-19 is not going anywhere.  It never was.

This virus cannot be eliminated;  there is no vaccine.

It will not be avoided;  global transmissions are surging.

What is clear is that the virus spreads faster than influenza and without a vaccine, it will kill more people than it.

These facts alone justify a unique response.  But that response must be proportionate to the risk.

Children should be educated, family must be cared for, and debt has to be serviced.

None of these things are possible under a never-ending lockdown.

Lockdowns do not work because they are a flawed solution to a complex problem.

They curtail personal freedom by ignoring demographic resistance.

They lack proportionality by outlawing activities which pose a minimal threat to public health.

And they polarise communities by divvying up exemptions based on employment and social status.

These realities are anathema to Australian society.  We have never lived this way and we can't be expected to any longer.

COVID-19 is already changing Australia for the worse.

As you read this, our people are further dividing into two Australias.

The first part comprises those Australians whose employment remains unaffected by the crisis ― predominantly public sector workers.  This group of Australians have kept their jobs, grown in number, and even enjoyed pay rises.

The second part are those Australians whose lives now lie in ruins.  They are young Australians, small business owners, the self-employed, and those otherwise employed in the productive, private part of the economy.

Twelve months ago, the later were the backbone of Australian prosperity.  Today, they are the victims of government decision-makers immune to adversity.

Embittering the public mood has been the uneven application of lockdown enforcement.

Again, two distinct Australias have emerged.

Celebrities like Shane Warne leave the nation to commentate on cricket in the UK, while regular Australians are refused travel for funerals or palliative care.

Black Lives Matter protestors take to the street in defiance of social distancing orders, yet mainstream Australians are the ones fined for holding picnics and BBQs.

And foreign students can easily traverse our country, but agricultural workers living along state borders cannot.

Sadly, all of this has been done in the pursuit of a goal which cannot be achieved ― virus elimination.

Without a proper debate or public approval, governments across the nation have dumped the goal of "flattening the curve" in favour of "virus elimination" ― an ambition which is unachievable without a vaccine or an end to global transmissions.

And as each government demands greater and greater sacrifice from the public in pursuit of this goal, the Australian community suffers ever more.

Intentionally or otherwise, Australia's COVID-19 response has placed the nation on a highway to nowhere without an off-ramp.

A target of zero cases means zero jobs, zero freedom, and zero hope.  And we have had enough.

Australia needs a plan to live with COVID-19 where the risks of infection are balanced against the risks long-term lockdowns impose on greater society.

Recently, I released my Medical Capacity:  An Alternative to Lockdowns report, offering a pathway for achieving that balance.

Medical Capacity confirms that the cost of a COVID-19 elimination strategy is over $319 billion.

This figure is the equivalent to 2.2 times the total annual value of Australia's entire Health Care and Social Assistance industry ($142.9 billion) and is equal to the 2018-19 Commonwealth Government expenditure on defence, education, health, and social security and welfare combined.

Medical Capacity charts a more reasonable course.

It acknowledges the risks posed by COVID-19 ― and manages them.

It recognises the human costs of lockdown ― and alleviates them.

Critically, it incorporates the latest learnings about the virus to ensure our risk management approach evolves alongside it.

The best COVID-19 response has always been about balance.

Governments should put in place measures to protect the elderly and vulnerable, implement high-quality contact tracing, continue with random community testing, and maintain international border control measures.

Equally, they must put an end to extreme lockdowns and relax social distancing measures so that economic, social, and recreational life can return to normal.

It is never too late to correct a mistake.  It is never too late to restore freedom.

A new approach is required to steer Australia through the next stage of this pandemic.

And that approach is ready right now.

Cutting Red Tape In Project Approvals Can Boost WA Jobs

Western Australia's prospects of becoming the fastest-growing, highest-potential state in Australia after the coronavirus recession was boosted by the commitment of the Commonwealth and McGowan governments to slash red tape for WA's resources sector.

Yesterday, the Commonwealth government confirmed its intention to enter into a bilateral approval agreement with WA under the Environment Protection and Biodiversity Conservation Act 1999.

This would put the WA state government solely in charge of the environmental approvals process, removing unnecessary Commonwealth duplication.

Commonwealth government approvals for big projects currently average 1013 days, or almost three years.  The bilateral agreement could reduce the approval time up to six months, and would help unlock more than $100 billion of development.

This latest initiative builds on momentum developed by the state government to cut red tape.  In 2018, the McGowan government launched a whole of government red tape reduction initiative called Streamline WA.

The initiative has already produced tangible results, such as the establishment of risk-based statutory guidelines for mining proposals and mine closure plans.

The EPBC Act, and green tape more generally, impose significant costs on the Australian economy.

My research released this year found that regulation under the Act has increased by 445% since the year 2000.  With 4,820 individual regulatory restrictions, the Act provides one of the most significant regulatory burdens to WA's most important industry, the resources industry.

According to a recent survey by the Chamber of Minerals and Energy of WA, the resources sector contributed $102 billion of value to WA's economy, including by paying $45.6 billion in wages, in the 2018-19 financial year.

Additionally, the sector directly and indirectly supported 452,229 full-time equivalent jobs in the state ― that's just over a third of total employment in WA.

The resources sector is central to WA in emerging from the COVID-19 lockdown-induced recession.

By reducing the green tape that holds this sector back, Premier Mark McGowan can ensure that WA has the best-performing economy in Australia.

According to the Australian Bureau of Statistics, 73,000 West Australians have lost their job since March and an additional 98,600 people are working fewer hours than usual because there is no work, not enough work, or they have been stood down.

These job losses are both an economic and social tragedy that will have a lasting negative impact on people's lives, from worse mental health to increased likelihood of alcoholism and drug dependency.

The experience from past recessions has demonstrated that the longer people are out of work the harder it is for them to get a job.

While West Australians should be encouraged by the latest move to cut red tape, it is up to the McGowan government to hold its Commonwealth counterparts to their word.

The WA and Commonwealth governments originally finalised a bilateral agreement way back December 2014.

The draft agreement sat in the bottom draw of a bureaucrat's desk until November last year when Mr McGowan revived interest in it, saying that "we need to do everything we can to speed up approvals and bring on these new jobs as a matter of urgency."

Indeed, we do.  But doing so means moving beyond "confirming an intention" to enter into the bilateral agreement, to actually signing that agreement.

Blue-Collar Jobs Are Worthy Too

Labor senator Raff Ciccone's statement at the weekend that "there is dignity in all work" is something mainstream Australians have always understood, and at last the political class appears to have cottoned on.

Ciccone called for an overhaul of state and federal environmental laws to create more blue-collar jobs, and for limitations on legal injunctions — commonly referred to as "lawfare" — launched by activist green groups.

My research estimated that the lawfare provision, section 487 of the Environment Protection and Biodiversity Conservation Act 1999, has put more than $65bn of investment at risk in Australia by holding up major projects such as dams, coalmines and roads in court for a total of 10,100 days since the year 2000.

Much of this investment is concentrated in job-starved regional communities and includes projects from the $16.5bn Adani coalmine in central Queensland to a $30m salmon farm in Tasmania.

Graeme Samuel's confirmation that there is evidence to support the existence of lawfare, which he spoke of in his joint press conference with Environment Minister Sussan Ley on Monday, reflects a growing consensus that jobs must be put ahead of the inflated concerns of noisy, inner-city green groups.

