Tom Connell:
Well, the government is making it harder for employers to have so called non‑compete clauses. It says they were out of control, but it is willing to listen on changes that might need to be made on its legislation. Joining me is the Assistant Productivity Minister, Andrew Leigh. Thank you for your time. So, you’re consulting on these changes…
Andrew Leigh:
Pleasure Tom.
Connell:
Have you been told by business, for example, look – here’s why we might need to use these more, here’s the value of them. Are you open‑minded? I guess because you’ve been pretty critical of these agreements?
Leigh:
Well Tom, a lot of fast‑growing businesses are really enthusiastic about this change because they know that in a full employment economy, the only way of getting more workers is by hiring them from other firms. Fundamentally this is both about equality and freedom. Equality in the sense that a worker starting off isn’t going to negotiate over a standard form agreement with a big firm. Freedom in the sense that people should be able to work for whoever they like without being shackled and left on the sidelines in an economy that has skills shortages and is crying out for talented workers.
Connell:
You are still shackled or you can be with wage – I think it’s above $180,000 or so. Those people can often be, you know the real movers and shakers I guess of an economy. Is there a fundamental issue that they can still be offered, I guess, a non‑compete? It’s pretty hard to turn one down if your work offers you one. I guess if you’re saying no, you’re hinting you might be leaving soon and then often you’re not paid in that period. Is there a provision to say if you’re going to offer these to an employee, you’ve got to pay them while they’re sitting idly on the sidelines?
Leigh:
Tom, you ask a great question. We’re getting rid of non‑compete clauses for workers earning under $180,000 and then we’re consulting about what to do above that level. In other countries such as Finland, you can’t have a non‑compete unless you compensate the worker. That’s one option that’s been put to us, but we’ll engage constructively with business as to how to deal with that. The proposal though does cover the vast majority of workers – the cleaners, the hairdressers, the security guards, who we know are being shackled right now by non‑compete clauses. You know, these are clauses that were originally meant to apply to high paid executives and now are applying to yoga instructors and fitness instructors.
Connell:
Alright. So you are genuinely considering where you are allowed to have one, you have to pay someone a replacement wage. During that period they can’t leave instantly and work for a competitor?
Leigh:
Look, there’s a range of different options for what we do for over $180,000. That’s about one in 10 workers. For the 9 in 10 workers who are under that level, then we’re looking to ban non‑compete clauses. There’s a long lead time on this. Treasurer Chalmers announced it in the Budget. It won’t take effect until the beginning of 2027. So, we’re moving constructively with business on a really important productivity boosting reform. This is going to mean lower inflation, it’s going to mean higher wages and it’s going to increase the number of businesses that we see started up in the economy. Good for wages, good for prices, good for productivity.
Connell:
Union boss Sally McManus has said productivity is an issue because of bad bosses and burnt‑out workers. Do you agree?
Leigh:
Look, Sally McManus will choose her own words. I certainly know that we need to make sure that we’ve got business and unions working together with the community sector and that’s what Treasurer Chalmers’s Economic Reform Roundtable will do. This is a really great chance to have that conversation around productivity. Building on a range of the important reforms that we put in place in our first term, such as the revamp of the merger laws, getting National Competition Policy going again, investing in education through the historic schools agreement. All of those things are vital to a more productive economy which after all is the foundation for higher living standards.
Connell:
Is there some other really low hanging fruit? I mean, you’ve been saying non‑compete is just illogical – where it’s been laid out. Get rid of them and instantly improve things. Are there other simple bits of low hanging fruit that you’ll be pushing for?
Leigh:
We’re certainly looking for those sweet spot reforms Tom. You know, economists sometimes talk about the equity‑efficiency trade off. Some policies do have that trade off, but many don’t. When we invest in disadvantaged young people, make sure they have access to the skills they need, such as through free TAFE then we’re not only making a more equal economy but also a more productive one. And revamping National Competition Policy I think probably is a reform of the character you’re talking about. Engaging with states and territories on planning and zoning, on ensuring that we’ve got occupational licensing right. On making sure that we’ve got the mobility and the dynamism in the economy that we need to encourage startups and to see firms grow and employ more people.
Connell:
And we’ve also obviously got this roundtable. The background that Jim Chalmers sort of fleshed out was all ideas welcome, but they’ve got to be budget neutral or better. He says now the budget needs to be more sustainable. Labor spoke a lot in the election campaign that the Opposition will cut, meaning you won’t. Does that mean the path to budget sustainability has to be in whatever way. Maybe it’s just efficiency, but raising more money through taxes in some way?
Leigh:
Well, we’ve made a lot of efficiencies and I really pay credit to Katy Gallagher and her work reining in expenditure on consultants and contractors. By bringing that work in house, we’ve often saved the taxpayer money as well as delivering better services to Australians. We’re very aware of the need to crack down on the rorts and the waste that we saw under the Coalition – the sports rorts, the car park rorts. All of that has saved the taxpayer money. And then of course, the important multinational tax reforms of our first term.
Connell:
But that’s done, and here we are with the Budget now. So, is the only way to make it sustainable from a Labor viewpoint, given you said we don’t want to cut services, that’s what the other side do. Raising more tax?
Leigh:
We’re always open to efficiencies and Katy Gallagher is doing important work around artificial intelligence in the public sector and ways of producing a more productive public sector. The work that we did on improving the Petroleum Resource Rent Tax and so the west coast gas projects pay Petroleum Resource Rent Tax this decade, that’s been important to budget sustainability too.
Connell:
Andrew Leigh, got to leave it there. Thank you.
Leigh:
Thanks, Tom.