Charting the politics of fear

Irrational joy at the carbon tax repeal recalls two-and-a-half decades’ worth of fear and wrath over industrial relations shifts, which data shows have actually changed nothing.

Today Business Spectator can exclusively bring you two of the most boring charts you will ever see – the almost straight-line growth in hourly pay and total weekly earnings for Australian workers in the past two decades.

What these ... yawn ... charts show is the dramatic lack of impact on wages or weekly earnings of three major rounds of industrial relations reforms.

The first was the Reith reforms of 1996 which allowed individual statutory contracts to replace the enterprise bargaining agreements between workers and employers.

Try to see some kind of large deviation up or down in the charts below in 1996. There isn’t one.


Graph for Charting the politics of fear


Graph for Charting the politics of fear

The next major overhaul came in 2005, when over-zealous advisers in the Coalition managed to get John Howard to introduce WorkChoices legislation that was supposed to start the long-term replacement of EBA agreements with Australian Workplace Agreements and create a utopian deregulated workplace.

That was a blunder politically – it invoked the wrath of the unions and their highly successful ‘Your rights at work’ advertising campaign – but again in looking at hourly earnings or take-home pay, the reform changed nothing.

And the third big ‘ripping up’ of existing IR legislation was the creation of the Fair Work Act in 2008. Individual contracts would run their course, but after that everyone would be back on awards, or EBAs.

And again, wages grew at the same magnificently boring pace as before.

Against that boring line, a chart of rhetorical volatility would look like an angry child’s texta scribble along the arm of a sofa – jagged spikes in both political fear-mongering and public concern for their wages.

Thus when the Reith reforms had consigned Paul Keating’s ‘Working Nation’ policy to history, ACT Liberal Vicki Dunne thundered in parliament that “It put a whole lot of people on the scrap heap. It saw the light of day; it saw people implementing it; and we saw lives ruined because of it ...’working nation’ is a national tragedy.

Ooh, that’s harsh. Many of the welfare-to-work provisions of Working Nation were on the nose, but the decentralising thrust of enterprise bargaining was quite the opposite of a national tragedy – though it was a little hard to see at the time due to the fact that the lack of real independence at the RBA had allowed monetary policy to go horribly wrong, leading to the early 1990s recession.

But in political terms, everything Keating had done had to be decried as nation-wrecking.

The Reith reforms did not elicit a huge amount of bile in parliament, but both sides of politics managed to miss that fact that those fairly benign changes were striking about the right balance in the age-old struggle between workers and employers.

The Coalition misread the situation and having got to the base-camp of the IR Everest without so much as getting out of breath, they decided to strike out for the summit with no political oxygen. At the 2007 election they ignominiously slid back down the mountain on their collective bums.

And so Labor had a mandate to ‘rip up’ WorkChoices and put in its own Fair Work Act, sops to the union movement and all.

The political rhetoric-o-meter again went beserk – this was a return to the pre-Keating era, according to the Coalition.

On the left, there was indignation that the uninspiring pace of wage increases compared to profits in the Howard era was not magically corrected by the tilt back to socialism.

As ACTU president Ged Kearney complained in March 2013, “We have consistently been warned of the wages breakout that would emerge if unions were granted a role in negotiations, if WorkChoices was repealed, or if any attempts were made to improve workers’ entitlements. This wages breakout has become the Loch Ness Monster of Australian politics.”

IR has been one of the great sources of fear-mongering in Australian politics. And though recessions and financial shocks have come and gone, and lots of ‘ripping up’ has occurred, things have remained reassuringly boring for most workers in terms of remuneration.

We should keep this in mind as another great fear campaign reaches its climax – the final killing off of the carbon tax bogeyman.

At the time of writing, we appear to be days away from the Abbott government repealing the Clean Energy Futures legislative package, with the help of Clive Palmer’s senators (and some very large concessions to the PUP leader).

There will, as Callam Pickering observed, be plenty of “irrational joy” in parliament as the repeal passes the Senate. It’s quite an achievement to convince voters en masse to replace an effective, least-cost-per-tonne abatement policy with one that either won’t hit its target, or will cost taxpayers a lot more. Sigh.

But like the straight lines of wages and weekly earnings, there is going to be a whole lot of nothing happening in the economy when the repeal occurs.

Clive Palmer looks set to impose strict requirements for energy companies to cut prices by the equivalent amount of the carbon tax, and consumers will see small reductions in power bills. However, given that the carbon tax is not even close to being the main reason for power price hikes in recent years, the effect will not be noticed my most consumers.

And there is one other place where nothing will change. All the small businesses that voters interact with on a daily basis, from grocers to hardware shops, mechanics to the corner cafe, have all had to put up prices and ‘pass through’ the carbon tax to customers.

In most cases these price rises were negligible – Treasury measured a one-off inflation increase after the introduction of the carbon price of slightly less than 1 per cent across the economy.

But where price rises were higher because businesses were more energy intensive – a manufacturing plant or a service-wash laundry – those price increases will most likely stay. Power companies will be forced by the ACCC to drop prices a bit, but their customers won’t have to.

Like the IR scare campaigns before it, the carbon scare campaign has been counterproductive for good policy in this country.

And any effects of the repeal will, if charted across the economy, produce hardly a blip on the line representing the ever-rising cost of energy