‘Finding common ground’

Ged Kearney address to the National Small Business Summit
7 August 2014
Melbourne

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Thank you for that warm welcome.

Congratulations to Peter Strong and the staff and board of COSBOA for putting together this conference, with such a strong and diverse roster of speakers.

Can I say just how much I appreciate the opportunity to address you today and to share some perspectives from Australian workers, whose voices are all too often marginalised or muted about the big issues facing our nation.

It is vital to Australia’s future that working people are represented and heard when we talk about issues that will impact on them, such as economic growth and productivity.

Workers have much to contribute to the public debate.

I am here as the proud representative of a movement of almost two million members that has historically performed a central role in protecting and advancing rights in the workplace and in building a fairer and more equitable society.

I have always believed in the power of the collective, the solidarity of a union, as the greatest force for change not only in workplaces but in society.

Alone, we can feel powerless, but together and united – and organised – we can achieve great things.

Employers organise through groups such as COSBOA, industries through peak bodies like AMMA, and workers through unions.

We all campaign. We all lobby for our members’ interests and if we didn’t, the whole system would be out of whack, a slave to one great force.

As a small businessperson the likelihood of you alone making a difference in the policy world is very slim.

But through organisations you have much more power. But imagine if you had no voice; I am sorry to say, the power of multinationals would be huge. Corporations would have all the sway.

There would be no balance. Imagine if there were only unions; you could argue there would be an imbalance.

A civil society is one where everyone has a voice. That is about balance and a civil society.
Workers – taking collective action and campaigning through their unions – have fought to win and defend basic rights in the workplace such as the eight hour day, public holidays, penalty rates, annual leave and sick leave.

Unions have also taken the lead in extending and updating employment standards as economic and social conditions change.

Unions in Australia have also played a fundamental role in promoting and securing fairness and equity through our broader social policy framework.

In the 1980s and 1990s, unions were partners with government in modernising Australia’s economy to recognise and respond to the realities of global competition, while seeking to preserve the fairness and protect those impacted by the changes.

The legacy from that era is a superannuation system that is the envy of the world, and a social wage developed in co-operation with the Labor Government and the leadership of business groups of the time.

Australian unions have a long history of speaking not just on behalf of their members, but on behalf of all workers.

We do this in the workplace and we do this more broadly in ensuring that the voice of workers is heard in debates about our industrial relations system and about which direction our society should go.

We are prominent in the current debates about Medicare, tertiary education, pensions, welfare, climate change – we fight for these things because they make a better society and they benefit our members. They make a better life for all.

We also partner with employers and fight together for things like better industry policy, for fairer taxes, for sustainability of enterprises. We have no interest in seeing businesses go broke.

I imagine among you today will be a range of experiences of unions.

Some of you will have regular dealings with unions as representatives of your workers; others may never have spoken to a union official.

But through the Award system, superannuation, occupational health and safety laws, minimum wage rates, and a range other industrial and legal instruments, your businesses are touched by unions in ways you might not even think about.

And I dare say some of you reflexively think of unions as the enemy, regardless of how much actual contact you have had with us.

Unfortunately some unionists also think of employers as the enemy, regardless.

This is a great pity and it is one of the great blights of public policy debate in contemporary Australia that we tend to divide into opposing camps.

I think much of the blame for this falls to the insatiable thirst of the media for conflict because conflict generates news.

The result of this is that we tend to emphasise our differences rather than look for common ground.

We must be wary of being seduced by politicians who are seeking to exploit grievances for political ends, cloaking ideology in policy, and trumpeting “solutions” to problems that don’t really exist – short-term fixes that provide no lasting solution.

We need to beware the cliché without content.

An example of this flawed approach is the recent changes to the work-for-the-dole program introduced by the government along with the craziness of the 40 job applications per month policy.

This policy, which seems to have no purpose except to punish jobseekers and the most disadvantaged in our society, is a classic case of focus group spin over common sense – not to mention research and evidence.

You cannot find anyone with a good word to say about this crackdown, whether it be business, unions, or welfare organisations.

We need to be more mature than this.

If I can leave you with one abiding message from today, it is this: unions need not be your enemies.

Just as COSBOA has today shown a willingness to engage with the union movement by inviting me here, I extend to you the hand of collaboration to find areas where we can work together for the common interest.

The ACTU and its affiliates have a strong record of engaging with industry and employer groups on industry policy, skills and training, workplace health and safety, job creation programs and other areas.

I would like to think we can do the same with the small business community.

