A jobs jolt could clinch Abbott's campaign

In the weeks leading up to yesterday’s September 7 election call, the Coalition and the Labor policies have moved closer on issues like carbon, refugees, education and public service cuts.

Where they are totally different is in employment – and with unemployment forecast to rise to 6.25 per cent within the year, this should be the main issue of the election.

So today I want to explain why the Coalition’s policies are so radically different to the government but also show that it would not be that difficult for Kevin Rudd to match Tony Abbott if it were not for the ALP’s union supporter base. I had the advantage of a Coalition briefing on this subject last week. (Abbott’s red-letter day for enterprise, August 1).

Let’s start with the areas where the employment policies are the roughly same. The Coalition has vowed not to radically change the Labor industrial relations laws because it says that was the message of the 2007 election. Most large Australian companies are inefficient users of labour because they use outdated management practices. The IR laws  add to that inefficiency. Large companies employ around 15 per cent of the labour force and, given that their management practices and the IR laws are unlikely to change in the foreseeable future, large companies will continue to shed labour in Australia. 

There is another 15 per cent of the labour force that is employed in the public sector. Given all the pressures on government revenues, government employment is also likely to fall no matter who is in power.

So it’s the remaining 70 per cent of the workforce that’s where the action must be after September 7.

The Coalition plan is simple and involves embracing policies that it borrowed from Kevin Rudd’s 2007 election campaign and enforcing existing rules.

The aim is to stimulate employment in the 62 per cent of the workforce who work in four segments: people working for private enterprises that have fewer than 20 employees (28 per cent); companies employing between 20 and 50 people (17 per cent); self-employed employers (8.7 per cent) and independent contractors (8.5 per cent). There is a further chunk of the labour force hired by companies that employ between 50 and 100 people. These groups are on the border of large and small.

The Gillard-Rudd industrial relations laws and wide-ranging regulations appear to have been aimed at making it very hard for the enterprises that comprise 62 per cent of the work force to operate. And because we had a mining investment boom the effect of the blows directed at smaller enterprises did not show up in employment. But, as the Treasury forecasts now show, that is about to change.

The first step in making it easier for smaller enterprises to operate is to adopt a policy advocated in the 2007 election campaign of Kevin Rudd – extended fair contract consumer protection to smaller enterprises. Currently, large companies and big governments use their market power to force smaller enterprises to sign unfair contracts. Reversing that is a radical policy, which will be opposed by large companies and the public service because it will require them to re-write most of their contracts. But it will be a huge stimulation to enterprises embracing between 62 and 70 per cent of the workforce. And that’s where the employment must be generated. 

The second and third steps step require no legislation. Australia has excellent independent contracting rules via the 2006 legislation but the taxation department and other government regulators have been either instructed or have decided not to implement the rules. On the surface all the Coalition has to do is instruct the public service to obey the law but in practice that involves a huge public service cultural change, particularly in the tax office.

The third step is to start on the immense task of slashing red tape, regulation by regulation, so reducing the burden on the majority of the work force and encouraging them to grow. The combination of these three actions will see an enormous rise in independent contracting which, for most enterprises (but not all), is the only way people can be employed efficiently given the industrial relations morass.

The three actions will transform the productivity of the nation and because the only legislation required is borrowed from Kevin 007, the ALP could copy the Coalition. But it won’t because the Labor’s funding comes from unions who find dealing with small enterprises very difficult. They want employment to grow in large companies and the public service where unions have clout.