LEON DELANEY:
Now, the big headline news today, of course, is the decision by the Fair Work Commission to award minimum wage earners an increase of 3.75 per cent. Joining me now the Assistant Minister for Competition, Charities, Treasury and Employment; our local member for the federal seat of Fenner; Dr Andrew Leigh. Good afternoon.
ANDREW LEIGH:
Good afternoon, Leon. Great to be with you and your listeners.
DELANEY:
Well, I’m sure you’re very cheered by the news that the Fair Work Commission has decided to award this pay increase to Australia’s lowest paid workers. Of course, I’ve already spoken to the CEO of the Council of Small Business Organisations Australia, Luke Achterstraat. His main concern? Well, he’s got 2 of them. One is he says that the 3.75 per cent is too high because it’s outside the target range for inflation and therefore reduces the likelihood that the Reserve Bank will see its way clear to reduce interest rates anytime sooner. And secondly, he says that you can’t have sustainable wages growth without proper productivity growth. And he’s right on that point, isn’t he?
LEIGH:
He’s absolutely right about the importance of productivity growth and that’s why it’s front and centre in our priorities as a government. We want to get people more skilled up, more apprenticeship places, those fee-free TAFE places, more spots at university, better infrastructure and competition reforms to boot. We’re also concerned that low wage workers have been falling behind and that real wage growth is now a central feature of what Labor is seeking to achieve in the economy. We don’t have an inflation challenge in Australia because cleaners and checkout workers have been paid too much. It’s because of the busted supply chains and the inflation that we’ve imported as a result of the war in Ukraine. We have unambiguously campaigned for increases in wages for the lowest paid since we’ve come to office. We’ve helped secure a 5.2 per cent pay rise for the lowest paid and of course, every Australian taxpayer gets a tax cut on 1 July, meaning the workers are earning more and getting to keep more of what they earn.
DELANEY:
Of course, the conundrum here, the catch 22, is that while inflation is not the responsibility of the low paid workers, they haven’t been driving up inflation by profligate spending, have they? Equally, it’s not the result of small business operators being unreasonable, either. They’re confronting what they’ve described as a cost of doing business crisis. If you’re looking for somebody to blame, the real fat in the economy surely is in the upper echelons of the corporate world, where there are record profits year after year and record growth in CEO salaries and executive pay. That’s where the fat in the economy is, isn’t it?
LEIGH:
Well we’re not going after anyone, but we’re certainly aware that small business need help. That’s why they’ve got that instant asset write-off extension and the energy bill relief, which is flowing not only to every household in the ACT, but also to small businesses as well. We understand small businesses are doing it tough. They’re at the heart of how we think about competition reform in this country. The work we’re doing around the Food and Grocery Code of Conduct goes to the suppliers, to grocery chains. We’re also really aware that if you get competition going again, then you get more of that healthy new business formation that’s fundamental to the productivity growth that Luke’s talking about earlier.
DELANEY:
Ok, now, the other point that Luke made, about 3.75 per cent being outside the Reserve Bank’s target range for inflation. Does that argument stack up? Does that make it less likely that the Reserve Bank will see its way clear to start reducing interest rates?
LEIGH:
The way to tackle inflation isn’t by keeping down the wages of the lowest paid people in the economy. It’s not by ensuring that early childhood workers and hairdressers are paid less. It’s about providing that targeted support. So, our measures in the last couple of budgets are forecast to take three-quarters of a percentage point off inflation this year, another half a percentage point off next year. What does that entail? It’s things like the $300 energy bill relief for all Australian households. It’s the childcare relief, which has driven down the rise in childcare costs that would otherwise have been substantially bigger. And it’s the 25 per cent increase in Commonwealth Rent Assistance, which also puts downward pressure on rents for those who are doing it tough. We’ve got to provide that targeted relief, Leon. But we’re going to do it in a way in that we don’t add to the inflation problem. And that’s why the boffins at Treasury say that our budgets are reducing inflation, not increasing it.
DELANEY:
I’m not sure that you’ve actually addressed my fundamental question, though, about this decision and what message it sends to the Reserve Bank. How do you think the Reserve Bank Governor is likely to interpret this decision in terms of weighing up inflationary pressures?
LEIGH:
Well, that’ll be entirely up to them, but I certainly believe that this decision is consistent with our determination to get inflation back into the target band. We came to office with inflation around 6 point something. Now it’s 3 point something. Obviously, the target band is 2 point something but again, Leon, we are not a government that aims to get inflation back into the target band off the backs of some of the lowest paid workers in Australia. We’re not waging war on battlers, unlike the former government, who said that keeping low wages low was a deliberate design feature of their economic architecture.
DELANEY:
Now, on the subject of competition, you have once again been banging the drum on one of your favourite topics about the so called non‑compete clauses in employment agreements and we’ve spoken about these many times before. There are some circumstances where a non‑compete clause makes perfect sense. For example, where an individual is a highly paid, specialised individual with a term contract saying, you will be employed for 3 years to do this job, and then when the business decides, well, we want to cut off the last year of your contract, you’re going to get paid out. But the condition is that when you get paid out, you can’t work for anybody else for that year. Now, that makes sense. But the clauses you’re talking about make absolutely no sense at all, because what they try to enforce is the idea that an employer can have some sort of say over what the former employee does with his own time once that relationship has been severed. And I don’t see how they can possibly enforce something like that.
