Hamish Macdonald:
Imagine for a moment you’ve worked your whole life in one particular industry – something you love doing, then one day you receive a redundancy. It feels pretty disheartening, obviously. You take it on the chin, you go back on the job hunt, then you realise that your redundancy came with a non‑compete clause meaning for the next year, maybe even longer, you can’t do the work that you love that you’ve trained for. Surveys are showing that as many as one in 5 employees in Australia are bound by these non‑compete clauses. Now the government is taking measures to end the practice for low and middle‑income earners. Andrew Leigh is the Assistant Minister for Productivity, Competition, Charities and Treasury. It’s a mouthful of a title. Good morning to you Dr Andrew Leigh.
Andrew Leigh:
Good morning Hamish, great to be with you.
Macdonald:
You’ve encountered a few horror stories of non‑compete clauses. What sort of situation do people end up in?
Leigh:
Absolute shockers. There was a laundromat manager in a small regional town who was made redundant and told that she had an implied restraint of trade that stopped her working in the same industry. There was a health worker on $80,000 who had a non‑compete clause that said they couldn’t work anywhere in Australia or New Zealand. There was an engineer on $63,000 who was banned from working anywhere in the same state for 12 months. These are clauses that are originally designed for CEOs, but now cropping up in the employment agreements of early childhood workers, security guards and fitness instructors.
Macdonald:
Why do employers want to put them in? What’s the benefit to the employer?
Leigh:
Well, the benefit for the employer is they get to get a leg up over their competitors. If you’re a stagnant firm, where you might be concerned that your employees could go to work for a fast‑growing competitor. That’s of course good for their wages, and it’s good for the productivity of the economy, but it’s not good for the incumbent. And so, firms have just been chucking these things in because a lot of employment agreements these days are standard forming agreements written by the boss, so why not throw in a clause which is advantageous to the employer?
Macdonald:
You mentioned early childcare. Are there particular sectors or industries where people are being most affected by this?
Leigh:
We’re seeing it across the board. It’s occurring with gig workers; we’ve seen examples with yoga instructors. There’s barely an industry that’s not touched by non‑compete clauses. And of course, they’re bad for a start‑up firm – because in a full employment economy, if you’re going to start up and grow you need to hire workers from existing firms, so they’re really damaging to the economy as a whole. Some of the US evidence also says they widen gender and ethnic pay gaps too.
Macdonald:
Andrew Leigh is the Assistant Minister for Productivity, Competition, Charities and Treasury. So, this ban you’re introducing actually limits this to people who earn less than what’s categorised as a high income, and that’s $180,000. Why stop it there, why not just ban them across the board?
Leigh:
Well, we thought that that was the most straightforward case Hamish, and we’re consulting about how to handle the employees earning above $183,000. This takes 9 out of 10 workers who are covered by the Fair Work Act out of the non‑competes, and means that the economy becomes more productive and more efficient. We get better wage growth and we also get more productivity from those new fast‑growing firms.
Macdonald:
I’ve got a text here from one listener saying, ‘I’ve just been made redundant by the New South Wales government. I can’t work in my industry for 9 months according to them.’ So, are there going to be governments that are caught out by these new rules?
Leigh:
Look, these reforms will cover government, although obviously there will be some areas such as national security where there’s necessary carve‑outs. That’s not about competition, that’s about safeguarding national secrets. But in general, we want to make sure there’s more competition and more dynamism right across the economy.
Macdonald:
We’ve been talking about the climate risk assessment this morning; a lot of people concerned about particularly what this looks like for Sydney. I know you’re very interested in the numbers of these sorts of things. Help us understand what the economic impact of climate is going to be for us here in Sydney?
Leigh:
More extreme weather events, which are costly to recover from, more heat waves which can make it hard for people who work outdoors and more impact on people’s health and impacts particularly on coastal communities which involve significant expenditure and adaptation. We’re putting the money into adaptation. Most importantly we’re also acting on dangerous climate change after 9 years of inaction under the former government, engaging with countries across the Pacific and around the world, because we know this is a shared global challenge but also an opportunity for Australia to become a renewable energy superpower.
Macdonald:
How are you thinking about our 2035 target given that’s about to be announced, and so many countries around the world are sort of stepping back from their emissions reduction targets? The United States, even Canada taking somewhat more, I guess nuanced approaches to this?
Leigh:
We’re ambitious and we’ve set that ambitious target of 43 per cent emissions reduction by 2030, which we’re on track to do. The government has received advice from the Climate Change Authority and the Minister, Chris Bowen is carefully considering it. I mean, he’s working very hard to get the renewable energy infrastructure that we need in place; engaging with renewables investors around the globe, because we know that transformation of the electricity grid is really at the heart of so much of what we’re doing, and also the Safeguard Mechanism.
Macdonald:
Could you make the case to listeners this morning for Australia taking more ambitious steps? A lot of people, whenever we talk about this say, ‘Well, what about countries like China? What difference does it make?’ Many of your political opponents say, ‘What difference does it make Australia taking ambitious steps when it will cost a lot to make that transition, if the biggest polluters aren’t doing their part?’
Leigh:
Well, no advanced country is more affected by dangerous climate change than Australia, and to be ignoring it would be like behaving like a global litterbug. If you drop your garbage on the ground in the streets of Sydney, then you’re not causing a mountain of trash, but if everyone did it, we would have a mountain of trash. So, each of us have the responsibility to take action and by taking action, a country that is flooded with wind and solar can also become a clean energy exporter to the rest of the world. So, it’s an opportunity for us.
Macdonald:
But will that action actually do anything to change these forecasts for us here in Sydney?
Leigh:
Australia is a significant global emitter on a per‑person basis. We’re one of the highest, and so we do have a responsibility to act, and in acting we show an example to other countries around the world. You don’t have to choose between growth and acting on climate. Australia is doing both.
Macdonald:
It’s just a question though about direct impact. Like does Australia having an ambitious 2035 climate target actually do anything to shift these dire predictions that you’ve released in the risk assessment yesterday?
Leigh:
We’re not going to avoid all of the dangerous aspects of climate change, and the report yesterday made that very clear. So, we do need to work on adaptation, but it’s also true that Australia’s emissions have an impact on the climate, and Australia’s example in acting on climate has an impact on the rest of the world. So, we need to do our part, and in doing that, we’re creating clean energy jobs, everything from PV installers to battery manufacture – all of that is really important for the nation.
Macdonald:
I’m about to take some calls on what people here in Sydney are doing to adapt themselves. Are you doing anything, Andrew Leigh, to adapt to climate change? Are you making your home ready, are you switching cars? What are you doing?
Leigh:
Yeah, trying to make the home a lot more energy efficient. So, we’ve been changing out the old windows to new windows, we’ve got a couple of electric vehicles, and yes, doing what we can to reduce our climate footprint. But ultimately, while I admire everyone who does that, we also need a government that takes serious action, and the risk of the Coalition abandoning net zero, turning its back on the business community and on Scott Morrison’s commitment, that would be disastrous.
Macdonald:
Dr Andrew Leigh, thanks for your time this morning.
Leigh:
Thanks, Hamish.
Macdonald:
Dr Andrew Leigh, the Assistant Minister for Productivity, Competition, Charities and Treasury.