I say this to you both as a unionist, but also as someone who has great affection for small business.

I grew up in a small business family. Some of my earliest memories are of my mother and father working behind the bar of our family’s pub in Richmond.

My first jobs were in the family pub, and there were many family conferences around the dinner table about the trials and tribulations of the family business.

My parents were typical small business people: they worked long hours, rarely taking holidays, and always attuned to the business even when they weren’t physically in it.

They had a small, loyal workforce, and they expected their children to also do their bit for the business.

It was hard work, frequently stressful and always peppered with risk, but rewarding in its own way because of the freedom and independence that came with running your own business – not to mention the evident satisfaction our employees got from being so close to the good outcomes of their labour.

Our customers were working people. My mum used to say hard working women and knock about blokes.

The pub gave them an outlet to socialise and be part of a community, and we were forever grateful that their earnings were sufficient to give them the disposable income for a meal or a couple of pots of VB in our pub.

Some of my siblings have followed my parents into small business, and although my own working life went in a different direction as a nurse and then as a union official, I have always remained sympathetic to the needs of small business.

But beyond that, unions recognise the crucial role of small business as an engine driver of the economy, and provider of employment for about 4.5 million people.

Small business has always represented enterprise, endeavour, innovation and entrepreneurship.

But small business has changed immensely in Australia over the past couple of decades.

Today, more than 60% of small businesses in Australia are not employers but rather independent contractors and sole traders.

The majority of these new small business people have worked at some stage as an employee and their parents most certainly did.

Many are independent business owners in name only, tied to a single contractor and to all intents and purposes an employee, without the entitlements of an employee.

Some of these independent contractors and sub-contractors did not become small businesspeople voluntarily.

They had their newfound status foisted upon them by contracting out, outsourcing, and competitive tendering.

Sometimes, they have been made redundant and then had to contract for their old job as a result of a privatisation or outsourcing agenda.

They have had their entitlements as workers stripped away, and found that suddenly many more of the risks of life and work had been shifted onto them.

Women in small business and micro business are particularly vulnerable – lured by the promise of being able to do it all, run the business at the same time as they care

for the kids and keep the house clean.

I know that many of them work incredibly hard and sadly many fail after a short period, often with debts. Many don’t pay themselves a decent wage or superannuation. I worry about this.

There is definitely common ground there between unions, who stand up for workers who are often faced with powerful business interests, and the owners of small businesses who also often face a power imbalance from commercial landlords, fleet owners, franchisors and others.

However, I am not naïve.

There are many occasions where unions, as representatives of labour, and business owners, as representatives of capital, will find ourselves on opposite sides of the fence.

Sometimes conflict is inevitable.

I suspect that one issue on which we are never going to find 100% agreement is that of weekend and night rates – or, as they are erroneously called, penalty rates.

No doubt fuelled once again by political opportunism and ideology, the debate about weekend rates is raging at the moment.

Big employer and business groups are lining up to put the boot in.

Unfortunately, this is another issue where the facts are not allowed to get in the way of a good story.

Virtually on a daily basis, outrageous claims are made which simply bear no relation to the facts, about the so-called negative impact of our workplace laws on the economy.

The truth is that on just about every measure – whether inflation, economic growth, productivity or days lost to industrial disputes – Australia is doing well.

Joe Hockey said so in NZ just last week.

Small business should not struggle in a wealthy land like ours. We must ensure that you are supported and that our great wealth is spread evenly.

The problem with the productivity debate in Australia today is that it has been hijacked by a narrow big business lobby fixated on more changes to our workplace laws.

Note that I say big business – because it is the big end of town where these campaigns are devised – not the main streets of suburbs and towns.

This is a debate where “productivity” is confused with “profitability”.

But the way to lift productivity in Australia is not through cutting workers’ pay and conditions.

The labour share of national income has already fallen by about 9% since 2000.

The “wages breakout” that conservative commentators keep warning us about never arrived.

Instead, we now have a “wages underhang”, where wages have failed to keep pace with productivity growth. There is a decoupling in fact where productivity is growing faster than wages.

Australia will never be able to compete with developing and third world countries on labour costs – and nor should it.

Instead of an endless roundabout of agitation for legislative changes, we need to focus on innovation and improving the skills of our workforce, investment in technology and – dare I say it – better quality management.

As the economics writer Ross Gittins wrote in a recent column: “productive workplaces are not the outcome of legislation but of the quality and leadership at the workplace”.

Governments can’t solve all your problems for you.

