How Newman's IR revolution will flourish

The way to get the most of the Queensland industrial relations revolution is simple: small enterprises must pay a fair base rate and they must remain unincorporated.

The looming Queensland industrial relations revolution must be about lifting rewards for those who work in unincorporated small enterprises either as employees or owners.

It’s a productivity revolution but, unlike too many other productivity advances, the rewards must be shared if it is to be effective.

Unfortunately, if a small business is an incorporated company, the owners and employees will be excluded from the benefits. The Commonwealth and not the states has the power over incorporated bodies.

These are two points that require commentary after the debate over the Queensland proposal started in Business Spectator conversation as part of my commentary (High stakes in Queensland's emergency rescue, December 18).

One of our readers who commented on my piece, Daniel Gardiner wrote: "Paying 80 per cent of the workforce less is not a way to a prosperous nation/economy/society”. Others followed him.

And I agree with Daniel.

The Queensland plan is to set up a separate simple industrial relations system for unincorporated small enterprises.

The present system is complex and works best when there are vast numbers working in human resources departments. Small unincorporated enterprises don’t have human resources staff and their productivity really suffers. Make it simple and there will be a big productivity increase for 55 per cent of the Queensland workforce, thus transforming the state. With Victoria to follow, Australia will receive a huge boost, which may enable New South Wales Premier Barry O’Farrell to get the numbers in the upper house and gain the benefits for his state.

A vital part of that simple system will be a minimum hourly payment. That payment must be seen to be at an attractive level so the rewards are spread. It’s true that those who mainly work shifts where there will be no penalty rates will need to negotiate. But the base rate must be attractive. I know small enterprise is struggling but in this revolution the owners cannot take all the productivity benefits. If the base rate is not attractive there will be a community revolt.

And enterprises will be more prosperous if hiring is simple, there are clear rules for dismissal or retrenchment and no "go away” money is required. Ken Phillips set out how it might work in his commentary yesterday (A Queensland escape for the IR weary, December 19).

Another reader, Peter Heffernan, writes: "Many (probably a majority) of the small businesses operate through a company. I don't accept your statistic of 55 per cent.

"Are you saying this small business operating through a family company will be excluded from access to the Queensland reforms?”

The answer unfortunately is ‘yes”. Small Queensland (and Victorian) enterprises will have to choose between being incorporated and be subject to Fair Work or be unincorporated and gain the benefits of the Queensland revolution.

As to the figures, we know that 72 per cent of the Australian work force is in small enterprise. There is debate about how many are unincorporated and there is room for argument as to whether 55 per cent are unincorporated, but that figure will not be far wrong.

If Campbell Newman is not nobbled by vested interests – and I don’t think he will be – then every small enterprise in Queensland will have a choice of whether to become unincorporated and enjoy the productivity benefits or stay incorporated.

You may see some enterprise sub-contract part of their enterprise to an unincorporated business.