Even former Labor leader Bill Shorten criticised the government's "go-slow" approach to approving major projects, saying on Twitter yesterday that the "ones who miss out are Australians in need of a secure job".

The interim report of the independent review of the EPBC Act, authored by Samuel and released on Monday, also rejected adding "climate change" as a trigger for the EPBC Act.

The climate trigger, long a hobby horse of green activist groups, potentially would have ­required all greenhouse gas-­emitting projects to be approved by the federal environment minister.  This would have constituted the de facto nationalisation of approvals for Australia's resources, transport, agricultural and heavy industrial sectors and the dest­ruction of hundreds of thousands of jobs.

Green groups also were expecting that the review would call for a federal government takeover of even more parts of environmental law.  Instead, jobs again were put first and the report recommended more devolution and decentralisation of authority to state governments — a recommendation the government has already adopted.

Ley said the government would pursue two bold reforms:  to accredit state governments to carry out environmental assessments and approvals on the federal government's behalf, and to explore market-based solutions to habitat rehabilitation.

The move to accredited state governments will substantially reduce duplication and sometimes contradictory regulatory requirements between the state and federal governments, and signals a shift away from Canberra's failed command-and-control approach to regulation.

Seeking market-based reforms to environmental conservations, meanwhile, has long been advocated by organisations such as the government's independent think tank, the Productivity Commission, to attain environmental outcomes with more flexibility and at less cost.

For example, the commission noted in its 2016 Regulation of Australian Agriculture report that "better use could be made of market-based approaches to native vegetation and biodiversity conservation at times".

The fact these two initiatives were announced on the same day as the release of an interim, rather than final, report indicates that the government is starting to understand how important job creation will be to Australia's recovery from the pandemic.

Between March and June, 815,000 jobs had been lost because of the COVID-19 social distancing regulations introduced by federal and state governments.  And while the official unemployment rate is 7.4 per cent, the real rate is 11.7 per cent once those who have on net left the labour market since March and those working zero hours are added.

Young Australians have been affected disproportionably by the lockdown measures, with 355,000 15 to 24-year-olds not in full-time education and not working, the equivalent to 29.6 per cent.  This is up from 22.3 per cent in March.

Getting Australians back into work will be the most important factor in economic and social recovery.  Mass unemployment is not only an economic problem, it is also a humanitarian tragedy.

Work is the epicentre of a good and flourishing life.  Those who work are more likely to own their own home, participate in their community and send their kids to good schools.  They are also likely to have far superior physiological and psychological health outcomes, and are less likely to become dependent on drugs and ­alcohol, or to commit crimes and to be in jail.

Losing your job because of coronavirus is one thing.  But missing out on the dignity of work because a small group of inner-city, university-credentialed elitists look down on blue-collar jobs and manual labour is not who most Australians are.

Parts of the interim report raise concerns.  The suggestion that ­project actions "must deliver a net gain for critically endangered species habitat and ecological community distribution" is vague and inviting itself to be used as a mechanism for throwing spanners in the works, while the proposed adoption of federal government-enforced national environmental standards could result in a bureaucratic and lawyer-infested investment quagmire.  These issues can be ironed out.

By putting jobs for mainstream Australians ahead of the boutique concerns of noisy activists, the government has a unique opportunity to develop a much needed pro-worker and pro-jobs economic recovery strategy.

How Coronavirus Is Killing Small Business ― And Threatening Our Values

The heart of the Australian way of life is under threat with small businesses fighting for survival as lockdown restrictions continue.  The crisis has hastened the ongoing decline of small business that functions as the fabric that holds local communities together.

A survey commissioned by the Council of Small Business Organisations of Australia revealed a third of sole traders have been hit with an 80% decline in turnover, while three in four small businesses have experienced a decline in revenue since the beginning of the lockdown restrictions.

The restrictions over the last three months have placed a particular strain on small business.  Small outward-facing businesses, particularly in the accommodation and hospitality industries, who are dependent on tourism and foot traffic have been crippled by border and movement restrictions.  Small cafes and restaurants have seen their operations severely impacted with limits on patrons.  Businesses with limited floor space have been less equipped to accommodate social distancing measures.  And business startups have had their momentum arrested.  While the hit to revenue and operations has affected businesses big and small, in the long run it will likely be smaller and less established businesses that are disproportionately affected.

The plight of small business is cause for concern, especially when put in the context of long term structural decline.  Over the past 15 years, the number of workers employed by small business (businesses employing less than 20 people) has fallen from above 50% to 41%, and the share of self-employed workers has steadily declined from 20% to 16%.

Declining entrepreneurship and business creation reduces opportunity and competition that drives higher wages and product and service improvements for consumers.

But the decline is not just concerning for economic reasons.  Small business is at the heart of the Australian way of life and a healthy and vibrant High Street promotes mainstream Australian values.

Creating value for the community, innovation, independence and personal responsibility are fostered by widespread self-employment and involvement in small business.  The erosion of the ability to start and run a business will undermine community formation and a culture of self-reliance.

Being involved in small business instils an understanding of and appreciation for what goes into running a business.  Employees are personally connected with the inner workings of the business and understand the risk taken on by their employer to make their job possible.  They understand the relationship between the value they create for the business and their wage.  For those involved in small business, business is not an abstraction with an artificial divide between the interests of employers and employees.  They see first hand the destructive effects of red tape and understand that businesses are not a bottomless untapped tax source for governments.

Small business is foundational to the fabric and character of local communities.  The commitment of locally owned businesses to the local area cannot be replaced by distant large corporations at the national or even international level.  An important part of the life of local communities is lost when the only difference between suburbs and towns are the relative locations of the McDonalds, Woolworths, Bunnings and BP.

To foster small business, encourage job creation and reverse the concerning trend of small business decline, governments must remove the impediments that disproportionately impact small business.  Workplace regulation is in dire need of reform to allow small businesses to expand without the headache of navigating complex awards with onerous entitlements.  When the likes of Qantas, Coles, and the ABC with professional accountants on staff are falling foul of industrial relations requirements, it is no wonder that small businesses owners are put off from employing due to the complexity of the system.

The same applies to the taxation system and red tape in general.  Small businesses who lack the resources to engage professional expertise are put at a significant disadvantage.  Bold reforms for simplification across the board are required to level the playing field and allow small businesses to thrive.

Reversing the decline in small business is vital for the health of mainstream Australia.

‘Eliminating’ The Virus Is Suppressing Truth

Recent calls for an "elimination strategy" to defeat the coronavirus pandemic are misguided, and may not even work.  Why?  Because pursuing elimination would mean longer and harder lockdowns.  That would mean more jobs lost, more businesses shuttered for good, more livelihoods destroyed, more families plunged into poverty, more lives ruined forever.

And even with that, there would be no guarantee of success.  An elimination strategy would also break from the goal broadly adopted by the Morrison government and National Cabinet, which is suppression.  But suppression and elimination are hugely different strategies, with vastly different practical consequences.

Under a suppression strategy, restrictions are loosened when there is a low and manageable level of community transmission.  Elimination requires stringent restrictions to remain in place until there is no community transmission whatsoever.  The idea is that if transmission is stopped for long enough, the disease will disappear.