Nor can the headwinds confronting small business be narrowed down to labour costs.

I recently met with a lovely gentleman called Mr Robert Wilson. He runs an SME in Melbourne.

He took me through a range of hurdles small business owners face, including tax regimes which drain cash flow, high costs of capital, the impact of a high currency (if they are exporters or competing against imports), lack of scale, enormous rents and soaring energy costs, and limited funding for research, development and business transitioning in a volatile and ever changing economy.

He mentioned to me the pressure of bargaining with the union – the resources it takes. He told me his labour costs were 20%.

Let’s talk about these things.

Our door is always open, but we will not make progress on a national productivity agenda until we can have a mature discussion that moves beyond industrial relations laws and cutting people’s pay and entitlements.

Weekend and shift rates of pay have been in existence for decades. They are not some recent phenomenon, and Australia’s economic growth has not been impeded by them.

They are a fundamental part of our industrial relations system, which almost uniquely in the world has always balanced the business needs of employers with equity and fairness for employees.

The 2012 review of the Modern Award system, contained two dozen different submissions arguing that penalty rates should be reduced or scrapped completely in the retail, hospitality and tourism industries.

That would have meant more than 330,000 of our lowest paid workers would have been out of pocket by anything up to $105 for a six-hour shift on a Sunday.

If this bid had succeeded it would only have been a matter time before employers in other industries tried to follow, and strip penalty rates from the rest of the 1.5 million workers who rely on Awards.

These are real people with real mortgages and real living cost pressures, just like you!! I doubt many of you would cheer about having hundreds of dollars ripped out of your pockets.

I know that penalty rates are the difference between many young people and women making ends meet or not.

Just recently I met a man who told me that the $80 in penalty rates he earned every week meant he could afford his wife’s medicines. For others, it will be the difference between making the rent and not.

I know that penalty rates are a big point of difference for us but when unionists like me are out there fighting to keep penalty rates I want you to know it’s not because we want to make things harder for small businesses like you all – what we are really saying is please don’t do this – please don’t make low income people even lower income people – don’t make things just that bit harder for them.

And that isn’t good for business.

When you lower incomes you lower consumer demand and economic activity.

We lose billions of dollars extra being circulated in our economy each year.

That is money that is spent in the shops and cafes of every main street in every suburb and town in Australia.

These are your customers.

The age old argument that more jobs will be created has been proven to be wrong.

Rip those billions of dollars out of the economy, and you take tens of thousands of jobs with it.

Australians understand this.

And we know from the USA that lowering wages does not create jobs.

I know that by and large, many small business owners actually have no problem with the idea of paying their workers a decent wage.

They often have a personal relationship with their employees. They recognise the contribution that a good, skilful, experienced employee can make to the profits of their business.

My friend Mr Wilson proved this to me when he introduced me to his loyal staff.

And they are prepared to reward their employees for their efforts, for the hours they work, often unsociable, because they view the business as something like a team.

So I would love to work with you to find ways of promoting good policy that helps small business.

Fairer taxation, assistance with R&D, fairer energy costs, better industrial process, like Industry bargaining for example, Industry assistance for transitioning a business.

Assistance with skills and training of your staff, multiskilling.

A wide range of ways we can work together without butting heads.

This is the real world, a world that the highly-paid lobbyists who work for ACCI or the Business Council have little experience of.

Unions never seek conflict for conflict’s sake.

But we will not take a backward step if the basic pay and conditions and rights of Australian workers are under threat.

If there is a fight to be had, we will fight.

That is my job! I am the president of the ACTU. That is my role in the great washing machine and tumble dryer world of ideas and ideologies, along with Peter Strong and Cassandra Goldie and others that eventually shapes our nation and builds a fair and egalitarian Australia.

Once again, I thank you for the opportunity to engage today, and look forward to working co-operatively with COSBOA in the future.

I think it is important that we seek to find common ground where we can on the issues that we agree on, and that we respect the positions of different parties on the issues we don’t agree on.

We have a strong record of constructive engagement with employers and business.

We recognise that businesses need to make profits in order to reward their employees.

And we understand that economic prosperity and productivity is crucial to lifting the living standards of all working people.

But strong economic growth and business profits are not mutually exclusive from workplace rights and decent pay and conditions.

They can – and must – go hand-in-hand.

Unions can work with employers to negotiate change in workplaces every day, to get a balance between flexibility, productivity and protection for workers. This is a conversation that I hope to continue with you in the future.

Thank you.

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