LEIGH:
No and that’s a real problem, isn’t it, Leon, that these clauses often aren’t enforceable? But who’s to know unless you’ve got hundreds of thousands of dollars to pay pricey lawyers to go to court, so people end up folding in the face of threats of non‑compete clauses. In the article in The Monthly, I talk about the story of Tony, a boilermaker who switched to work in-house for a former client and his previous employer sent him a letter saying he’d breached his post‑employment obligations, threatened court action, seeking thousands of dollars in damages plus costs. Now, for a young boilermaker just seeking to make his way in the world, that’s a pretty brutal way of an employer reacting and yet one in 5 employees has a non‑compete clause right now. So, that’s why we’re looking very carefully at the role they play in the economy. We’ve just had this Issues Paper and a lot of terrific submissions come in, some really troubling stories, and the next step will be to announce what the government intends to do, to consult on that.
DELANEY:
Yeah. The other example you gave in your article was an individual who was employed as a hairdresser and then went off and established her own hairdressing salon and found herself facing the threat of legal action again because of this non‑compete clause. Now, if I work for you and you decide that you no longer require my services, I should be completely free to do as I wish in order to earn a living. You shouldn’t have any right to interfere with my ability to do so. Isn’t the enforcement of these so called non‑compete clauses really a restraint of trade?
LEIGH:
Well, Leon, I always thought I was more likely to end up working for you than the other way around. Happy to go with your hypothetical there. I do think that unenforceability is a problem, but they have a chilling effect, that’s the thing. People look at these clauses in their contract and they say, well, that’s what the contract says, I guess I’ll just go along with it. Some of the most terrifying stories I’ve been reading are about young women who are being harassed at work and then being told by the boss, well, you can leave if you like, but you’ve got a non‑compete clause and that’ll mean that you can’t work anywhere else in town. That sort of behaviour is just unconscionable and yet it’s going on because these non‑compete clauses are cropping up in all kinds of employment agreements.
DELANEY:
Yeah, I don’t see how they can even be legal, but, you know, I’m not a lawyer, so what we need, obviously, is some sort of clear and specific legislation to make sure that everybody is aware that they’re not legal.
LEIGH:
That’s right and so if you look at California, one of the most productive places on the planet, non‑compete clauses have been illegal since the 1890s. That’s meant that you get a whole lot of start ups. It hasn’t stopped tech heavy businesses from operating well there. Stealing secrets from your boss remains illegal in California, but California bosses can’t stop their workers from setting up a competing firm.
DELANEY:
Yeah, obviously stealing secrets is, you know, that’s not on but if I’ve severed my relationship with my previous employer, then that previous employer should have no further ability to interfere with my life in any way, shape or form. Before we run out of time, a couple of other things to talk about. Today I saw a story reporting that regional Australians in particular are more reliant on access to cash than people who live in the cities and yet it’s regional Australians who are most impacted by things like bank branch closures, and they’re finding it harder and harder to actually get their hands on the cash. This is a big issue.
LEIGH:
It really is and when I was on the House of Representatives Economics Committee, I would routinely ask the big bank CEO’s what’s happening with your branch numbers and your ATM numbers? And every time I asked them, the numbers were smaller than the previous hearing. Australia Post plays a really important role, 3,400 post offices around the country are playing a role of taking transactions. But when we have major banks closing branches, that has a real impact on regional communities and I would welcome some of the announcements we’ve had by major banks to pause branch closures.
DELANEY:
Yeah. In the past, Australia Post was actually an agency for the Commonwealth Bank. But since the Commonwealth Bank has been privatised, that relationship’s not as strong as it once was.
LEIGH:
Yeah, they can do transactions for any major bank or any bank, full stop. That’s a service that’s taken up by a range of different banks, that’s important, but if you’re doing other activities, such as more detailed transactions or getting mortgages, sometimes Australia Post outlets can’t do that and that then leaves regional Australians in the lurch.
DELANEY:
And in particularly remote areas even the Australia Post outlets are not necessarily Australia Post outlets. They might be agencies or franchises.
LEIGH:
Yes, that’s right and so we certainly have that issue of franchises closing down. You know, we’ve seen that even in Canberra, the Watson Post Office is now closing down so, it is a threat right across communities.
DELANEY:
Ok and finally, last week, the Parliamentary Joint Committee on Human Rights, chaired by one of your Labor colleagues, Josh Burns, gave a final report which recommends that Australia should introduce a human rights act. Why don’t we?
LEIGH:
Well, the committee report is a really important one. Josh is a very thoughtful individual, who brings an awful lot of heft to the Caucus. We’ll consider the report. It’s an issue that’s been around for a long time. I know there’s been a lot of advocates of introducing a federal human rights act. It’s certainly not something the government plans to do before the next election but we’ll take this report seriously as we take seriously everything that Josh says.
DELANEY:
Well, obviously there’s a process to go through. The government has time to consider the report and then prepare some sort of formal response. When should we expect to see some sort of formal response?
LEIGH:
Look, I don’t have a timetable on that for you, Leon. I’m aware that it’s an important issue, and I’m aware that it’s something that the Attorney‑General will have carriage on. Mark Dreyfus is probably the busiest Minister around the Cabinet table, and so he’s somebody who’s doing a lot of other reforms of course, he’s brought in the National Anti‑Corruption Commission, the Administrative Review Tribunal to replace the rorted Administrative Appeals Tribunal. He’s got a lot of other important reforms on his desk at the moment.
DELANEY:
Indeed. Andrew, thanks very much for your time today.
LEIGH:
Real pleasure, Leon. Thank you.