“There is no reason why this country should not go back to the workplace system we had between 1996 and 2005” … former Prime Minister John Howard. Photo: Glenn Hunt
Former Prime Minister John Howard has urged Tony Abbott’s Coalition to return to the individual employment contracts of the Work Choices era and to crack down on unfair dismissal claims against small business, claiming that Labor’s reregulation of the jobs market will impose a mounting toll on the economy.
Mr Howard also used an unguarded and off-the-record speech to a forum hosted by Westpac earlier this month, and obtained by The Australian Financial Review, to argue Labor and Democrat opposition over including food in the goods and services tax had created a yawning revenue shortfall for the states.
But it was Mr Howard’s suggestion that Mr Abbott adopt industrial relations reforms that is likely to create the biggest political headache for the Opposition Leader.
Labor successfully merged individual contracts with Work Choices in the public mind in its 2007 election campaign, though individual contracts preceded Work Choices.
In his speech, Mr Howard argued that the “one bad political mistake” of Work Choices was the removal of the no disadvantage test – which prevented workers from being worse off under individual contracts – and questioned the widely held view the laws cost the party the 2007 election.
“I actually think that Work Choices, although it played a part in our defeat, wasn’t the main reason. The received view is that it was and therefore that’s had an impact on the commentariat and an impact on the Coalition,” he said. “I think we have to address this issue again. There is no reason why this country should not go back to the workplace system we had between 1996 and 2005 where you had individual contracts.
“But one addition to that is that you have got to do something about unfair dismissals.”
Mr Abbott has repeatedly tried to neutralise industrial relations as a political issue by promising to return Australian laws to the “sensible centre”, hinting at changes that would introduce greater flexibility to work places while reducing union militancy and boosting productivity.
Mr Howard’s speech came at the end of the day-long Westpac Deeper Insights forum in Sydney which also heard from Reserve Bank of Australia assistant governor Guy Debelle, Westpac chief economist Bill Evans and former Lowy Institute executive director Michael Wesley.
Mr Howard said small business was struggling under the weight of the Gillard government’s unfair dismissal laws, which had made it very difficult for employers to dismiss workers without “paying them go-away money of $50,000 or $60,000”.
“So I hope that in their own way, the Coalition returns to this issue. The timing of that and the handling of that is something that I’d leave to Tony Abbott and his colleagues,’’ he told the forum.
“I think it’s a great pity that in the last 25 years we have had tax reform, IR reform, we privatised government industries, we’ve got rid of tariffs and we’ve freed the financial system . . . but the one area [where] we have gone backwards is IR and I think that’s a great shame, and as time goes by the consequences of that will become greater.
Mr Howard said that while he didn’t respond publicly on day-to-day issues out of a sense of fairness to his successors, “I certainly haven’t lost my commitment to labour market reform”.
Mr Howard also made a pitch for further tax reform by arguing opposition parties should have allowed food to be included in the GST before it was introduced.
“I’d say that it’s a great pity that the Labor Party and the Democrats in the Senate in 1999 hadn’t voted for the GST that the Australian people voted for which then included food,” he said.
“The states have got a huge problem with their GST revenue and one of the reasons is that because demand for food is relatively inelastic for the most obvious of reasons, the absence of food from the coverage of GST is now having a painful effect on state revenues.
“You can put off going to a restaurant for dinner or you can defer a trip or something but food, if that was still in the GST, that would be more.”
Turning to the domestic economy, Mr Howard endorsed Labor’s view that the economy is in relatively strong shape.
“When the Prime Minister and the Treasurer say that the Australian economy is doing better than most, they are right, I agree with them,” he said. “There is no doubt the Australian economy is doing better than most – our unemployment is remarkably low, our debt-to-GDP compares very favourably and on all the measurements, our inflation is low.
“The overwhelming reason of course for this is to be found in our geography, the fact that we have an enormous amount of what George Bush used to say to me, he said, ‘John, you’ve got that stuff’ . . . that stuff has proved to be very valuable.”
Mr Howard’s comments about Australia’s low debt-to-GDP ratio are significant because some Coalition figures, including Nationals Senate leader Barnaby Joyce have used Australia’s debt levels to slam the government’s fiscal discipline, while Mr Abbott partly built his 2010 election campaign over Labor’s “debt and deficit”.
Mr Howard suggested that Mr Abbott was locked in to opposing the carbon tax for political reasons at the expense of business certainty and admitted his government could have invested more in productivity-boosting infrastructure at the expense of personal tax cuts and family payments.
Pressed during the question and answer session on Mr Abbott’s unrelenting political campaign against the carbon tax and whether the opposition leader should shift his position to give business certainty, Mr Howard effectively admitted the Opposition Leader’s hands were tied by political, rather than policy factors.
“Tony Abbott is in the political position he is now in because he stared Kevin Rudd down on the subject of the ETS. Whether you agree with that policy position or not, it’s the reason why the Coalition is where it is politically,’’ Mr Howard said.
“If Abbott had not become leader and stared Rudd down, Rudd would still be in my view the prime minister in his own right.”
Mr Abbott was quite right not to shift his position on the carbon tax for political reasons, Mr Howard said, as he had gone to the last election opposing it.
“To now turn around and say well I’m in favour of it or I’ll keep it, it might in according to one definition of certainty provide certainty, but on the other hand people would be entitled to say ‘but you’re no worse than Gillard, you said you were opposed to it and now you are going to keep it’.”
“The public will support a change of attitude if they’re given an opportunity to pass judgment. We found that with the GST.”
Mr Howard also conceded his 11-year government could have invested in infrastructure at the expense of personal tax cuts but defended his economic priorities.
“We could have done that – given lesser tax cuts and family payments, which are really tax cuts for people with dependent children,” he said.
“Yep, you could argue that and there is a respectable case for it. On the other hand I keep hearing this argument about the entitlement mentality in the community.
“Well, in a way it is the community’s money and they are entitled if they think the government is made adequate provision for defence and social security and all these other things, they are entitled to have some of it back.”
Current Prime Minister Julia Gillard lacks authority and popularity, he said, because of her involvement in the removal of predecessor Kevin Rudd and the hung parliament – and political certainty will not return until there is an election.
“I don’t think we will have certainty while we have a minority government, and that would apply whether the minority government were led by a Liberal or Labor person,’’ he said.