But that is at best wishful thinking.  Countries that kept infection rates low, like Singapore and Israel, saw cases surge when restrictions were lifted.  Even in New Zealand, where a "stage four" lockdown was imposed on 25 March and transmissions have been effectively at zero for weeks, Prime Minister Jacinda Ardern has indicated that the government is bracing itself for the possibility of another outbreak.

The futile "elimination" debate is part of a wider problem with Australia's coronavirus response.  Politicians and health bureaucrats have shifted the goalposts so much that they don't even seem to know what the actual endgame is, much less explaining it to the Australian people.

Initially, the goal was clear and reasonable:  Keep infection rates as low as possible ― that is, "flatten the curve" ― to give our health system time to prepare without being swamped with cases.  Since that time, billions have been spent on intensive care beds, masks and ventilators.  By any measure, our hospitals are now well-equipped.  If there was ever a justification for heavy-handed lockdowns, there isn't one anymore.

Still, the idea of an "elimination strategy" is finding disturbing favour among everyone from the Grattan Institute to the ABC's resident prophet of doom, Norman Swan.  The latest push comes from Daniel Andrews' hand-picked Chief Health Officer, the hapless Brett Sutton, who has plunged the state of Victoria into a second lockdown after the first one, incidentally the most heavy-handed anywhere in Australia, failed spectacularly.  Frankly, it beggars belief that the Victorian government feels entitled to lecture anyone about anything.

To be sure, public health experts are approaching the coronavirus with the sole aim of keeping infections at zero.  It's an understandable objective, but it comes with enormous human costs, and the terrible toll taken by lockdowns must at least be a part of the debate.

The most obvious casualty is jobs.  The official unemployment rate has soared from 5.2 per cent in March to 7.1 per cent in June, but my research suggests that this a gross underestimate, and the real rate is close to 12 per cent.  Young people have been the hardest hit:  Almost one in three Australians between 15 and 24 are now neither working nor studying.  All in all, 815,000 jobs been snuffed out since lockdowns began, and many more will go as they drag on.

The serious consequences of lockdowns are almost always reduced to a tawdry debate about "money versus human life" (largely by those who are insulated by the economic carnage by a safe, lucrative job in the public service or academia).  But the misery and deprivation of this 21st century Great Depression are not about abstract notions of "the economy", but very real human costs.

Already, there are warnings that Australia's suicide rate could surge by up to 50 per cent.  Lifeline is taking one call every thirty seconds related to the coronavirus crisis.  The fact that health experts ― of all people ― are dismissive of these ugly realities is callous in the extreme.

Remember, also, that these are the same "experts" who have gotten so much wrong.  These are the "experts" who told us that Australia would run out of ICU beds no matter what we did, who advised us that masks were ineffective and then changed their mind, and who told us that sitting on a park bench or playing golf was dangerous and deadly, but deliberately ignored the risk of having 10,000 protesters stage a "mass gathering" in the centre of Melbourne.

If Daniel Andrews or any other premier is foolish enough to pursue an "elimination strategy", they must come clean and tell us how many more jobs they are prepared to destroy, and how much anguish they are willing to inflict on their own people.

Until then, they would be well advised to follow the lead of Scott Morrison and Gladys Berejiklian, who have made the politically difficult but highly commendable admission that further lockdowns would make the state-imposed "cure" far outweigh the disease.

We Need To Do Reform, Not Talk It

With the economy in recession, Prime Minister Scott Morrison should spend less time trying to be popular and attempting to be everyone's friend and more time advocating for the policies that will get Australians back into jobs.

When he stood up at the National Press Club last week, the Prime Minister could have announced corporate tax cuts, or reductions in red tape, or, if he had really wanted to be bold, that Australia was going to develop a nuclear energy industry.

Instead he talked about organising five working groups to have employer groups and the ACTU talk about industrial relations reforms they might each eventually agree to.  Zoom chats between bosses and unions organised by the government might well fulfil what pollsters claim is the public's desire during the coronavirus crisis for "consensus" politics and an end to partisan bickering.  But what will be the real outcomes is at this stage difficult to envisage.

To get Australia out of the recession we're now in will require the government to do more than say "we tried".  It will need a clear-eyed and hard-nosed understanding of what want to achieve

As was reported this week, Steven Kennedy, the secretary of the Treasury, said at a private meeting of the working groups "it could take five to seven years to bring the economy back to its pre-pandemic state" and with unemployment at up to 9 per cent by 2021.

Given that Australians are constantly being told "we're all in this together", presumably Kennedy will find a forum to share with those 86 per cent of Australian workers who are not a member of a trade union the insights he's willing to discuss at closed-door meetings of bosses and unions.

If there does happen to be something bosses and unions agree on it probably would have happened by now.  If there is low-hanging fruit it would have fallen to earth already.

In recent weeks the ACTU has had two opportunities to show it was interested in a different way of doing business ― but it didn't budge an inch.

The Federal Court decision allowing some casual employees access to the entitlements of permanent staff could affect more than 2 million workers, and require employers, many of whom will be small businesses, to make up back pay of up $8 billion in total.  As businesses struggle to stay afloat this is the very last thing they need, but of course it was a decision the ACTU welcomed.  According to a Roy Morgan poll, one quarter of the businesses that were surveyed said the decision will "deter them from hiring casual employees.

And when the NSW state government attempted in institute a 12-month pause in pay increases for state public servants in return for a guarantee of no job losses, the proposal was rejected out-of-hand by the ACTU.  Michele O'Neil said it was as "an insult to thousands of essential workers who had worked to get the state through the coronavirus crisis".  It's true that many essential and health workers have performed an incredible job, but NSW has 410,000 public servants.  Some are nurses and teachers, and some are administrative officers writing up diversity and inclusion plans.

Admittedly it's early days ― but so far the unions have given up nothing for their privileged seat at the table.  On the other hand, as a show of "good faith", the Coalition has shelved the Ensuring Integrity Bill to reform the administration of employer and union organisations.  What once the Coalition trumpeted as legislation to protect the interests of Australian employees it is now willing to treat as a mere bargaining chip and a political exercise ― which is what the unions have claimed all along.

No doubt there'll be some good photo opportunities when the Minister for Industrial Relations, Christian Porter, shakes hands (or touches elbows) across the table with ACTU secretary Sally McManus.  But the likelihood is that unless McManus experiences some kind of Damascene conversion towards accepting reform to nearly every aspect of Australia's industrial relations system, nice photos is all the Coalition will get from this process.

It is true that talking about reform is better than not talking about it ― but talking isn't doing.

Red Tape Holds Back Growth

The WA state government is leading the way for a post-lockdown recovery based on slashing business-crushing red tape to support small businesses.  Premier McGowan's moves to make it easier for certain businesses to change how they use their premises and streamline the process for single development applications are welcome.  However, the Government can and must go further in cutting red tape to make WA an economic powerhouse in the wake of the devastating lockdown which has smashed the productive private economy.

Red tape imposes an enormous burden, reducing economic output to the tune of $176 billion across Australian each year.  While this is a dangerous handbrake on prosperity, it is also a serious moral issue.  By preventing people from starting new businesses, innovating new products and creating opportunities for themselves and their families, red tape stifles the aspirational spirit that drives so many West Australians.

