ACTU president Ged Kearney tells Alan Kohler, Robert Gottliebsen and Stephen Bartholomeusz:
– Holden's proposed wage cuts puts an unfair onus on workers and misses the complexity of other factors including the dollar, while it’s important to consider a wide range of options for improving efficiency rather than taking a ‘slash and burn’ approach.
Alan Kohler: Well Ged, welcome to the Business Spectator. It’s great to have you.
Ged Kearney: Thank you. It’s a pleasure to be here.
AK: Now, firstly Kevin Rudd has announced that leadership is going to be down to, from his point of view, 50:50 – 50 per cent Caucus, 50 per cent the members. Now, I think that Tony Sheldon has said actually we want the unions to have a direct say as well – 30 per cent. Do you support that? Is that what you would like to see?
GK: I know it’s really hard for a lot of people to understand, but the Australian Council of Trade Unions actually doesn’t have a role in that debate. As president of the ACTU I don’t get any say really in party machinations or indeed who the leader is going to be. Up until now, the leader has been decided by Caucus. There’s been a suggestion for a reform and I think that’s a good thing. I think any democratic organisation should undergo reforms from time to time.
AK: But you are a spokesperson for the unions. I mean, is that…?
GK: I am, and that is exactly my point. I’m a spokesperson for the ACTU, so a lot of unions aren’t even affiliated to the party. My old union, the nurses' – 250,000 members, the second biggest union in the country – is not affiliated. The teachers aren’t affiliated. The police aren’t affiliated. So as president – and I’m president across all of that broad church – and it’s hard to understand, I know, but I don’t have a say in that. I think it’s a good thing that the affiliated unions have a say. They’re affiliated to the party. They should. Tony Sheldon should have an opinion. Paul Howes should have an opinion, I think. But I would much rather –
AK: But you must have an opinion. What’s your opinion?
GK: Well it’s not my place to weigh into that debate. I’m not part of the commentariat – I leave it up to you wonderful experts to do that. My opinion is based solely around the fact of, well, let’s stop talking about it – sort it out, certainly, but it’s my job to be out there talking about the things that my unions want to know about.
AK: Okay. Well, let me ask you something. What about the affiliation of the ALP with unions, and should that continue? Because Kevin Rudd clearly has in his mind, whether specifically in terms of the leadership or not, in general he wants to distance the ALP to some extent from the unions. What do you think of that?
GK: Well, I’m not sure that’s the case, but my view about that is – and I’ve been on the record as saying this – that the Labor Party grew out of the union movement. It was started as a voice for working people. Unions started the Labor Party as a political voice for their members and I’m always surprised when people are surprised that unions have a role in the Labor Party. I mean that’s how it began. That was its very genesis. And I for one will be very disappointed if, at some stage down the track, the unions lost that role because there would be, in my opinion, a great pity because workers who are represented by their unions would lose that voice in a political party, and I’ve always been on the record as saying that. I think unions have a very legitimate role in the Labor Party and I, for one, support their participation in it.
SB: Unions’ role in the economy has been diminishing. I think the participation is now down to 18 per cent generally and 13 per cent in the private sector. Should it continue to have the same sort of influence as it had over national affairs and national politics that it had in the past, given that so few Australians now are members of unions?
GK: Do you know what? I really get amused by this. On the one hand, people say we have too much power – we’re too big and nasty, we have too big a say. On the other hand, they say we’re irrelevant, we don’t represent anyone. Well, you can’t have it both ways. But density is around 20 per cent, as you say, across the board. It’s much stronger in the public sector. It is much lower in the private sector. But we are a very powerful organisation. We still have two million members. No other political organisation can say that. Two million paid up members.
We ran a brilliant campaign in 2007 which contributed to getting rid of WorkChoices, which was detrimental to our members. We have a lot of influence. Every time we negotiate an enterprise bargaining agreement for, say, about 14 per cent of workers in the private sector, it covers everybody – everybody. So what we do as a movement has a huge impact across our economy. We go in every year to bat for a pay rise in the minimum wage case. The ACTU does that. The unions do that. And that impacts some 1.4 million people, members or not. So we are very influential in the economy and our membership grows every year – absolutely it grows, by thousands and thousands. But it’s not having an impact on the density of the workforce, I guarantee it. That is a worldwide phenomenon, something I need to deal with and I should probably get my skates on.
SB: I suppose what I was trying to get to, is the influence you have disproportionate to your role in the modern Australian economy. And if the influence is to be proportionate, what can you do to make the union movement more relevant?
