(From today’s Herald Sun)
The recently concluded B20 meeting in Sydney was addressed by Australia’s top politicians and the cream of Australian business chiefs, including Rupert Murdoch, BHP’s Andrew Mackenzie, and Energy Australia’s Catherine Tanna.
It also brought to Australia the heads of many of the world’s key businesses.
Australia as the host is in the spotlight. But this can have a downside if the world focuses on our shortcomings.
And the Australian economy has some dark corners. None of these is more alarming to business leaders than the prospect that our labour market arrangements may prevent them managing an enterprise with the effect that profitable opportunities turn sour.
The six years of RuddGillard governments gave unions greatly enhanced privileges.
The Fair Work Commission was ever more stacked with unionists, the Australian Building and Construction Commission’s restraints on lawlessness were allowed to whither and Labor appointed one of their own to head up an Australian Competition and Consumer Commission, which was never keen on investigating union restraints to competition.
The police, for their part, seem to be utterly intimidated by unions and refuse to apply the law against them.
To stop the rot, the Abbott Government appointed a royal commission, which is proceeding at a leisurely pace to examine the more notorious examples of union coercion.
One high-profile case involved the Health Services Union, infamous because of the ability of its executives to divert money from the lowpaid workers they ostensibly represent into their own bank accounts.
Similarly, we have seen a focus on the Australian Workers’ Union which intimidated building firms into funding the leadership’s reelections.
But of greater importance is the damage that union monopolies inflict on the economy when they shut out firms which refuse to cooperate with their illegal demands for kickbacks.
The CFMEU is notorious in this respect. It sought to destroy Grocon for not providing it sufficient kickbacks and in the process squeezed any suppliers, including Boral, that refused to participate in illegal and harmful restraints of trade.
Boral’s refusal to join the CFMEU’s conspiracy led to the union “persuading” other firms to choose alternative suppliers.
And the institution supposedly policing this, the ACCC, was missing in action even though in its dealings with firms it readily raids corporate offices and pursues them for trivial misdemeanours.
Union-imposed restraints on managers mean higher costs and lower productivity.
And when this is evident, a showcase event like the B20 meeting can have downsides.
One of the firms represented at the B20, the French petrochemical firm Total, plans to invest $15 billion in Australia.
But its CEO observed, “If you compare the cost per tonne of building LNG production capacity worldwide, the highest cost is in Australia, so it’s a real issue for development in the future”.
Australia’s labour costs are 30 per cent above those in North America and 50 per cent above the UK’s. Only Scandinavian workers cost more. We want to see high and increasing living standards in Australia. But these require higher levels of productivity, which unions and their institutional supporters will often prevent.
Unless this changes, Australian living standards will fail to meet their potential