My recent analysis estimated that the private sector has been crippled by the coronavirus lockdowns, while the public sector remains relatively unscathed.  Jobs in the private sector have decreased by 7.7 per cent since the middle of March while the public sector has seen only a 1.7 per cent decline.

Despite politicians insisting that "we are all in this together", their pay and hours remain the same while 1.3 million people have had to work fewer hours and another 900,000 have lost their jobs entirely, according to data from the Australian Bureau of Statistics.

This environment, where the private sector is punished while the public sector remains unscathed, cannot be maintained if there is to be an economic recovery.  The private sector accounts for 80 per cent of economic activity, and it is only by taxing this activity that we can afford public services such as roads, schools, and hospitals ― including ICUs for coronavirus patients.  The number one priority must be maximising this wealth creation, and slashing red tape is one of the best ways to do this.

The link between red tape and economic prosperity is clear.  Cutting red tape allows for more businesses, more jobs, and higher wages.  It allows people to experience the dignity of work, and encourages people to be enterprising by reducing unnecessary compliance costs.  Most importantly, red tape disproportionately impacts small businesses, so cutting red tape will provide a boon to sole traders and family-run businesses across WA.

Small businesses are vital to the West Australian economy.  According to the most recent data from the ABS, there are 226,416 small businesses in WA.  At least there were before the lockdown started in March.

Creating new businesses is essential to the economic recovery.  Small businesses don't just provide an income to their owners and employees, they provide a sense of community and a ladder to prosperity.

WA has been incredibly successful in containing COVID-19, and has done so without carelessly treading on freedoms as the Eastern States so willingly did.  The WA government should quickly lift the remaining restrictions on businesses, while maintaining social distancing and hygiene requirements.

After allowing all businesses to reopen, Mr McGowan must slash red tape.  The tentative steps taken in this direction are encouraging, but there is no shortage of overzealous regulation that can be discarded.  WA has 107,812 individual regulations on the books, according my analysis published last year.

Food truck owners who want to set up at the local park or do the rounds of the suburbs are simply not allowed to do so.  They can only serve customers in registered areas and at certain events, all of which have been cancelled.

Chauffeurs who have seen their bookings drop by 80 per cent or more are still required to pay 10 per cent of every fare to the government's taxi plate buy-back scheme.  And that's in addition to GST.

And when a Perth surgeon wanted to start an intimate, high-end wine bar on William Street, he was forced to spend upwards of $12,000 on communicating with police about his liquor license.

This kind of onerous and petty red tape is simply unaffordable in the post-COVID-19 economy.

Mr McGowan must set an example for his Eastern States peers.  By slashing red tape, the Government will allow West Australians to create a bonanza state once again.

Exposed: The True Scope Of Lockdown Unemployment

The official unemployment rate released by the ABS hides the true impact of the lockdown measures on the economy and employment.  In addition to the 823 thousand unemployed, there are 1.26 million Australians who have been forced out of work since March following the lockdown that are not included in the unemployment rate.

The unemployment rate for April jumped to 6.2 per cent, up from 5.2 per cent in March.  The increase was substantially lower than many forecasts.  Following the release of the unemployment rate Treasurer Josh Frydenberg stated the lower than expected rate "reflects the success of the JobKeeper program".

The JobKeeper program has allowed many businesses to continue to operate and provide their employees with work, but it has also masked the true extent of unemployment by shifting people who are without work out of the unemployment number.  The unemployment rate is the number of unemployed divided by the labour force consisting of both employed and unemployed.  The rate, therefore, does not include employed people working zero-hours or those who have left the labour force altogether.

In March there were 13.7 million people in the labour force.  This included 13 million people who were employed and 719 thousand people who met the unemployment criteria of actively searching for work and available to work in the reference week.  In April the labour force fell to 13.2 million people with 12.4 million employed and 823 thousand unemployed.

This means an unprecedented 490 thousand people left the labour force since March, meaning that they are not employed and do not meet the unemployment criteria.  A further 770 thousand people according to data released last week by the ABS have been classed as employed but for economic reasons are working zero hours.  These individuals are reported by the ABS as having "no work, not enough work available, or were stood down" and are likely to be receiving the JobKeeper payment.

Including as unemployed the 490 thousand Australians who were part of the mass exodus of the labour force and the 770 thousand who are employed but working zero hours for economic reasons, in addition to the 823 thousand counted officially as unemployed, gives a staggering unemployment rate of 15 per cent with over two million people being without work.

JobKeeper should not be deemed successful because it has suppressed the official unemployment rate.  The Commonwealth Government has, in effect, created a way for people to receive unemployment benefits without contributing to the unemployment rate.  In effect, businesses who employ zero-hour staff have become a type of pseudo Centrelink.  The only difference is a zero-hour employee may be eligible for a $1500 fortnight payment compared with around $1,100 from the JobSeeker unemployment payment.

There is no substantial difference between someone out of work receiving JobSeeker and someone out of work receiving JobKeeper.  One is deemed to be unemployed and receives a government payment, while the other is "employed" but working zero hours and receives a "wage" fully subsidised by the government.

The real test for JobKeeper will come when the payments cease, with the program currently slated to end on 27 September, six months after it began.  The purpose of the scheme is to keep businesses afloat through the lockdown so that they can employ in the future without government subsidised wages.  At this stage, it is not known how many businesses are simply walking dead, maintaining a semblance of operation to allow their staff to access JobKeeper but with no prospect of being able to stand on their own feet after September when the JobKeeper payments end.

The momentous task of getting two million Australians back into work will not be achieved without the government undertaking serious economic reform.  Lifting the lockdown measures will allow many people to return to work, but thousands of others will find that there is simply no job to return to.

To allow the private sector to rebuild, generate jobs, and provide the dignity of work, businesses need to be freed from excessive levels of red and green tape.  Small businesses, that employ more than 40 per cent of Australian workers, need to be freed from the shackles of the Fair Work Act that destroys jobs and prevents hiring.  And Australia's crippling high energy costs caused by government schemes pushing renewables needs to be urgently addressed.

Aiming at simply returning to business, as usual, will ensure that thousands of Australians will find themselves out of work for a long time to come.

Voice Of Small Business Is Silent On The COVID-19 Commission

Senator Michaelia Cash is the Minister for Employment, Skills, Small and Family Business in the Morrison government.  It's one thing for a minister to have such a title.  It's another thing entirely for the government to take that title seriously.

It might have been that the minister was absent when the Morrison government was busy selecting the members of its National COVID-19 Coordination Commission.

The commission was announced by the Prime Minister in March and it has six commissioners.  Its task is to "ensure the government receives the most comprehensive advice to meet the challenges ahead to cushion the economic impact of the coronarvirus and help build a bridge to recovery".

The commissioners, by virtue of their role, are now some of the most powerful people in the country.  They're advising the government on nothing less than the future of the Australian economy.  And when you design an economy, you design a society.

The six commissioners are Nev Power, who was chief executive of Fortescue Metals Group;  David Thodey, who was chief executive of Telstra;  Greg Combet, who was secretary of the ACTU and a minister in the Rudd and Gillard Labor governments;  Jane Halton, a career public servant;  Paul Little, who was managing director of Toll Holdings;  and Catherine Tanna, who is managing director of an energy company.

That's four commissioners from big business, one from the public service, and one from both the trade union movement and the Labor Party.

