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?

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

(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.

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

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 :)

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.
"

Yes David,I agree,I'm now investigating the possibility of importing from China since I can see the writing on the wall.If you can't beat 'em,join them.I only see this driving our wages lower in order for us to compete.

John Howard is making all this noise about IR reform,yet there is no mention of red tape reduction and getting Govt off our backs.I think NSW is headed for recession.This is mainly due to State Govt incompetence.Things are very tight at the moment and I don't see them improving very quickly.

There needs to be increases in productivity,but not at the expense of those least able to defend themselves.

What really annoys me about all levels of Govt is that there is no debate,just "faite accommpli" lump it or like it.

The Coalition will lose the next election if they don't dispense with the arrogance and allow reasoned debate to prevail. Australia will once again be confronted with the Labor economic vandals.

Ken Mckay is right,we will never be able to compete with China in labour or semi skilled manufacturing,but invest in Education and skills training.

I just wish that all Govts at least make an attempt to explain the method in the madness,since it alienates us and makes good people very cynical.

faustino,

have you looked at the make up of the current account deficit. If the dollar depreciated then the deficit would become larger. The j-curve does not factor in as the current account deficit isn't just traded goods but capital movements as well. As the private sector's overseas borrowingss are in either US dollars, Euros or Japanese yens predominantly then all a devaluation does is exasperate the current account deficit. Herein ends EC101 for those that do not understand basic economics. Lesson two productivity growth is slowing.

Industry strategies of under investing in skills development and engaging in a just-in-time strategy for skilled workers has led to huge skills shortages which place an economic contraint on expansion. Gee the market works apart from short sighted management policies doesn't it.

Managements answer is to complain about the high wages for apprentices, yet what is the reality. Huge incompletion rates because apprentices can earn more doing general labouring duties or working in supermarkets. The market solution would be to increase apprentice wages to match but again the managers are not doing this and the whole economy is suffering.

The levels of advanced manufactured goods is declining not because of "unfair" competition from China and India but because of short sightedness from Australian managers who won't invest in skills development, who won't invest in research and development.

The focus on enterprise development has led to businesses to go off and develop their career structures but can't effectively provide the infrastructure to ensure the workers can be trained in their unique structure.

The tragedy is that the captains of Australian Industry do not look at the future, regard training as a cost and not as an investment and are wrecking our collective futures.

Slasher,the levels of manufactured goods are declining here because Labour in China is $1.00 per hour.They also have access to the latest technology.Don't forget also the Chinese are smart and work long hard hours.Their Govts don't burden them with regulation,taxation for social security,no super contributions or workers comp,sick leave,long service leave,unions or OH&S regulations to worry about etc.The family unit is their social security.They live to work and often at work in the lofts of their factories.They have also kept the Yen artificially low to keep their exports cheap,which the US is furious about.

The only way to compete is be totally robotic,but this does not employ many people.There is no such thing as a level playing field,and there is no way we can compete in manufacturing.

arjay, i was commenting on advanced manufactured goods not the products of sweat shops, suggest you gain basic understanding of economic terminology so you can make informed comments.

As a trade unionist who marched against John Howard's new industrial legislation, I think I can appreciate both sides of the argument.

John Howard is my political enemy. But he is probably the most popular and trusted Prime Minister that this country has ever had and I think that he is sincere in his desire to make Australian industry more competitive and productive.

In addition, I sympathise with those courageous people who have the courage to open businesses and give people jobs. I can understand that they should have the right to get rid of workers who they consider are unproductive or even counter productive.

On the other hand, unless the trade unions can keep some of their power it is inevitable that working conditions in this country will go backwards. As a member of the building industry, I can already see this happening. I have worked six day weeks and ten hour days for 13 months now and there is no end in sight.

I have even worked on one site where zombiefied men with thousand yard stares were working 12 hour shifts, 7 days a week. The customers who owned this site and who were demanding an unreasonable and rediculous finishing date for the work, had just given their managing director a $60 million dollar retirement handshake.

The skilled tradesmen working these hours were only doing this because they were frightened of losing their jobs. The cyclical nature of construction work means that there is feast or famine. Unless you work killing hours when things are good, then you are the first to get the boot when things turn bad.

The new laws will make this worse and they will reduce the pay of men who's working conditions are often pretty bad and appear to me to be declining.

Never thought I'd hear myself saying this - but - Redneck has raised some very good points.

Clearly a skills base is needed to compete successfully - there is no point in trying to compete with low wage Asian labour - to do so would turn Australia into a third world economy.

We need to rethink our approach and offer a higher level of technology - we presently have the people, the knowledge and the ability but do we have a government with heart enough to make Australia truly competitive?

The IR changes would indicate that Howard is taking the easiest solution - very good at taking away, but lacks the 'ticker' to put in place viable infrastructure to make Australia the 'clever country' we were once touted as being.

Would Slasher kindly edify us plebs as to exactly we are going to compete with China in his vision of "Advanced Manufacturing".Please give us examples and logic to back it up.