22/11/2005 - 21:00

Government should reassure on IR

22/11/2005 - 21:00


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I had an interesting experience the other day when I found myself in a room of people who were bitterly opposed to John Howard’s proposed industrial relations changes.

I had an interesting experience the other day when I found myself in a room of people who were bitterly opposed to John Howard’s proposed industrial relations changes.

As I found myself discussing why business wants the changes (and admitting that not all business wants all the proposed changes), I encountered a common theme of resistance – that workplace agreements will push wages down and leave people worse off. Those people would be the most vulnerable.

This, according to the people I was with, was the unfairness they were all concerned about.

I couldn’t help harking back to the introduction of the GST and how the federal government ensured there was minimal opportunity for its reforms to be derailed by business capitalising on the changes.

While I believe there won’t be any greater degree of ‘exploitation’ of labour than before, it would still be a canny political message for the government to stress that it has taken a strong position with regard to businesses that overstep the mark if and when the proposals become law.

Just as consumers were ‘protected’ from business that may have wished to improve margins with the arrival of GST, so too do some people need reassurance that minimum standards will be maintained.

In my view this is more of a sell than an issue of substance.

Basic awards will be enshrined in legislation and a minimum rate of pay will be maintained.

Perhaps the debate would be more useful if it shifted from hysteria over the introduction of the IR reforms to who these vulnerable people (they are not, for instance, construction workers, are they?) are and what are the minimum standards – such as the basic hourly rate of pay.

Opponents of the legislation are avoiding this debate because what they wish to keep are not, in many cases, minimum standards but rather the complex and convoluted award structures that have been cobbled together over the past century.

In many cases they guarantee people pay for roles that no longer resemble the positions they hold. Danger money when there’s no danger, special allowances for doing things that are more ‘every day’ than ‘special’.

It is like a lottery; you win a job in one of these highly controlled industries – like construction – and you also get all the benefits that come along with that, whether or not they relate to your job or your experience or your efforts.

That needs to change and the new rules allow for an organic shift as new workers come on board to a system where pay relates directly to the work you do – where your contribution is rewarded for your individual efforts.

The other pay debate

While this debate rages about minimum standards, another annual argument is being had about executive pay.

To people on one side of the fence it’s obscene; to others it’s just rewards.

This year we have embarked on our annual salary survey with the mission to examine not whether big pay packets are right or wrong but to compare the performance of the people getting them.

It is a fascinating study by journalist Mark Beyer, and is no doubt the most comprehensive survey of Western Australian executive salaries.

While the survey stories avoid the argument of right or wrong, I don’t have to.

I think it’s a pity that too many poor performing CEOs and chairmen are rewarded well when compared to their more successful colleagues.

It makes it harder to justify the line I strongly believe – that people are worth what they are paid and there is little you can do about it.

Unfortunately, shareholders ought to do more to make sure poor performers are marched out the door rather than chauffeur-driven down money-lined aisles. That means more than stopping every big remuneration package – it is about making sure that real benchmarks are set so that everyone is rewarded.

Once we get that right, big salaries will be far more acceptable.

Ultimately, business leaders should be rewarded for success, which includes bolstering the superannuation returns of the many employees who will rely on that money when they retire.

Got a spare room?

I loved this exchange between BHP Billiton iron ore chief Graeme Hunt and Fortescue Metals Group executive Julian Tapp, reported by WA Business News this week in our Daily Business Alert email.

The argument is over access to BHPB’s rail network, and Mr Hunt remains unhappy about a draft National Competition Council ruling allowing FMG to use the train line.

“This is a bit like someone deciding someone else has the right to live in your spare bedroom and then the debate is about how much rent they have to pay,” Mr Hunt said.

Speaking from the floor, Mr Tapp took up the room analogy.

“What we are asking for is not the right to stay in your spare bedroom but the right to stay in your hotel and not necessarily to eat your food,” Mr Tapp said.

However, Mr Hunt got the last word in on the matter

“We don’t own a hotel, we sold the hotel in Newman five years ago,” he said.


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