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You've got the dual portfolio responsibility of building up our workplace participation and holding our corporations to account. Are there common principles between the two parts of your portfolio?
Well, I think they're both a bit of hard work! The primary area we've been working on is the employment and workforce participation area because of the ongoing skills shortage and the welfare reform agenda currently being pursued. There are potential areas of cross over there, particularly into the corporate responsibility area. For instance, I think we could probably look at trying to develop better policy settings to encourage more responsible behaviour by corporations and that may well extend to employment.
They've both got a little bit to do with short-term thinking don't they?
Yes, I suppose that's true. One of the issues that some of the better minds in the business community have been grappling with is this notion of long term sustainability for their companies and understanding that part of the sustainability agenda is ensuring that stakeholders and the community have a positive view about the activities of companies - that is a longer term game plan.
I think the same applies to workforce participation and employment. Part of the problem we are seeing currently is the government's failure to invest in the Australian workforce to develop the skills that the country needs. I think we've paid a large price [...] economically, if you look at the constraint on our economic capacity that these skills shortages have provided. We've also paid a price in terms of the Australian workforce where people are locked out of jobs often because they don't have the necessary skills to take on the vacancies that are there.
The skills shortage is coming to a head today but does the former Labor Government bear any responsibility? I'm particularly thinking about through the nineties our whole policy was based on getting kids into tertiary education; the idea that the Bachelor Arts was much more important than a trade certificate. Do we have to actually look at some of the values we pushed through the 90's?
I think if you compare the Hawke and Keating Governments in education and training across the board it was a very substantial investment. We also invested very heavily through Working Nation in training programs as part of our strategy to try and shift unemployed people into work and they were good policies and they were good strategies. The Howard Government came to power and removed most of the labour market programs that were contained in Working Nation. What we've seen is that over the period of their Government they've had to re-introduce some similar programs because a great many of them were useful.
Of course your brief's a little bit broader. Workplace participation isn't just about the skills shortage. It's about getting more people into the jobs market. What sort of ideas are you bringing to the table there?
Well, I do think skills are a big component of people's workforce participation. We've seen the scope of the problem in the figures that the ABS have released over the last month both in terms of people who are only marginally attached to the labour market and also the part-time workers who want more work but are not able to get it. There are about 600,000 part-time workers who identify as being under-employed. Over half of them would prefer to work full-time. Then you have around 1.2 million Australians who identify themselves as wanting to work but are not included in the labour force figures. Now, a great many of those people identify skills as a barrier to their participation in the workforce. So one of the things that we have to develop policies for is how you actually deliver better training and skills acquisition policies for these people.
I Have there been any ideas that have been put to you that have really excited you or sparked your interest to say yes there are some new approaches around?
Look, I think the general proposition is you have to actually make an investment in government. You have to be prepared to resource this. This is one of the hallmarks of the whole welfare reform debate where we talk about how do we assist or support people from welfare into work. That is a good principle - we should be supporting those who are able. We should be supporting and encouraging those who are able to work to do so. It's been clear from most of the areas you look at that governments have to actually invest in appropriate support if you're going to get people to do that.
I suppose at a general level what you'd have to find is the right mix of support as well as incentives and responsibility if you're serious about getting people off welfare and into work. Its pretty clear from the international evidence that there is a reasonable correlation between good [...] work and family policies and women's participation rates and we don't do particularly well on that front in Australia. Women have a lower participation rate than in similar countries and many people, including myself would argue that's in a great part due to the fact we have poor work and family balance [...] policies and we have insufficient childcare and other support.
In terms of solutions the government's talking about a couple of short term fixes. One is giving business money to run their own effective TAFE system and the other is bringing in guest workers. Do you have a position on either of those two propositions?
In terms of technical colleges, that's technically Jenny Macklin's area but the position she has articulated is one I agree with. It seems rather odd that you would invest in a completely new infrastructure when you have a TAFE system there that can deliver the courses from which people have been turned away because of a lack of funding. You would have thought you'd be better off using the system you have and resource the problem.