Missing from the commission is the voice of the sector that accounts for one-third of the economy, that provides more than 40 per cent of the jobs in the private sector, and that is the foundation of a free enterprise economy.  That voice, of course, is that of small business.

It is small business and the families of the owners of small businesses ― not big business and not the public service ― that are bearing the brunt of the government-imposed shutdown of the economy.  Seventy per cent of small businesses are family-owned.

My analysis of Australian Bureau of Statistics data shows that over the past three months jobs in the private sector have been lost at 4½ times the rate of job losses in the public sector.  Most of those lost jobs will have been from small business.

In fact the government is doing everything it can to ensure public servants are untouched by what's happening in the rest of the economy.

Although nearly 75 per cent of Australians support pay cuts for politicians and public servants earning more than $150,000, the Prime Minister has categorically ruled out any such reduction.  The biggest sacrifice Scott Morrison has offered is to delay pay rises for some public servants.

It's incredible that a perspective from the sector that employs 4.5 million Australians (or at least did until March) is not represented on the commission.

If and when the unemployment rate reaches 10 per cent or more, the vast majority of those who will have lost their jobs will be small business employees.  By the end of March, approximately 8 per cent of small businesses had already stopped trading because of COVID-19 restrictions, while 61 per cent of small businesses have applied, or will apply, for wage subsidies from the government.

The Australian economy won't recuperate and employment will not grow in any meaningful way until small business recovers from the economic shutdown.  The future of small business should be front and centre of the government's attention, not an afterthought ― if that.

It's frightening to contemplate, but maybe what happened is that those who picked the commissioners thought if you're deciding how to save the Australian economy, the only people you need an opinion from are those who inhabit the cosy club of the Qantas Chairman's Lounge:  big business bosses, public servants, and former union officials and Labor politicians.

It is revealing these are the sort of people the Morrison government picked to advise it.

Presumably, no one in the Coalition thought to ask the cafe owner in Parramatta who has just laid off all their staff, shut their business and lost their livelihood, whether they would like to be on the National COVID-19 Coordination Commission.

Coronavirus Pain Must Be Shared Around

The economic and social burden of the government-imposed sanctions to manage the health crisis must be shared equally with the public sector, which so far has remained shielded from the fallout while thousands of small businesses, sole traders and tradies go to the wall.

Seven modest measures to cut inefficient and wasteful government spending worth $30bn could be redirected to help fund the commonwealth government economic recovery packages, which assuming an annual salary of $80,000 could save 375,000 jobs.

Inefficient and wasteful spending is any dollar the commonwealth government is spending that does not meet the objectives set out by Scott Morrison of keeping Australians in a job and businesses operating.

Public servants on average have higher wages and higher superannuation contributions than private sector workers in Australia.  This is unacceptable in good times but unconscionable in the middle of economic and social Armageddon.

According to the Australian Bureau of Statistics, average weekly private sector earnings are 20 per cent lower than in the public sector, implying a $4.4bn annual commonwealth public service wage premium (20 per cent of the total commonwealth public sector wage bill of $22.12bn).

Commonwealth public servants also receive at least 15.4 per cent superannuation, compared with 9.5 per cent for private sector workers, implying a $1.3bn annual commonwealth public service superannuation premium.

The combined premium is $5.7bn, which (at an annual salary of $80,000) would be equivalent to 71,250 jobs.

Scandalously, according to the Australian Public Service Commissioner's 2018 Remuneration Report, one executive level 2 employee — which is the equivalent to a middle manager who might manage five staff — received $934,612 in 2018.  This included an eye-watering "retention bonus" of $91,196, which is higher than Australia's median salary.

No one in the public service should be receiving a productivity or retention bonus until the crisis is over and the unemployment rate drops below 5 per cent.

According to the APSC's report, the average "benefit" component — sign-on, productivity, retention and performance bonuses — of public sector salaries is 15 per cent.  Removing this and keeping the remaining 85 per cent base salary would net $3.3bn, or 41,250 jobs.

The Clean Energy Finance Corporation oversees $10bn of investment in clean power that has done little other than give Australia the fourth highest electricity prices in the world.  This is the equivalent 125,000 jobs.

The government provided a one-off grant of $444m to the Great Barrier Reef Authority in 2018 when the authority had only six full-time members.  This grant should be recalled, to the value of 5500 jobs.

The ABC's property portfolios in Brisbane, Sydney, and Melbourne are worth about $522m.  Having the public broadcaster lease premises while selling these would help save more than 6000 jobs.

Selling the National Broadband Network could retrieve just less than $10bn, according to the Parliamentary Budget Office, the equivalent to a further 125,000 jobs.

These are more than just numbers.  These are lives and livelihoods.

Every effort must be made to keep Australians in their jobs.  A job and a life are more valuable than a windmill or a solar panel, or the ability for a retired public service employee to play golf three times a week instead of twice.

The longer someone is unemployed, the harder it is to get back into work.

Maintaining the relationship between workers and their employers will play the most important role in the nation's recovery.

Yes, many will rely on unemployment benefits.  But more than a few of those who now enter the queues outside Centrelink will never work again.  The bureaucrats and experts who are re-engineering our society and economy but who themselves might never stand in an unemployment line seem less than fully aware of this stark fact.

The financial costs of unemployment are obvious.  But the social, cultural and psychological costs are substantial and, in many cases, permanent.

A job is more than a pay cheque;  it is source of meaning, dignity and self-sufficiency.  People who do not work are often unable to afford their own home, involve themselves in their communities or build a family.  The impacts of joblessness can be felt for generations, as the children of the unemployed fall behind at school and must endure the domestic pressures associated with that loss of income.  Some might even come to the conclusion that they have little to live for and nothing to offer the world.

Equality of sacrifice is required to get Australia through this unprecedented challenge.  We must all dig in.

The Moral Case For An IR Overhaul

In a week's time the federal Coalition will have been in government for six years after having won three elections in a row.

For all the worthwhile things it has done over those years — and has tried to do but failed — industrial relations is one of the big policy areas the Coalition has been afraid to touch.  Australia's industrial relations system in 2019 is, to all intents and purposes, identical to the one created by Labor with its introduction of the Fair Work Act 10 years ago.

The present-day discussion about productivity and declining business investment takes place with hardly any reference to the fact that in terms of matters such as the rate of the minimum wage, unfair dismissal laws and statutory regulation of terms and conditions, Australia now has one of the most restrictive labour law regimes in the developed world.  According to the World Economic Forum's 2018 Global Competitiveness Report we have the 110th least flexible workplace relations system in the world.

What Treasurer Josh Frydenberg said on Monday to the Business Council of Australia is therefore welcome.  While he certainly didn't promise an industrial relations overhaul, he said the government would consider changes that were "evidence-based, pragmatic, protect workers entitlements and produce clear gains to the economy and working Australians".  That's a good start — but it's only a start.  Frydenberg and the government should add two things to that formulation.

The first is that industrial relations reforms should aim to benefit both working Australians and Australians out of work.  The pity is that trade unions represent only the employed.

The second is that work is more than just a financial exercise.  Work and the dignity of work have a deeply moral purpose.  That's not captured by the statistics.  And while on the subject of morality, it remains deeply immoral that successive governments are prepared to let people live on the Newstart allowance, which provides income support at the equivalent rate of $7 an hour, but ensure it is illegal for a person to offer to work for less than the minimum wage of $19 an hour.

Before any government legislation to reform industrial relations must come the moral argument and the discussion about the need to change.

A good place to begin is by overturning the notion that there's such a thing as "dead-end jobs" and that low-paid work doesn't ultimately lead to something better.

Each year the federal government provides a submission to the Fair Work Commission's annual wage review, which informs the Commission's decisions about awards wages and the national minimum wage.

The most important finding in the government's submission this year related to the crucial role that access to low-paid work plays in facilitating upward economic mobility.  The submission notes that 36 per cent of those who start in the workforce do so in low-paid work.  (Low-paid work is defined as employment that pays two-thirds or less of the median wage.)

A significant statistic is that those in low-paid jobs don't do that job for long.  Half the individuals in a low-paid job are within a year working in a higher-paid job — which on average pays 58 per cent better than the job they had previously.  After five years that figure is 75 per cent.

The problem is that the longer someone is out of work, the harder it becomes for them to find work.  Although upward mobility is strong among those in low-paid work, those outside the workforce find it increasingly difficult to obtain employment the longer they are unemployed.  About one-fourth of those who are unemployed have been so for more than a year and are considered "long-term unemployed".  Time out of work means loss of income, a relative decline of skills, and loss of important social connections.

Part of the reason why the cause of industrial relations reform has made so little headway is that change has only ever been couched in terms of economic productivity.  The larger question as to why we should care whether someone is in work or not is seldom discussed.  Likewise, the phrase "the best form of welfare is a job" is hardly ever heard in this country.

Bureaucrats Immersed In Canberra Bubble Out Of Touch With Nation

Last month's federal election result throws up a worrying anomaly.  The ACT electorates diverge markedly from the nation.  In the ACT, the electors embrace the ALP big time.  In the Canberra-based Australian Public Service, one group is under-represented:  people who vote for the Coalition government.

Federal bureaucrats apply an intense focus to diversity and inclusion.  It is the subject of endless meetings, conferences, workshops, strategies and taskforces.  Executives and senior staff spend hours poring over their plans to achieve diversity targets.  They do well, with outcomes for women at 59 per cent of the workforce.

The results are not so impressive for the disability, ethnic and the LGBTI and other letter groups.

The theory is that the makeup of the APS should mirror the Australian community.  The gurus say this will aid policy development that draws on the ideas of the diverse Australian community.  And, after all, the community pays the bureaucrats' salaries.

Nationwide the Coalition attracted 41.5 per cent of first-preference votes on May 18;  the ALP 33.8 per cent.  In the ACT, the voting pattern is flipped:  Coalition 31.2 per cent and ALP 41.6 per cent.

Returns for some electorates are even more divergent.  In the seat of Canberra the two-party preferred outcomes were 67.4 per cent for the ALP and 32.6 per cent for the Coalition.  In the ACT seat of Fenner the result was 61 per cent for the ALP and 39 per cent for the Coalition.  The national two-party-preferred result was Coalition 51 per cent and ALP 49 per cent.

The APS prides itself as a professional outfit that has served the nation well.  Its record in this regard is solid.  Its emphasis on professionalism means officers subjugate their political opinions when discharging their duties.

However, more subtle influ­ences may need to be addressed.  Care has to be taken to ensure the APS does not become disconnected from the broader national community.  An APS officer in Canberra easily can become captured by a limited insider's perspective.

During my time in the APS I observed a tendency to superficially tolerate the trendy accepted wisdom.  For example, right-wing politicians and institutions were dismissed with a "tut-tut" as out of step with community values.  Many espoused climate change as an impending threat requiring dramatic shifts in economic and industry policy.  An intellectual arrogance permeated some groups who showed disdain for ordinary folk as incapable of grasping the true intent and effects of policy.  No one could rest until every aggrieved minority group achieved a suitable voice and representation.

I found a culture among regulators, in Canberra, that showed intolerance of those who complained or proposed more effective ways to achieve fairness.  This often was amplified by a disturbing ignorance about the impact of regulations on an individual, company or industry.

Scott Morrison bemoans "the Canberra bubble", so it makes sense for his re-elected government to combat the tendency for groupthink.  First, MPs develop good local networks and listen attentively to constituents.  We need a mechanism to ensure worthwhile views of constituents are thought about.  Promising ideas should be shared with the APS.

Second, portfolios and agencies develop consultative arrangements.  These should cover a range of interested parties, not just the familiar lobbyists, industry associations, non-government organisations and other Canberra players.  Special attention should be paid to identifying and listening to innovators in their fields.

Third, most departments with policy responsibility should consider relocating some staff to other cities and localities.  One benefit of such a shift is the engagement of more staff from outside the APS.  Many Canberra bureaucrats have difficulty even contemplating a shift from Barton to Tuggeranong, let alone moving to an interstate city.  A move of one agency's operations to a regional centre last term was equated with having to live in Siberia.

Fourth, senior Canberra staff should be encouraged to travel to meetings and conferences outside the ACT.  The more intrepid could even discover intelligent people in regional and rural Australia.

Fifth, the digital transformation of government should be used to enrich the input of citizens and businesses into policy formulation and review.

These ideas may seem basic.  But too many in the APS think the internet and the Canberra scene provide sufficient information on Australians' views of policy.

I also worry about the capacity of the APS to continue to attract talent.  Melbourne and Sydney are predicted to grow to cities approaching eight million in the next 30 years.  Cities of that size will offer immense career opportuni­ties for young people with talent.

Life in trendy voting Canberra may not seem all that attractive.

The Higher Pay Paradox

In Australia, nothing is certain except death, taxes and increases to the minimum wage.  And while understandably welcome news for workers, each wage hike tightens the noose around the necks of small business and millions of Australian job-seekers.

Minimum wage cases have become a Groundhog Day-like ritual.  Every year, the Australian Council of Trade Unions demands an unreasonably high increase, employer groups like the Australian Chamber of Commerce and Industry lob in a low-ball offer, and the Fair Work Commission orders an increase somewhere around the middle.

So it was this year, where the ACTU asked for a six per cent increase, ACCI countered with 1.8 per cent, and the FWC settled on three per cent rise, taking the minimum wage to $740.80 per week.

This represents an increase on what is already the second-highest hourly minimum wage in the developed world, second only to France.  Bear in mind also that for most workers, the statutory minimum is much higher, because of Australia's unique system of 122 industrial awards covering various occupations.  These awards cover around 2.3 million Australian workers, 92 per cent of whom receive pay in excess of the statutory minimum.

Now, the Sally McManus's of the world will tell you that this is a good thing and, if anything, Australia's wages aren't high enough.

But the reality is that Australia's industrial relations system is, for one thing, a massive handbrake on the economy.  In fact, "restrictive labour regulations" has ranked as the number one most problematic factor in doing business in Australia almost every year over the past decade or so, according to the World Economic Forum.

Small businesses are hit particularly hard.  Because they can't afford the lawyers and consultants needed to do "sweetheart deals" with unions, they don't have the ability to "bargain out" of various wage premiums.  That's why, for example, a big chain like KFC pays a relatively low rate to its staff on Sundays, while the charcoal chicken place down the road is forced to pay the full penalty rate.

Bigger businesses also have greater ability to automate.  Coles and Woolworths, for example, can simply sack workers and replace them with checkout machines.  The local grocery store does not.

