20/02/2007 - 22:00

Shifting the balance of power

20/02/2007 - 22:00

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Australians are getting used to the idea of a two-speed economy, with resource-rich Western Australia and Queensland rocketing away from the southern rust-belt states.

Less obvious is an internal two-speed function of the labor market, which is separating people in each state; and which is starting to hurt.

Essentially, we are dividing into those who believe in government and unionism, and those who wish everyone would just get out of their way so they can get rich without interference.

Two items of evidence support this sweeping statement from Briefcase which, when analysed, points to an old Australia and a new Australia.

First, there is the painfully obvious inability of government, particularly state governments, to deliver the services they promise, or find enough good people to work for them. Water, schools, hospitals, police, power, and roads are obvious areas in which government is falling down.

Second, there is the absolutely astonishing analysis of trade union membership reported by the Australian Bureau of Statistics.

In reverse order, the latest ABS yearbook reports that trade union membership in the Australian workforce stands at 22.4 per cent. In itself, this is nothing new. Most observers of the changing labour market have noticed the collapse in union membership from its peak of 61 per cent in 1962.

What’s new with the latest ABS data, at least it’s new for Briefcase, is a breakdown of the private and public sector.

In the private sector, what we might as well call ‘new’ Australian because of the way it is embracing new technologies and work habits (hands up anyone in this sector who remembers Monday-to-Friday, nine-to-five hours?) union membership has dropped to just 16.8 per cent.

If that 16.8 per cent isn’t eye-popping, there’s more in the detail.

In the public sector, union membership is 2.8 times higher at 47.2 per cent of the workforce. On a gender breakdown, union membership among female government workers is 44.8 per cent. Among males it is 50.4 per cent.

On a sector-by-sector breakdown, the ABS data shows that union membership between 2000 and 2005 has fallen (or remained steady) in every category of industry except, and you guessed it, government, where there has been a modest increase.

Briefcase would be connecting too many dots too quickly to draw a comparison between the heavy unionisation of government workers and the failure of government services – but some sterner critics might feel inclined to do so.

Consider how that allegation might be made using schools, hospitals, electricity and water as case studies.

In the case of schools, parents are voting with their feet and wallets and getting their kids out of the government system as fast as they can. Why? Because the government work-to-hours system is failing the kids. It shows up in examination results, and shows even more starkly when government tries to hide the so-called league tables of the best schools. In the case of hospitals it has actually become a life-and-death matter.

In electricity, it is all about struggling to meet demand, and in water it is all about taste – government water is awful, and private suppliers of decent water are booming.

To cap off this failure of government and its workforce – which receives zero incentive to work harder, longer, or smarter – there is the utterly gobsmackingly astonishing situation of government clinging grimly to the supply control of water and power, and then running advertising campaigns about not using the service they’re selling.

The problem for government, and the victims of its alleged services, is that nothing is going to get better quickly because of a big new factor in the equation – the boom.

This point is illustrated by the inability of government to find enough people to fill the job vacancies it has. Why? Because all the good people are migrating to higher-paid jobs in the private sector where the money flows more freely, and where there is reward for effort and ability – not reward for simply turning up.

When boiled down, the indisputable evidence of failing government services, and the heavy, inflexible nature of the unionised government workforce, illustrate starkly the difference between old Australia and new Australia.

New Australia has its problems, simply because money is most definitely not the answer to everything in life.

Old Australia, however, has an even bigger problem. It’s called living in the past.

•••

While considering the question of old and new Australia, the thoughts of Briefcase also drifted back to an earlier theme – conflicts of interest.

In fact, these two issues combined very neatly in the form of the hometown boy made good, Rod Eddington.

A few weeks ago Sir Rod was appointed an adviser to new Labor leader, Kevin Rudd. His brief was to bridge the gap between Labor and business.

But, unless Briefcase is sorely mistaken, this is a mission doomed to fail, because Sir Rod faces the challenge of what looks to be an example of the immovable object meeting the irresistible force.

The object that refuses to budge is the union movement, which retains a grossly disproportionate hold on the Labor Party – something like 40 per cent of the votes while representing 22.4 per cent of the workforce.

Mr Rudd must listen to his union mates, and their desire to smash Australia’s new workplace laws, because the unions still dominate Labor politics.

But Sir Rod faces an equally powerful issue – his role as a director of Rio Tinto, a mining company at the forefront of smashing union power, and which has made fat profits (and enriched its workforce) by re-focusing workforce loyalty to the company and the job, and not the union.

What, Briefcase wonders, will Sir Rod tell his mate Kevin about workplace agreements. Surely a conversation would go like this:

Sir Rod: Kevin, these workplace agreements and individual contracts are pretty good.

Kevin: No they’re not.

Sir Rod: Yes they are.

Kevin: No they’re not ….. (and on, and on, it goes).

Get the idea. Classic irresistible force and immovable object – and the only loser will be Sir Rod.

•••

“Great minds discuss ideas, average minds discuss events, small minds discuss people.” Hugh Cameron

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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