In terms of guest workers; well you know there are some real concerns about how a guest worker model could work. There are some real concerns about the industrial conditions that would apply and you know historically in Australia there have been some problems around the notion of guest workers. I think the broader issue about migration being a solution to employment and labour force problems needs to be thought through. Whether that's in skilled or un-skilled labour, that really it is a short-term quick fix solution. It is not a solution which is about government looking at the mis-match between the labour force and the jobs which are out there and trying to actually put in place policies to address those. So on the skilled workers front Labor's obviously not opposed to build migration but to have that as your primary policy response to a skills shortage after a period of under-investment in training and education is a very short sighted policy.
What's the sort of time lag in these debates actually coming to fruition. We can talk about participation rates and skills shortages, how long is going to take for us to see the effects of the decisions that we make this year?
That's a very good question. Well the time lag is one of the criticisms that we also have with the technical colleges because what you're looking at there are a number of years before you actually get any skilled workers out of that process. Participation is an area you have to try and address by way of policies over a number of years. There is no quick fix solution - and it is not [...] one size fits all. The strategies you might put in place to try and encourage people on the disability support pension to work would be different to those that you might have in place to encourage part-time workers to increase their hours or a sole parent or a woman who's out of the workforce. You have to have different policies for different cohorts. The problem with the government's approach is it tends to be the all stick and no carrot approach. A focus on coercing people into work by making potentially draconian changes to their entitlements. That is not a very positive reform agenda.
Just trying to frame the debate between Labor and Liberal, is there an ideological element to this debate? Is the difference between the way the government is approaching this and you would approach it something that we can pare back into the ideological differences between the two parties or is this just a question good economic management?
No, I think there's some very strong ideological differences between how this government is approaching the issue of workforce participation and the Labor way of doing it. I think the Government's agends is a hard, conservative and punitive agenda to simply limit access to benefits, not provide the appropriate support, not provide the appropriate training, not provide the appropriate incentive to get people from welfare to work. I think the Labor way is to recognise that governments have a responsibility to actually support people from welfare to work. That there is a role for government there. The role for government is not just to be coercive, which is often the way the Howard Government responds. Labor takes the view that the government also has its responsibilities when it comes to workforce participation.
Finally, just briefly on your corporate responsibilities portfolios. What can we do in terms of what Evan Thornley describes as the new divide in Australia: the divide between the bulk of us who are shareholders in super funds and the managerial class who seem to skim everything off in executive salary. I guess there's two levels, one is; how can we as share holders in super funds have great responsibility in what's going on and secondly, how can we reign in these outrageous corporate salaries?
They are very good questions. Can I talk first about the engagement issue, which is really the issue about shareholders and super funds and getting involved in corporations? Engagement by shareholders with the management of companies, with the board of directors is a critical relationship if you're going to have good governance practices. It is one of the approaches Labor has consistently taken over recent years and I have continued to take. [...] You need a policy framework that tries to encourage that sort of engagement and the reason that engagement is so important is it is one the ways in which you can hold companies accountable.
At a number of AGM's where unions try to put up resolutions or try to move things from the floor, the rules seem very much weighted against individuals putting those things forward
Well, I don't know the specific ones that you're talking about but there is the capacity to put things up. But it is not just [...] putting up resolutions at the AGM's. We have a situation where a very large number of Australian shares are owned by superannuation funds, including union-supported superannuation funds. We went to the last election with a policy to require super funds to actually exercise their proxy votes, which is one of the ways you can try and increase the engagement. I've just been to Tasmania at a conference of major superannuation funds and one of the issues that have been quite widely discussed both in that conference and associated with it is how you actually get better engagement by super funds so you do introduce more accountability with those companies. So proxy voting and other ways in which you can try and get large shareholders such as the super funds engaged with a company is an important part of good corporate governance.
In terms of executive salaries the Howard Government's gone very soft on this. We've seen just a couple of weeks ago in Parliament they rejected a Report from a Committee I was on where we had bi-partisan support for greater disclosure on executive remuneration including the notion that it is actually not a good principle for an executive to set their own pay and remuneration conditions, which was rejected by the Government. In fact, this Government is actually behind where the International community is going. We do need better regulation. We do need better transparency when it comes to executive salaries, especially things like termination benefits and the way forward I think there is to be pushing for that transparency and accountability and having good principles there. I think that it's ridiculous that the Government actually thinks its OK for executives to set their own pay.
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