The cost of Labor’s contractor carnage

The government’s sins against the small business community are coming home to roost, with 130,000 independent contracting jobs lost in the last two years.

Let me relate closely linked but contrasting tales from the Labor and Coalition camps. Suddenly new figures showed that a centrepiece of the Liberal 2013 election campaign – to double the rate of small business creation in Australia – looks very achievable. On the government side, during the week, a friend of mine was yarning to a senior federal government minister who simply couldn’t understand why the government was unpopular and thought the unpopularity stemmed from bad and biased media and not policies.  

Most Australians can list sins by the Gillard government, which have contributed to the bad polling. But none is more important than the government’s deliberate decimation of significant sectors of the small business community. 

The latest figures from the Australian Bureau of Statistics show that the number of independent contractors fell by a stunning 130,000, or almost 12 per cent, from 1.1 million to 980,000 in the last two years. The Coalition shadow small business minister Bruce Billson will have that recovered in no time and the Coalition can also see where there is enormous scope for cost reduction.

According to calculations made by the Institute of Public Affairs, while independent contractors have declined, since the global financial crisis public sector industries have lifted their employment by 406,000 as part of a long-term trend to employ more and more Australians in the government sector.  

Graph for The cost of Labor’s contractor carnage

A key to recovering  those 130,000 jobs lost in independent contracting and creating many hundreds of thousands of new jobs in the small business sector will be having continuity in cabinet of the small business minister. The government has had five small business ministers in 15 months and so no one stood up to the carnage.  

How did the government decimate the independent contractor movement? This morning Independent Contractors Association chief Ken Phillips isolates the fact that the government put a severe clamp on the ability to register an Australian Business Number (Paralysed in a tax office trap, April 24). Just imagine what this has done to creativity and job creation in the private sector in Australia. There were also direct attacks on independent contracting, trying to force contractors into some form of employment. And so in the government sector they made it very hard for independent contractors to get work.  In the commercial building sector the tax man decided to rough up independent contractors at the request of the union movement. They completely ignored the housing industry, where there are large amounts of cash-based work taking place. Safety attacks were made in the road transport area. The tax commissioner was merciless on the entire small business community including  independent contractors (Call off the small business attack dogs, April 19)  

There are many reasons why Australia’s productivity has slipped back but one is the fact that we have deliberately attacked one of the most productive methods of work creation – independent contracting – and we have replaced it with one of the least productive – government employment. The community knows when something is wrong yet this independent contractor attack has taken place without any media publicity. It is just sheer brutal government action to achieve an objective. But there will be a price and that will show up in the September election. And it has nothing to do with the media.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles