Tough reform from the Coalition playbook

Abbott’s campaign to make IR reform electorally palatable will closely follow the blueprint created by his mentor, John Howard, when he introduced the GST.

Despite confected howls of indignation from the Opposition and the labour movement, the Abbott Government’s mooted Productivity Commission inquiry into workplace laws is an election promise kept, not broken.

The PC inquiry was foreshadowed prior to the 2013 federal election, partly to placate those in the business community and media clamouring for IR reform. But it’s also part of a bold plan to take WorkChoices Mk II to the 2016 federal election and secure the people’s mandate in order to deliver what the business community wants.

Not that the Coalition’s new IR policy will be called any such thing – for WorkChoices is dead, buried AND cremated. Abbott’s campaign to make WorkChoices-by-another-name electorally palatable will closely follow the blueprint created by his mentor, John Howard, when he successfully took the GST to the 1998 federal election, paving the way for the tax to be established in July 2000.

Keeping in mind that, following John Hewson’s humiliating loss to the unpopular Paul Keating in 1993 predominantly because of the GST, and that he himself had vowed to never, ever propose a GST, Howard didn’t just plonk it on the table during the election campaign and ask voters to trust him. Instead he spent more than a year preparing the ground and shaping voters’ expectations to ensure the new tax had the best chance of success at the ballot.

To counter its rocky past and reputation as a partisan plaything, the GST was first considered and then recommended by a taxation taskforce established by the government to prepare options for tax reform. (Said taskforce was chaired by Treasury official and former Keating staffer, Ken Henry).

Exactly one year after establishing that taskforce, Howard’s treasurer Peter Costello presented voters with a package of tax reforms that included not only a GST but also personal income tax cuts, an increase in the tax free threshold and pensions, and the scrapping of wholesale sales tax, as well as the elimination of nine other taxes imposed at the state and territory level. Then the government blitzed voters with a controversial advertising campaign before immediately plunging the nation into a moderately early federal election.

Abbott is wise to be treating industrial relations reform as carefully as Howard did the GST. While he hasn’t explicitly gone back on an undertaking in the way Howard did, Abbott will be subject to that accusation right up until the next federal election and it has a good chance of getting traction.

Like Howard, Abbott is trying to create a sense of vision, momentum and inevitability around a vexed policy that obliterated one of his predecessors. Instead of sending it to a bureaucratic taskforce, Abbott has chosen to launder the policy by sending it to the economically dry (and therefore reasonably predictable) Productivity Commission, which will simultaneously bestow a sheen of objectivity on the essentially predetermined recommendations to urgently reform Australia’s workplace laws.

The media scandals and union angst generated by the Royal Commission into union governance and corruption are intended to build complementary support in the general community for Something To Be Done and soften resistance to the Government reigning in union power. This should create a favourable environment for the PC recommendations to be handed down in April next year, leaving a year for the government to release its workplace relations policy in response and perhaps run a controversial advertising campaign before calling the 2016 election.

It’s a matter of record that Howard narrowly won the GST election, securing less than 50 per cent of the vote and shrinking his majority from 40 seats to 12. Less certain is whether the GST dragged Howard down or propped him up.

At this early stage it’s equally difficult to determine whether IR reform will be a bane or bonus for Abbott. He has only a majority of 30 seats and consequently less scope for failure than Howard.*

The key is likely a rarely discussed element of the successful GST campaign. Political scholar Richard Eccleston pointed out that particularly influential opponents of the GST in the 1993 election – namely welfare advocates – joined with the business community after the regressive indirect tax increases announced in Keating’s 1993-94 budget in 1996 to find common tax reform objectives. These ultimately included agreement that a low rate, broad-based consumption tax should be part of a wide tax reform package. According to Eccleston:

A combination of changing economic conditions, the Keating government’s consequent deceit in relation to indirect taxation, and the disciplined promotion of the need for reform by the welfare-business coalition from 1996 convinced a majority of voters that indirect tax reform was necessary.

Abbott is going to need a similar convergence of traditionally disparate interests to get his IR reforms across the line in 2016. He’ll need to bring workers and employers together to support workplace reform in the same way that ACOSS and ACCI jointly supported tax reform in 1996. Demonising the union movement and creating a common “foe” for employees and bosses appears to be the chosen way.

Yet 55 per cent of Australians say they’re concerned about job security, 61 per cent think unions are important, and 45 per cent say workers are better off with stronger unions. So it will be interesting to see how Abbott fares with the IR reforms he is prepared to make during this parliamentary term.

The Government introduced legislation last month to implement the Coalition’s Fair Work Laws election policy. The bill aims to amend the Fair Work Act to tighten right-of-entry rules for unions, allow employees to trade penalty rates for more flexible hours and close “strike first, talk later” loopholes.

Of course that won’t occur any time soon because the legislation won’t be passed by the current Senate. Instead the legislation is little more than a platform upon which the parties, unions and employer groups can continue to wage their industrial relations battle.

Abbott and his Employment Minister Eric Abetz may have introduced the legislation purely to create this opportunity to further denigrate unions in the eyes of the public. But if voter sympathy for the labour movement is generated instead, Abbott’s bold plan may well be dashed before it’s even really under way.

More than one message in SPC decision

The government’s decision to rebuff SPC Ardmona’s request for assistance may well be a line in the sand, but not just for the business community.

Not one but three messages reverberated from the Abbott government’s cabinet decision yesterday to reject a request from iconic Australian fruit-processing company SPC Ardmona for $25 million assistance.*

Both Prime Minister Tony Abbott and Industry Minister Ian Macfarlane stated in no uncertain terms that the decision was a message for business that the days of government being a crutch for business were over. Labeled “an important marker” by Abbott and a “defining point” by Macfarlane, the rebuff signaled that industry restructuring should be led (and, by extension, resourced) by business alone.

Doing as much as possible to deflect any inferred responsibility for jobs lost through the decision, Abbott made a big play on the size, profitability and social conscience of SPC’s parent company, Coca-Cola Amatil. He expressed confidence that the multinational would do the right thing by the canning company and its workers.

And for the second time this week, the government also drew attention to the responsibility of companiesto strike wage agreements with unions that do not threaten their business’s sustainability over time. This is part of a strengthening government homily that companies must take more responsibility for their actions.

However, the big dose of tough love for the ever-demanding Australian business community will likely give little comfort to the recipients of the second message. Taken together, the Cadbury and SPC Ardmona decisions starkly tell voters one thing: some jobs are more equal than others.

Yesterday the Prime Minister rationalised the Coalition’s 2013 election campaign decision to support Cadbury with $16 million in assistance as development of “regional tourism infrastructure” and not simply propping up another struggling business. But at the time he seemed particularly focused on the continuing viability of Cadbury in Tasmania and the 200 jobs that the factory upgrade would add to state’s depressed economy.

The key to this apparent contradiction lies in votes – or more precisely seats in the federal parliament. The SPC Ardmona facility is nestled in the very safe Liberal seat of Murray, which Sharman Stone holds with a whopping two party preferred vote of 70.87 per cent. This healthy margin gives Stone some latitude to be a rebel at times, but it also means the Coalition can treat Murray’s voters with impunity without risking a backlash that bites. In fact the Abbott government could probably slay every first male child in the electorate and still retain the seat.

In contrast, the Cadbury factory is located in Andrew Wilkie’s Tasmanian seat of Denison, and is supplied by the dairy industry in the adjacent seat of Lyons. Not coincidentally, Liberal candidate Eric Hutchinson went on to take Lyons at the 2013 election from Labor’s big man Dick Adams with an almost 14 per cent (two party preferred) swing in his favour.

So the SPC Ardmona decision revealed that if you live in a marginal seat or one represented by a potentially influential independent MP, your job is important to the Coalition. Otherwise, not so much.

Finally, the decision not to protect the jobs of canners and, by extension, their fruit-producing suppliers, sent a decisive message to the Nationals: you can’t always get what you want.

Even though it remains perennially puzzling why this rural rump of agrarian socialists wields greater influence on Coalition decisions than its total vote or number of seats in parliament, they continue to do so. Most recently they were successful in convincing Treasurer Hockey to reject the $3.4 billion foreign takeover bid by US agriculture giant Archer Daniels Midland for local grain-handler GrainCorp. The “national interest” grounds on which he did so were spurious at best and sent a ripple of unease through the business community.

But now a similar public campaign in support of assistance for SPC Ardmona by Agriculture Minister (and deputy leader of the Nationals) Barnaby Joyce has failed. It may be that the Nationals expended their political capital on keeping the Yanks’ hands off our grain-handling infrastructure, or that any preparedness by the free traders in Cabinet to countenance further protectionist assistance for Australian businesses was consumed entirely by the GrainCorp decision. Perhaps it was simply because there are more marginal votes in the grain belts of rural Australia than in Murray.

Either way, the messages conveyed by yesterday’s SPC Ardmona decision may prove counterproductive for Tony Abbott. While he sees them as “an important marker” and a veritable line in the political sand, the message recipients may see them more as a challenge, an ultimatum and a call for retaliatory action.