Abbott's 12-point plan to transform Australia: Part 2

The Abbott government will leave no stone unturned in its overhaul of the Australian economy. Changes to IR and productivity are even more important than those highlighted yesterday, but just as scarcely understood.

The Coalition’s plan to transform Australia is far more ambitious than that being advocated by large corporations. Few companies understand the sheer breadth of the program and the transformation in the Australian economic outlook that is in prospect.

Around Australia big companies are screaming for Tony Abbott to scrap the current industrial relations act and improve productivity. That is going to happen, but not in the way they expect and it will require a very different approach to management.

And so the first six changes in the Abbott 12 point plan to transform the nation were the precursor to the second six. Readers who missed the first part of this two part series (Abbott's 12-point plan to transform Australia, September 9) should read yesterday’s commentary first. If anything, the second six are more important. And, in fact, I have added a supplementary change where Clive Palmer may be important.

Change 7

(No legislation required): This will be the biggest change of all and yet on the surface it seems just like public relations puff. Many parts of non-mining Australia are set to take off. And mining Australia will perform much better than the doomsayers are predicting.

In both areas a major force holding the country back has been the chaos in Canberra. When the opinion polls and the bookmakers declared that the Coalition was a certainty to win you could feel a surge of confidence going through the community.

And so our second or third largest eastern states display home builder suddenly saw inquiries surge to close to record levels. In the next couple of months that builder expects to sign up an enormous number of new houses. I met him in the week before the election and he could not contain his excitement.

A commercial architect tells me that when the opinion polls confirmed a Coalition win, people came through the door. A large number of companies are cashed up and have held back capital works because of Canberra.

There are still several multi-billion LNG projects on the drawing board. Those involved have been talking with the Coalition and they will be among the first beneficiaries of change number two (deregulation).

The approval process will be sped up greatly. And change number eight will also help LNG projects.

In my view we are going to see a complete change in the outlook for builders and their suppliers. And of course that is exactly what the Coalition plans. In time that will spread to retail.

If the ‘confidence’ injection works, then there still may be one more interest rate cut because it will take time for what is happening to be reflected in official figures. But once momentum builds the interest rate moves will be higher.

Change 8

(A double dissolution issue): If the Abbott plan is to succeed the cost of building infrastructure and commercial projects must be cut. Three states (Victoria, Queensland and New South Wales) have already moved on the issue.

Abolishing the cartel-style agreements between large builders like Lend Lease and Leighton and the big building unions and reversing the increased union access to work places passed in the dying days if the 43rd Parliament is vital for the nation. Under the Coalition plan the cartel-style agreements will be stopped by the combination of a building commission with teeth and a strict code of conduct. The cartel-style agreements currently give unions a large degree of control over building sites and who can be subcontractors. As a result, because competition is restricted, productivity is low and profits are good. The cost of commercial building and infrastructure rises by between 15 and 30 per cent. Tony Abbott will be able to build so many more roads and hospitals once the cartel-style agreements are abolished. I must emphasise that Leighton, Lend Lease and other large builders have done nothing wrong and they simply maximised their profits under the rules of the day. But they will require totally different management styles and union agreements if they are to operate in the government sector and they may even be removed from big slabs of new private contracts. This legislation will cause vigorous industrial action by the building unions. The biggest problem for the government is that among the larger builders, Grocon is one of the few companies that operate outside these agreements. Tenders may need to be made smaller so smaller groups can tender. Overseas players are also looking at coming to Australia to fill the gaps created if Lend Lease, Leighton and other big builders don’t change their management style.

But, most importantly it means a whole host of new sub-contractors can enter the commercial space and there will be more productivity. This is another illustration where the big end of town will be on the back foot. And so will the building unions. Watch this space.

Change 9

The base legislation for industrial relations will not be changed but what will take place is a return to the Howard rules on independent contracting.

We have excellent independent contracting legislation. Unfortunately the tax department and business administrators have not been obeying the law and they have been very tough on independent contractors. That can be reversed with public service pruning and some clear instructions from the relevant ministers that the law must be obeyed. We are going to see a huge boom in independent contracting that will overcome many of the industrial relations problems that have been thrown at the business community by the previous government.

I must emphasise that the Howard independent contracting rules do not allow open slather replacement of employment with independent contracting but they do allow an independent contractor to work for just one company. On the independent contracting association website there are the detailed rules covering behaviour, financial and relationship tests. Genuine independent contractors and people who organise their business to meet these tests can operate under this system. The productivity improvements can be huge. This is vital for the nation.

Change 10

A new approach to the public service will see a rationalisation with the states, which will enable the Commonwealth to slash expenditure on health, education and the environment without affecting services. Currently, there is massive duplication. This will transform the federal budget.

Change 11

There is no better illustration of the help the government plans to give to small enterprises than its parent leave scheme. Small businesses simply can’t afford to pay the allowances that will be a part of the government’s program. On the other hand, many leading companies already pay similar amounts. The parental leave scheme is being funded by a levy on the profits of large corporations and affectively represents an income transfer from large companies to the staff of smaller enterprises to enable them to offer similar rewards.

Change 12

The ALP’s national broadband scheme would have taken a long time and would have sapped the strength of the nation. The Coalition’s plan is much simpler and will be introduced more quickly. The problem is not receiving data but sending it out. To compete, many small enterprises must have the ability to send out their material and require bandwidth. Those in that situation will need to fund broadband from node to their enterprises. Users will pay if they need the full broadband service.

Supplementary change

The government plans to look again at the joint strike fighter. The shadow Defence Minister David Johnston maybe a little bit close to the military establishment and I fear he will not do a proper review of the JSF. But if he does it he will quickly discover that it is simply no match for the Russian Indian aircraft, which has been purchased by Indonesia, who are currently destined to control our northern air space.

Many of those in the backroom of the Palmer United Party have done work on this issue and they can really do the nation a service if they make sure the government does a proper review and not just listen to defence chiefs trying to cover their mistakes. During the period of this government there will be the opportunity to encourage the US to bring together the JSF and the F22 projects and actually produce an aircraft to match that ordered by Indonesia. If it is not done during the next three years then we will have lost control of our air space for a generation. It is the greatest danger the nation faces.

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