And that brings us to another group hit hard by Australia's annual wage spectacle — the low-paid and unskilled, the very people who our industrial relations system is designed to protect.

The experience in the US — where various states and cities have been experimenting with steeper minimum wages for years — suggests that the costs actually outweigh the benefits.  One study estimates that thanks to wage hikes in Seattle, the average low-wage worker lost US$125 a month as businesses have cut their payrolls, put off new hiring, reduced hours and let workers go.

Elsewhere in California, there have been reports that municipalities which have recently raised their minimum wage have seen almost one in 10 restaurants shut their doors.  Obviously, that is bad news for both business owners and workers.

But the biggest losers of our industrial relations system are Australia's most disadvantaged:  The over 700,000 unemployed looking for work, the around 1.1 million underemployed looking for more work, and the countless others who do not even show up on unemployment statistics because they have simply given up looking.

For these vulnerable Australians, each minimum wage hike is a slap in the face that puts gainful employment further out of reach.  It is a devastating barrier to work that entrenches poverty.

Think of it this way:  The Newstart Allowance — the income source of many jobless Australians — currently works out to around seven dollars an hour, averaged across the Australian working week.  As of 1 July, the hourly minimum wage will be $19.40.

This means that an unemployed person cannot get a job unless they find an employer able to afford the statutory minimum.  They cannot, as a matter of law, accept a job that pays, say, $13 or $14 or $15 an hour — lower than the minimum wage but higher than the dole.

This costs unemployed Australians more than just much-needed income.  For many, it means missing out on that "foot in the door" job-wise that is often so critical.  It means going without the non-economic benefits of work that so many of us take for granted:  Creating value, building skills, enjoying earned success.

The Fair Work Commission should keep that in mind the next time it contemplates yet another wage hike, depriving millions of Australians of the dignity of work.

Living Wage, Universal Basic Income, And The Dignity Of Work

Address to the 2019 Friedman Conference

Sydney, Australia, 25 May 2019

Although the push to introduce a living wage in Australia may have experienced a recent setback, the concept has become a standard part of policy prescriptions on the left, along with the related idea of a universal basic income.  This is illustrated in the platforms of the Democratic presidential candidates in the U.S.

In Australia we've had calls from the ACTU to institute a living wage so that "no full-time Australian worker lives below the poverty line".  And the Shorten led Labor party promised to turn the minimum wage into a living wage ahead of the recent election.

The idea of a "living wage" is to increase the minimum wage to a level capable of providing the wage earner with some predetermined acceptable standard of living.  Every job in the economy would be required to meet this standard.

Proposals for a universal basic income have taken various forms, but the general idea is that everyone would be provided with an income stream direct from the government to provide for basic needs.

I want to begin by talking about how these two policies are often built on the same philosophical foundations, and why it is important to understand and oppose the ideals behind the policies, and not just argue about their economic impracticality.

I'm reminded of an excerpt from Ayn Rand's "We the Living", where a Communist party member says to the protagonist Kira, "I know what you're going to say.  You're going to say, as so many of our enemies do, that you admire our ideals, but loathe our methods."  To which Kira responds, "I loathe your ideals."

It is not just the policy methods that we oppose, we should also recognise and oppose the faulty utopian ideals being aimed at and argue for our own ideals in their place.

There are a number of related philosophical commitments that underpin the current support on the left of a mandated "living wage" and a Universal Basic Income.

The first commitment is to an expanding view of positive rights.  There are probably a number of different conceptions of rights in this room, but I think we can agree that there are real dangers in redefining human needs or goods as "human rights".  When housing, food, utilities, healthcare services, education are included as "human rights" the political and economic implications are radical.

The core problem with the conception of positive rights is that they necessitate violating actual rights and freedoms of property and association.  A positive right gives someone the right to be provided something by someone else.  If I have an absolute right to household utilities I must be entitled to force someone to install my Internet and unblock my plumbing.

This conception of rights underpins the argument for a living wage.  "A worker is entitled to be given a wage capable of providing for a certain standard of living," we are told.  In other words, businesses should be forced to pay a certain wage, and the worker has a right to this wage.

Many arguments for a universal basic income are built on the same assumptions.  While there is a pragmatic libertarian case for a UBI (not one I agree with), many proponents appeal to a universal right for basic goods and services.  And of course a universal basic income must be enacted.  If you have a right to a certain standard of living, surely this right doesn't only apply if you have a job.  A universal basic income ensures that everybody can obtain what they "deserve" by virtue of being human, even including those who are unwilling to work.

The use of the concept of rights in this way allows people to take the moral high ground when arguing for these policies.  Forcing business to pay wages and in practice preventing them from employing labour, and hiking taxes to pay for an explosion in the welfare state are excused for the redefined greater good.

As Murray Rothbard notes, "if one side is granted ethics and the 'ideal' from the start, then that side will be able to effect gradual but sure changes in its own direction;  and as these changes accumulate, the stigma of 'impracticality' becomes less and less directly relevant."

The second principle is the related idea of inequality as a moral evil.  As free markets have proven to be an unprecedented engine of poverty relief and increased human prosperity throughout the world over the last couple of hundred years, the attacks on markets have shifted to inequality.

We have even seen a widely accepted redefining of "poverty" to be a technical measure of inequality within a country.  The official "poverty line" has been brought up in Australia in the context of arguing for a living wage and increasing welfare.

We hear lines such as:  "No one should be paid a wage that keeps them in poverty" or "welfare needs to be increased so that recipients are not below the poverty line".  This may sound plausible to many until you look at how "poverty" is defined and see the level of deception.  Earning below half or sometimes 60% the median income is defined as poverty.

Without bothering with an actual argument, the language implies that it is somehow unethical for anyone to receive a wage or welfare payment below half the median income of the country he or she lives in regardless of job status or hours worked.

This doesn't pass a basic test of common sense, it is based on a radical ideal of absolute undifferentiated equality, an ideal that leads logically, not to minor industrial and welfare reforms, but to full-fledged socialism.

Inequality is not an evil that must be eradicated, it is a simple reality of the natural order.  Moreover, it is essential to any political economic system based on freedom.  While there can be unjust inequality caused by state interventions, inequality in general is not a bug of capitalism, but a feature.  The reason a market system works, is because of the decentralised role of the entrepreneur.  The market system possesses the right incentives, and diverts resources to those who have proven proficient at creating value.  The profit and loss system that generates inequality is the reason we live in unprecedented prosperity.

Third, a closely related idea to the evils of inequality, that too often goes unchallenged, is the view that there is an unjust distribution of income.  On the topic of social justice, F.A. Hayek stated the following in a lecture given in Sydney in 1976

There can be no distributive justice where no one distributes.  Justice has meaning only as a rule of human conduct, and no conceivable rules for the conduct of individual persons supplying each other with goods and services in a market order would produce a distribution which could be meaningfully described as just or unjust.  Individuals might conduct themselves as justly as possible, but as the results for separate persons would be neither intended nor foreseeable by others, the resulting state of affairs could neither be called just nor unjust.

When a business hirers an individual, the two come together and agree on an employment arrangement.  Both parties benefit from the exchange.  The business acts ethically in the agreement without calculating the subjective needs of the employee or where the agreed wages place the employee in the statistical distribution of income in the area.