GK: I think we’re incredibly relevant. I disagree with the premise of your question. As I just explained, we have a huge impact on the economy by virtue of enterprise bargaining, our impact on the minimum wage, our impact on public policy. We fought very hard for paid parental leave, which everybody gets; we fought very hard to support the National Disability Insurance Scheme; for the education reforms. These are all big union campaigns. We have a major impact in politics and in the economy, so I don’t kind of agree with your premise that we have a decrease in impact. If you’re asking me do we need to grow our membership, I’ll be unabashed about that and say yes. You might have seen our latest ads on television, our latest advertising campaign which is actually saying this is what we do, join a union. And, you know, I’m not backwards in coming forwards about that.
RG: Ged, I want to take you in a totally different direction. Irrespective of what governments may do, do you accept that if General Motors employees reject the company’s labour offer, then General Motors manufacturing in Australia will cease?
GK: You know, there are a lot of reasons why our manufacturing sector is struggling – and you gentlemen probably know a lot more about that than I do – but I get really disappointed when looking at the whole complexities of the high Aussie dollar, what’s happened globally, how businesses are structured globally because they’re multinational corporations now. The one thing they go to fix the problem – okay, let’s slash wages, let’s pick on the workers, it’s all the workers’ fault, that will be the answer to all our woes.
I don’t hold that that is true because Holden has told us that wages are about, what, 17 per cent of their production costs. They’re proposing a 10 per cent cut which to the average worker $200 a week is a big wallop out of their pocket and yet it’s going to be 1.5 per cent savings in their costs. You can’t tell me that that is going to save Holden.
RG: Well, let me share that it will.
GK: A mere fluctuation –
RG: No. Not that it will save it because there are other things that have to happen as well.
GK: Correct. I mean, a mere fluctuation in the dollar would absorb that.
RG: But let’s not talk about the fairness of it. Do you accept what I believe to be totally factual, that if the workers accept that offer – whether it be a fair offer or unfair offer, different subject – they will lose their jobs.
GK: No, I don’t because there are myriad other things that we can do to save Holden, save their jobs and protect their incomes and I think it’s far too simplistic.
RG: Well, will you recommend to the workers that they accept it? And go with those unions, if you’ve got a union?
GK: So look, right now there are discussions with Holden and the unions and the Australian Workers’ Union is managing those negotiations right now and they have put a lot of things on the table, I know. They are talking about efficiencies. They are talking about productivity. They are talking about having independent people come in and assess and help. And I’m not prepared to make a statement here today until I’ve seen all of those things on the table because there are a lot more things we can do than attack workers. You take $200 a week out of a worker’s pocket, what impact is that going to have on the rest of the economy? We talk about consumer optimism. We talk about the importance of consumers to our economy, and yet we are far too quick to rip money out of the people who are the consumers – and that’s the workers.
RG: But if you recommend the workers reject the offer and they take your advice, then soon after the plants shut – or announce they’re going to be shut, it may take a year to be shut – will you sleep at night? Because you would have caused the loss of vast numbers of jobs.
GK: If I recommend right now without all the information that I need that the workers take this package and six months down the track Holden shuts, I won’t be able to sleep? Because I don’t believe that the wages packet alone will be the saviour? I need to see more stuff. I –
RG: I think the key to this is the wages packet – it is more than that, but if that is rejected, there is no hope for the company.
AK: Is it fair to say that this decision about Holden is pretty seminal for both manufacturing and for the union movement?
GK: The decision to accept the…?
AK: Yeah, because we don’t often see – in fact, I can’t remember it – where a company has effectively said if you don’t cut your wages, we’re going to shut down. It does make it a big decision for you and for the union movement, I think.
GK: It does make it a big decision, but I think it’s an unfair decision and I think it’s perfectly reasonable for the workers to say, don’t put all that onus on us. Let’s discuss all the other factors here. Let’s see. Have an open and honest conversation with us. What we are doing is a small amount of your production costs. What are the impacts of all the other things? The Aussie dollar is coming down. Let’s do some projections. What’s that going to look like in six months if the dollar keeps coming down? And my understanding – I’m no economist, but my understanding is all the indications are it is going to come down even more. I mean when you look at that, that’s had a huge impact.
Now, what other things? What about production costs? What about efficiencies? What about what we did during the global financial crisis where workers agreed to cut their hours to work part time, to take training? Let’s have a talk about that. Let’s not just put an ultimatum on the table that I think has no basis in fact.
AK: But do you on the other side say, never a pay cut? Do you say that? Is that in principle, never a pay cut?
GK: I think in principle it is very dangerous territory to go down that line because pay cuts in the short term might have some short-term impact, but in the long term it will harm the economy. We do not want to see people lose their incomes. What’s the flow-on effect? They can’t pay the mortgage. They can’t pay their rent. They can’t support local small businesses. There goes fish and chips at the corner shop.
Now, the impact on the economy, I think we have to really seriously look at that – particularly on small business, particularly in regional areas. I think it is a very serious thing for such a large company to ask workers to take that before we see all the other things that we can do. It should be a last resort.
