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The Forum > Article Comments > Building capacity in Australian industries > Comments

Building capacity in Australian industries : Comments

By Ken McKay, published 18/11/2005

Ken McKay argues building the skills base along with research and development are the key issues to drive productivity.

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Outstanding Post Ken,

As an employer I know first hand what you are saying and sympathise.

Perhaps if they spent time on education and battling the skill shortage, we would not need to grow as businesses at the expense of staff conditions and wages. I dont want to view staff like units of production, they need to be viewed as individuals yet they will undoubtedly feel the pain of our ability to turn over staff easier, and the ability to negotiate to lower costs of production.

"We cant find good staff" everyone says it, Howard knows it, yet what is the benefit in creating a poverty trap where people cannot afford to gain skills, and the casual worker is the default in Australia. In my experience an employee shows value over a longer period, and shows much more value in a secure, stable environment.

As an employer i can see some flexibilities, but to solve a problem you dont replace it with another. I see this as the 'cane toad' and we are going to regret the depressed economy that will be created.

We want skills, so why is he attacking the unskilled?
Posted by Realist, Friday, 18 November 2005 1:55:46 PM
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Good grief, where to begin? You say that "With the removal of the no-disadvantage test against all award conditions, new employers entering an industry can dictate the employment conditions wholly and solely" Of course they can't! They are in competition for workers with other employers, and have to provide wages and conditions sufficient to attract and retain employees.

"There needs to be regulation not to control the actions of the majority but to temper the excesses of the minority who can cause so much damage." Regulation should be a last resort, used only when there is a clear public benefit which can not be achieved by any other means. Queensland regulation rarely passes that test. Let's give the new IR regime a chance to work before supporting tighter regulation.

"What these changes are going to is undermine all the advances of the last century and bring back the master/servant as the underlying theme to the employment relationship." This is absolute nonsense, when I employed skilled people my attitude was that they were a valuable, increasingly mobile resource; I wanted them to enjoy their work and to be able to increase their skills and future career prospects as much as possible, giving them every reason to stay with me. I had a happy, highly productive workforce with great morale. You need that to compete, you can't have it with a master/servant relationship.

As for "crippling current account deficits" - crippling what? Output, incomes, employment and productivity are all rising. So long as Australia remains an attractive place for investment - which it will - the current account's not a big issue. Your argument that the deficit would be higher without the minerals export boom is nonsense. Without that, the exchange rate would fall, import prices rise, non-mineral export prices fall, and the CA would self-correct. That's been the case since the $A was floated in 1983.

As for competition etc, that needs a separate post
Posted by Faustino, Friday, 18 November 2005 2:31:54 PM
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(Part 2) It has been demonstrated over centuries all around the world that competition is the major driver of innovation and productivity, the source of the rapid rise in incomes over the last 200 years. The evidence is undeniable. Australian industry can "control its own destiny" by pursuing best practice, by concentrating on what it does best, by buying in best-in-class inputs and services, by properly identifying market opportunities etc. Competition drives it to do this - you thrive if you offer your customers a better deal than your competitors, you fail if you don't. That's the force which has raised our living standards so far so quickly (there was negligible growth for over 2000 years prior to the industrial revolution).

Queensland's Department of State Destruction (DSD) has never grasped this, leading to massive losses on non-viable government-backed projects ($480m on the magnesium smelter alone) or massive subsidies to projects which have little benefit to Queensland (e.g. Korea Zinc, where benefits accrued mainly to overseas providers of capital and equipment and to skilled workers from interstate).

There is an economic concept of "competitive advantage". This is the ability of a firm to make higher returns than its competitors because it is in some way superior to them. DSD misuse the term - it applies to firms but they say that Queensland has a competitive advantage when they want to promote projects or industries which commercial investors and enterprises consider non-viable. The bureaucrats believe that they can better identify profitable opportunities than can businessmen who live or die by doing so, and support them with public funds (a clear indication that they are not viable). Again, the evidence is undeniable - this approach never succeeds. It takes money from viable businesses (through taxation) to subsidise non-viable ones, and calls it economic development!

Economic development in Queensland occurs in spite of Government policy, not because of it. When you recognise this, you might have something useful to say.
Posted by Faustino, Friday, 18 November 2005 2:52:47 PM
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Faustino,

Well done.

There is a small group of people who spend their time "regulating" the majority. Regulations almost never stop bad people from doing bad things. However they frequently trip up good people.

Prosperity is indeed created in spite of government interference. I am not convinced that the new IR reforms go far enough but at least they start to unbind peoples hands.

Regards,
Terje
Posted by Terje, Friday, 18 November 2005 8:41:36 PM
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I want to take issue with just one aspect of the article.

GREENFIELD WORK AGREEMENTS.

More accurately "Statement of conditions of employment"

How brilliant do you have to be, to know that when you undergo an employment interview, and these conditions are spelt out, you make a decision. YES.. or NO...

I'm afraid I rather believe in market forces here. If you offer peanuts, you will get monkeys, and those at a higher level than monkeys will goto an employer who feeds them properly.

Who in their right mind would see 'Condition A, B, C' and feel like wanting to puke and then ACCEPT such a job ? unless, they are thinking "I'll do this for a while no matter what until something better comes along"......now, who is the loser here ? even blind Nellie can see it is the EMPLOYER. New people.. more retraining.. low and costly efficiencies for the first couple of months ...etc..
then all over again.

You goto private school. Do you read the rule book and then start thumping on the table for them to change the rules for your liking ? Hardly. You goto a different school.

I rang Silcraft today (just put off 400 people and closing next year) and then BHP billiton about the EBA stikes with the Electrical trade union etc.

The realities of life, are that there is no guaranteed employment and no guaranteed conditions. UNLESS you live in fantasyland where all things happen according to your imagination. If there is no contract, or no sales... the simple fact is you go BROKE..

R&D and TRAINING.
sure sure... yep.. pat pat.. you train as an IT programmer.. only to find your job has been outsourced to Bangalore.
You improve your product range, only to find out that each 'rung' of your product ladder is progressively stolen by China.

THE FUTURE. is very bleak if you are not a rocket scientist. Once we are economically weak, even the tourism businesses will be run by 'culturally appropriate' outsiders.

SOLUTION. Declare War on China if they don't pay fair wages :)
Posted by BOAZ_David, Friday, 18 November 2005 9:09:14 PM
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The only reason that wages are low in China is that across their economy the capital to labour ration is low. We have higher wages in Australia because we have more capital (acumulated over centuries) that needs to be kept productive and it takes many skilled hands to do that.

As China accumulates capital (ie roads, factories, machinery etc) then its wage rate will rise also. This process takes time, although they are on the right path.

It is stupid to tax capital gains tax because the more capital we create the better it is for workers. However the dopy nature of our tax system is an entire topic in its own right.

Even Karl Marx recognised this. The following is a quote from Marx:-

http://www.marxists.org/archive/marx/works/1847/wage-labour/ch06.htm

QUOTE:-

"
And so, the bourgeoisie and its economists maintain that the interest of the capitalist and of the laborer is the same. And in fact, so they are! The worker perishes if capital does not keep him busy. Capital perishes if it does not exploit labor-power, which, in order to exploit, it must buy. The more quickly the capital destined for production the productive capital increases, the more prosperous industry is, the more the bourgeoisie enriches itself, the better business gets, so many more workers does the capitalist need, so much the dearer does the worker sell himself. The fastest possible growth of productive capital is, therefore, the indispensable condition for a tolerable life to the laborer.
"
Posted by Terje, Saturday, 19 November 2005 7:18:30 AM
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