Now, it is also important to consider these policies economically and practically.

To quote Rothbard again, "If an ethical ideal is inherently 'impractical', that is, if it cannot work in practice, then it is a poor ideal and should be discarded."

A living wage cannot possibly work for all the reasons that all price controls don't work.  Creating a price floor above the market price for a good will result in excess supply.  In the labour market, we call this unemployment.  If businesses are forced to pay a worker more than the value he contributes, businesses will be forced to lay the worker off or reduce hours.  No amount of econometric fiddling with marginal changes in noisy natural experiments can attack this truth.

There is also the serious problem of determining the amount of a living wage.  Who decides what this basic standard of living is?  And how do you standardise this with a single wage rate across the country?  The needs of a single income earner with a dependent spouse and children with a mortgage in an expensive area of the country, are not comparable to a dual income household with no children living in an affordable area.

Wages reflect economic realities.  You cannot legislate controls for inequality in income distribution.  The only way to increase wages is to increase productivity.  This can is achieved through investment and capital accumulation, not by declarations from bureaucrats in Canberra.

Now let's look at the case for a UBI.  Of course not all arguments for a UBI are based on positive rights and inequality, a number of libertarians have made a pragmatic case for the UBI as a means of replacing exiting welfare and reducing bureaucratic waste.

But when you look at the numbers they simply don't add up.  If you were to give 20.5 million adult Australians no strings attached payments of $40,000 a year in lieu of the current welfare system it would cost $820 billion.  This is compared to total current federal government spending of $500 billion.

If you halved the amount to $20,000 a year, the $410 billion spend would still be $230 billion more than the current welfare spend of $180 billion.

Even if you lowered the UBI to $12,000 a year, the $250 billion spend would still be more than our current spending on welfare, education, and health combined.  And it would be a decrease on the current Newstart allowance.

The only way you can have a universal basic income is if you committed to a massive expansion of government and tax hikes.  If implemented, there will be no end to the calls to equalisation through welfare increases.

There are also further negative social impacts.  The expansion of welfare with no strings attached plays into the idea that people have a right to this money, and that it is in no way connected to charity.  It normalises welfare dependence and diminishes the incentive for individuals to be involved in work that creates value for others in the market.

I started by going through some of the principles that underlie the arguments for these policies relating to work.  It is important that we present our own principles in opposition.

We need to argue for better ideals to guide policy.

Personal responsibility needs to be defended as a value of a free society.  Yes, this means that there will a disparity of outcomes in society.  But this is a by-product of being free to pursue our own ends, and taking responsibility for our own lives.

Voluntary charitable giving through civil society needs to be defended as virtuous.  Government crowds out civil society, and reduces private charity.  We need to argue for the importance of society outside government in families, churches, clubs and societies, and make the moral case for helping the poor and unfortunate through private enterprise.

And the best way to help these people is by giving them a job.  A job cannot be reduced to its monetary benefits.  When you work you are contributing to society by creating value for others.  You are earning your money honestly, and fulfilling a central part of what it is to be human.  Working reinforces personal responsibility that makes up the fabric of our society and allows people to build better lives.  This simply cannot be replaced by a direct cash payment from the government.

These are principles that should underpin our approach to labour market policies, so that we can ensure that everyone can experience the dignity of work.

We Must Keep Law-Breaking CFMEU On A Short Leash

The survival of the Australian Building and Construction Commission has become a customary element of federal election campaigns.  The ABCC was established in 2005, abolished in 2012, became the trigger for the 2016 double-dissolution election and was re-established that year.  The ALP plans to abolish it if it wins the May 18 election.

Perhaps many are ambivalent about the role of the ABCC.  The proposition that the building and construction industry is riddled with lawlessness and beyond control is tolerated.  Perhaps too few appreciate how damaging the abolition of the ABCC would be.

The Coalition believes the industry's defiance of the law is exceptional and a tough regulator is required.  The ALP believes the building unions' conduct is unexceptional and general workplace relations laws will secure lawful conduct.

In any discussion of the building and construction industry several salient facts apply.  Industry participants, particularly the unions, are singular in their disregard for lawful conduct.  Commercial interests owning and financing projects take a short-term view and are inclined to ignore the industrial turmoil.  Subcontractors have limited cap­acity to resist coercion and extortion.  The Construction Forestry Maritime Mining and Energy Union is dominant and seeks to control the industry's labour supply.  Exposure to penalties and costs to achieve one's aims is an accepted business strategy.  Court decisions are increasingly critical of the union's repeat offending.  The penalties imposed are travelling closer to legislated maximums.

In the absence of the ABCC the worst of unlawful standover tactics would characterise the industry.  An examination of cases brought before the courts since 2005 is illuminating.  The ABCC has been highly successful in holding unions and others to account.  It has won most of its cases.  Its 2017-18 annual report records that the courts awarded penalties of almost $6 million that year.  The majority, $5.6m, was levied against the CFMEU.  Since 2005 penalties against the CFMEU top $17m.

The contraventions penalised in the early ABCC cases continue to feature today.  Also, several officials penalised in earlier cases continue to be respondents to contemporary cases.  The early cases involved coercion to employ a person, coercion to have a union agreement, coercion not to engage a contractor, right-of-entry breaches, and unlawful industrial action.  The same contraventions are found in recent cases.  The cases today involve the levying of substantial penalties:  $74,000 for right-of-entry breaches on a Flinders Medical project;  $668,000 for a campaign of unlawful industrial action on several Queensland projects.  The Barangaroo project in Sydney saw record penalties of $1.706m for coercion, unlawful industrial action and failing to comply with an agreement.

The ABCC has had many legal wins.  In addition, its site presence and educa­tion of industry participants empower many contractors to repudi­ate union threats and intimidation.  Even so, unlawful conduct persists.  The ABCC has more than 30 cases before the courts.  The battle to move to a law-abiding industry continues and the CFMEU's aggression has hardly abated.

The ABCC issue is more than a matter played out by political heavies.  It affects an industry crucial to our economy.  Pervasive indust­rial lawlessness has substantial productivity and cost impacts.

The CFMEU conduct can be reined in only by a powerful and determined regulator.  The union does not listen to reasonable or fair-minded pleadings.  The abolition of the ABCC combined with a proposed 66 per cent reduction in maximum penalties will have an obvious result.  It will be a green light for more coercion and intimidation of honest subcontractors and their hardworking employees.  Unlawful strikes and bans will intensify.  The costs of public and private projects will rise.  No winners, except for those engaging in thuggish behaviour, will emerge.  This is an incomprehensible outcome that has serious and destructive elements and should not be tolerated.

The CFMEU presents a lurking danger for the ALP.  It is the major contributor to the ALP and supports many candidates.  It seeks and uses power ruthlessly.  It must be a genuine concern as to whether the embrace of the CFMEU will ultimately compromise or tarnish the functioning of the ALP.  Time will tell.

In recent years CFMEU officials and branches have pledged support to the besieged government of Venezuela and its autocratic President.  The Australian government was urged by a senior CFMEU official to recognise the last Venezuelan election and congratulate President Nicolas Maduro.  We should be concerned that a building and construction industry let off the leash may embark on a Venezuelan journey of corruption, misery and a callous disregard for the rights of honest individuals.  A strong regulator is needed now more than ever.