SB: Ged, the General Motors situation is a dramatic illustration of that larger challenge for the manufacturing industry in this economy which is a high waged, but relatively small economy distant from the large markets facing competition from people who have got much lower cost bases than us. How do we approach that? I mean what, in your view, should we be doing to improve productivity, competitiveness and create some sort of viable future?
GK: Well, you know, there are a lot of people talking about this right now. We’ve had Ken Henry out there with his, you know, Asian white paper. You know, we’ve had the government setting up, all sorts of productivity taskforces. We’ve got the manufacturing taskforce. We’ve got a lot of people talking about this very thing. And I think it is about being smart. I think it is about having industry plans. It’s about looking to the future to see where we can value add.
You know, if certain industries we have right now might not be viable in the future, how can we help a transition? Let’s not just shut things down. Let’s look at what we can do. It’s what we did in the Button era. You know, we had industry plans. We invested in change and transition and we thought about the future. And I just get so frustrated with short termism. I mean let’s have that long-term conversation. Where do we fit in the future? Where do we fit in the Asian economy? And how we’re going to invest and keep people in jobs. Let’s take the high road.
You know, the high road is much better than the absolute slash and burn of the low road and I’m prepared to have that conversation. I think we need to. The prime minister, the new prime minister is actually talking about having that. He’s talking about businesses or business sitting down with him and sitting down with government and I think we should even bring in the social and community sector as well to have that conversation, so that we can hear the impact that policies on everyday working lives. How is it going to impact a community like Geelong? How is it going to impact a small metropolitan city like Adelaide? Let’s talk about that. You know, we don’t seem to plan like that anymore.
RG: Ged, would you agree that your approach is a very high-risk one? Because if you’re wrong and the plant is going to shut unless these things happen, Toyota will probably be brought to shut as well and you’re talking about a 150,000 to 200,000 jobs, a large number anyway. But your proposal is very high risk given all this will be decided in a couple of months.
GK: See, you in your question just said “if these things aren’t done”. To me, they’re only giving us one thing.
RG: That’s right.
GK: Let’s talk about the other things. To me, there hasn’t been any sensible discussion about what the other things are that need to happen, so let’s look at them as a package and be sensible about it.
You know, at the moment we’re being told there’s one thing, slash wages. I don’t take that as fact. I think we need to look at all the other things. We need to look at the dollar. What is going to happen to the dollar down the track? What about efficiencies? What about your production lines? How can we do things smarter? You know, before we do… I think it is very high risk doing what is being proposed right now because the flow-on effects need to be examined very, very carefully.
RG: Ged, one of the big disputes between motor companies, but also over a wide range of industries, coal mining and a lot of areas, is that the unions want agreements where they have a lot of control over certain aspects of the management, like rosters and the way staff are used and promotion and recruiting, sometimes recruiting. Managers are now in a global market place and can’t afford that anymore and are simply going to have to shut if that keeps up, but it’s a huge dispute. What’s your view about it?
GK: Look, I’m a nurse. My background in nursing and rosters, just taking that point in case, was a huge issue for us, a huge issue. You know, I had four children, I had a husband who worked, I was working. The way my rosters were delivered and, you know, it was incredibly vital to my life. I couldn’t have functioned without having some say and some input and the only way that I could have any input and some say over my life and how I managed it and still be productive and an honest worker was through my union.
And I incredibly valued having my union there to sit down and help me say to my employer rosters are important. They’re important to my family, they’re important to my community, they’re important to my being an active and social citizen, they’re important to my income. You know, to say that those things are not the realm of the worker and their representative is just wrong.
Now, I know in the mining industry, it’s even more vital than that. The fly-in-fly-out issue is vexed. I mean we have seen families and communities collapse around the fly-in-fly-out rosters. So, it is the realm of the worker. I don’t agree with your premise that it’s not. But unions don’t want to see businesses fail. We don’t, but we’re willing to have a two way conversation about that and I disagree with your premise, Bob, that they are not the realm of unions. You know, we are the workers, those things.
RG: The problem is that wage bases are becoming more and more global and the luxury of that situation where companies are competing in different ways – it could be a mining company or it could be a motor company or it could be something else. They’re competing globally, then unfortunately it’s not a luxury. It’s a lovely luxury to have, but it’s a luxury that can cause the plant or the mine to shut.
GK: Well, I haven’t seen that happen yet.
RG: Well, I have in a coal mine. Go and have a look. Have a look at Ford, exactly what’s happened there. I’ve seen it many times. You should have a look.
