Tom Connell:
Well one of the inclusions in Labor’s Budget was non‑compete clauses. They claim this will be a big increase for people’s wages. Joining the panel now for more budget reaction on that, Assistant Minister for Competition, Charities and Treasury Andrew Leigh. In his own words, he’s been banging on about this for a while. Welcome to the panel. Yes, everything you say off air is on air too in this show.
So, non‑compete clauses – a lot of people will sort of go, alright, has that got anything to do with me? What’s a specific example that you’ve picked up because you’ve been very focused on this. You don’t have to put names in there, of a non‑compete that just had to go in your view?
Andrew Leigh:
So, we heard the story of a 17 year‑old dance instructor who was being harassed by her workplace. She moved to a competing dance studio and then got a letter from the former employer saying that she’d breached a clause that said she couldn’t work in another dance studio within 15 kilometres for 18 months. These clauses were originally applied only to executives, but are now being applied right across the economy, not just in the boardroom, but also in the mailroom.
Connell:
Can you see exceptions where people could take clients from a business with them? Is that an area where non‑competes actually protect a small business trying to make it in the world?
Leigh:
Well, employers still have a significant number of ways they can protect their intellectual property. Of course, they’ve got copyright and patent laws, they’ve got section 183 of the Corporations Act which makes it illegal to take information out of the business for your own benefit. And then they’ve got non‑disclosure clauses. They’re using non‑competes as the bluntest tool in the shed, but it’s curtailing labour mobility, which is one of the great sources of wage growth and productivity gain.
Connell:
But if you have, say someone at a law firm taking clients with them, there’s no IP there. They just, they’ve done that by building a relationship, or someone at a hair salon. Is that an area where there still needs to be some protection for a small business?
Leigh:
We will of course consult on this. It doesn’t come in until 2027.
Connell:
But, those things are on the table. You’re open to areas where these will still be applied?
Leigh:
Well at this stage, Tom, we’re not looking at these non‑solicitation clauses, which is what you’re talking about, except where they might be used to have the same effect as a non‑compete.
Connell:
Okay.
Andrew Clennell:
Why is it in the Budget?
Leigh:
Because we’re about productivity. So, the Budget needs to be about boosting growth. Ultimately, we’re pro‑growth progressives and the competition agenda of this government has been as ambitious as any government in the past generation.
Clennell:
How long have you been trying to get it past the Treasurer and Prime Minister to try and get this thing up?
Leigh:
The Treasurer and Prime Minister are very enthusiastic about this.
Clennell:
Yeah, but how long have you been trying to get it on the agenda?
Leigh:
We set up the Competition Taskforce in 2023. Jim and I announced that Competition Taskforce to drive things like the merger reforms, the National Competition Policy work with the states and territories, and then also the work on non‑competes. Our issues paper went out last year. We’ve got a range of thoughtful responses back on that. We’re moving at the same time Andrew, as a whole range of other countries are moving. Austria, Spain, Finland, the UK, the US all looking at the problem of non‑competes reducing job mobility.
Kieran Gilbert:
Why did you cap it at $175 grand a year?
Leigh:
We see the most egregious impact on wages Kieran, as being among low wage workers. And the Fair Work Act has that high income earner threshold which is a natural one to use, cutting in currently at $175,000.
Gilbert:
If you had your way, would you like it across the board – just get rid of it?
Leigh:
Well, this covers the vast majority of workers and therefore deals with the vast majority of the problem that we’re tackling in non‑competes. We know that firms have other ways of dealing with keeping their intellectual property and we know that non‑competes for workers that have them can drive down wages by around 4 per cent. So, we’re talking for an affected worker about a potential wage gain of $50 a week.
Angira Bharadwaj:
You said this is in the Budget because it’s a productivity measure. Do you think there were enough overall productivity measures in the Budget? What are some of the other things the government’s doing to boost that?
Leigh:
Yeah, look, the government’s really ambitious on productivity. Obviously, the education measures, the 3 day childcare guarantee, getting that schools funding agreement and the free TAFE places. The infrastructure investments are critical, as are the energy investments. All of those are about increasing the speed limit of the economy.
And the competition reforms proudly sit alongside that. We’ve had a decline in the competitiveness and the dynamism of the Australian economy over the last couple of decades and that’s really what’s led us to take such a strong forward leaning approach on competition.
Clennell:
Are you anticipating Peter Dutton to go bigger on tax cuts as a response to the government’s policy?
Leigh:
Well, today he went a lot smaller. We went into the parliament voting for lower taxes for Australians and the Liberals and the Nationals voted for higher taxes. Now, if Robert Menzies was still around, he’d be starting an Opposition party.
Clennell:
Well, hang on. I mean, he’s got a little bit of time now.
Leigh:
He had a chance, right? Today Andrew – he had a chance.
Clennell:
So, that’s it? You don’t think he’ll do it?
Leigh:
I have no idea what he’s going to do. He’s a bit of a loose unit.
Gilbert:
Does he consult you?
Leigh:
It appears not. But you know, this bloke will say one thing on Monday and do something else on Tuesday.
Connell:
But he gets to mull it over. Jim Chalmers was asked about giving a bigger tax cut. He said this was the most, basically that could be afforded. So, if Peter Dutton goes further, you can’t then match it, can you? If the Treasurer said this is the most the budget can afford?
Leigh:
Well, what we’ve done is ensure that every taxpayer got a tax cut. And if you put together – the tax cuts from last year and the tax cuts that we’ve now announced, that will amount to some $50 per week.
Connell:
But, this is your final offer?
Leigh:
This is what we’ve got in the Budget, and $50 a week is pretty substantial. That sits alongside measures such as cheaper medicines, cheaper childcare, the energy bill rebates – so much of it opposed by the Liberals and Nationals who seem not to care at all about the cost‑of‑living pressures that Australians are under.
Connell:
Alright, really appreciate your time today. Thank you.
Leigh:
Thanks so much.