GK: No. Well, I don’t think you can entirely blame that on the workers’ board. I think there was a whole problem. My understanding is from the CEO of Ford himself that there was an issue with their global supply chain, how they sort of worked their company. You can’t blame it all on the workers. I’m just saying you can’t put it all back onto the workers. There are some very complex issues and if you want to maintain a high wage economy that is competitive, then let’s talk about other ways we can do it before we resort to just slashing wages which will hurt the economy. You have to admit, Bob, you have to admit it will hurt the economy if we slash people’s wages.
RG: Absolutely. By the way, I agree with you that it’s not all with unions. Some of the management decisions have been poor and I didn’t want to give you the impression it was all unions. But the point I’d make is if we lose 100,000, 200,000 jobs that would be far more detrimental to the economy.
GK: Sure. And look, if a company came to us, like in the global financial crisis, and said we’re not coping, we are not coping, it’s been my experience in the past that unions have sat down and had an intelligent conversation about that – in the AWU in particular and the CFMEU. So, you know, no union wants to see a business collapse or close, but we need all the facts.
AK: Isn’t it possible that one of the reasons for the decline in the union membership and relevance over time is the sort of the desire by the unions to protect at all costs hard won gains?
GK: Oh, no. Why would you say that?
AK: Because they are becoming less relevant to the modern economy. I mean there has to be more flexibility. Clearly, there needs to be flexibility. The unions… The ACTU was involved in setting up flexibility in enterprise bargaining in the first place and there just seems to be an attitude of, you know, of resisting that now.
GK: Well, I wouldn’t disagree that unions need to modernise and they need to upgrade the way I guess they communicate and operate, but I would put it to you that the main reason that we are seeing a main fall in density is the employment contract. And we at the moment are running a campaign around insecure work because people in precarious employment – nearly 40 per cent of our workforce is in precarious employment – and when you are frightened of losing your job, you are frightened of doing something that would annoy your boss and that could be join a union.
And the unions have been remiss in this and I think that we haven’t done enough to really organise a precarious workforce. That is something that I will recommending to our unions that we do and that is certainly something that we are trying to do through our ‘Working for a better life’ campaign to highlight that we can help people in precarious employment. So, you know, it’s a complex nature and it’s a global phenomenon, but I think that, to me, is the main reason that union density has fallen and I admit it, we haven’t really picked up on that game, but we’re trying to do that now.
SB: Ged, there is one last thing I want to ask about. One of the approaches to maintaining a high wage economy is to up-skill the workers in the economy. The 457 controversy, it seems to me, that’s an illustration of the issues around the shortage of skilled workers. The issue is not 457s; it’s actually the shortage of skilled workers within Australia. Do we need to reorient, for instance, our educational spending at the margin towards vocational training to look at the specific skills to meet the demands of a 21st century economy?
GK: I could spend a whole hour talking about that. The vocational education and training system needs a good hard look at. At the moment my take on it is that the VET sector has become its own industry and is existing for itself now, so they take courses that are low cost, that are high volume, that make them a dollar rather than looking at industry needs and matching the needs of industry. So, as you say, industry needs fitters and turners. They need highly skilled people in IT. We need all of these high-end, higher skilled people, but that’s not what we’re getting. We’re getting personal trainers and ….
RG: Ged, can I take you in a different direction again?
RG: I want to take you to nurses.
GK: I love nurses. Yes?
RG: I felt when the wife had experience in hospital and was very well looked after, and I watched nurses work extremely hard.
GK: They do.
RG: So, this is not an attack on nurses.
RG: But when I look at the systems by which they’re operating, they are like 20 or 30 years ago. The iPads have to come in. All the modern techniques that we use in other parts of the economy are not there. Tremendous technology in medicines, I’m not suggesting that. But I’m talking about the paperwork and the actual sort of, the administrative measures. And it’s not attack at unions… Would you help hospitals modernise?
GK: Absolutely. When I was back at the nurses’ union it took us 10 years, and I think we actually failed in the end, to try to get one standard electronic medication form. Do you know how hard that was to get all of the hospitals across all of the country to agree on one standard medication form? I agree with you, Bob, it is a nonsense that every time you go into a hospital you have to start your history all over again. Why can’t histories be taken and shared? They’re trying to do that with the electronic health record which I think is a fantastic innovation if we can ever get it moving. I don’t really know how to answer that question except agree with you that a lot of work has to be done.
RG: But you wouldn’t try and stop it?
RG: Obviously not. That’s very good.
GK: No, not at all. No.
AK: Finally, are you going to stand for preselection?
AK: You’re not going to?
SB: Why not?
GK: I love what I do. Everyone seems to think that I’ve accepted a second choice because I’ve chosen to stay at the ACTU. No. I am really honoured to have this role. I love this role. My heart is with the union movement and I want to stay here. I think it’s where I can do a lot of good work.
AK: Thanks for joining us.
GK: My pleasure.
SB: Thank you, Ged.