Beyond the Budget: Building the Nation

Speech to the National Press Club 
Greg Combet
ACTU Secretary

2 June, 2004

Unions are one of the longest-standing and most resilient institutions in this country.

For over 150 years unions have helped to shape Australian social and economic life. 

We have lifted living standards for generations of Australians.

Through our representation of working people, unions have felt the effects of economic booms, depressions and war.

When the labour movement recently celebrated the centenary of the world’s first national Labor government, many of us were mindful that this was in part a union achievement – for in the 1890s unions created the Australian Labor Party.

Unions took that step so that working people would have political as well as industrial influence. In partnership with Labor, unions have built great social assets like Medicare and universal superannuation.

We therefore look to the future with a long and proud record of achievement to draw upon, and a resilience matched by few other institutions in our society.

And the source of this resilience is not only our capacity to adapt, it is the continuity of our values.

Fairness in the workplace, justice in the society, opportunity for the individual.

These values represent not only our past – they are the foundation for our future.

Since my election as ACTU Secretary, about four and a half years ago, I have set about applying these values in practical ways to improve employee rights.

We have been achieving tangible results.

The ACTU has lifted minimum award wages by $94 per week since 1999.

Most union members however do not rely on minimum wages – their pay is now set by workplace collective bargaining. 

And through bargaining union members now earn about 15% more than non-unionists across the economy – or more than $100 per week extra.

Bargaining campaigns have also delivered new standards such as nurse to patient ratios in the health system, smaller class sizes in schools, new family rights, and better health and safety standards.

Union campaigns have secured a Government guarantee for employee entitlements in the event of company collapse.

We have significantly improved severance pay for the many workers made redundant by economic change.

There are new curbs on unreasonable overtime, and new rights for casual workers to access permanent work and parental leave.

After a sustained union effort to attain paid maternity leave for women, it is now effectively the policy of both major political parties going into the election.

All of these are significant wins for working Australians. And they are building confidence in unions.

Union membership has grown in three of the last four years.

And community support for unions is high. This comes through consistently in our research. 

Even a substantial majority of Liberal and National voters agree that employees are better protected if they are in a union.

While the results of the last four or five years are encouraging, the focus for unions is firmly on the future.

We are continuing to develop a new workplace agenda. We are renewing unions by involving more people in collective bargaining. And we are delivering value-for-money services.

New workplace agenda
The starting point of our new workplace agenda has been to understand and respond to people’s contemporary employment aspirations and concerns.

Unions have extensively researched the issues relevant to people in workplaces and industries across the country.

We have found that the single most important dynamic affecting employees is the intensification of work – caused by the drive by business for improved competitiveness and flexibility.

For large numbers of employees this has meant a proliferation of low paid, part time and insecure jobs – the emergence of a US-style working poor. 

Although we have experienced prolonged economic growth, 87% of the jobs created during the 1990s paid less than $26,000 per year.

Amongst these people is an army of more than 2 million casual workers – well over a quarter of the workforce. Since 1988 more than half of all new jobs (54%) created have been casual.

But for many other employees the biggest problem can be long working hours, stress, and dissatisfaction with the pressure work places on family life.

Peter Costello thinks the work-family issue can be fixed by throwing billions of dollars at people. Tax cuts for the better off and an increase in family payments were the centre pieces of what can only be described as the biggest vote-buying Budget in living memory.

What this Government doesn’t understand is that it’s not just money that’s the issue for working families – it’s also about time.

Unions have surveyed thousands of working parents. People told us that balancing work and family is their number one employment and life concern.

Sure they will accept increased family payments, but what they also want is time – time to look after sick kids, time to get to childcare, time to cover school holidays, and time to spend with children and partners.

The rules at work don’t allow people this flexibility, this capacity to manage their working hours, when they need it.

That’s why the ACTU is running the first ever work and family test case in the Industrial Relations Commission.

We aim to win substantial new rights for working parents.

A week ago the ACTU commissioned Newspoll to compare people’s support for the work-related rights we are seeking with the Government’s family payments.

The measure nominated as most useful by all those surveyed was an obligation on employers to provide family flexible working hours.

Full time workers rated an increase in family payments by Government as their last preference.

87% of full time workers identified flexible working hours, the right to time off work for family emergencies, a choice for part time work, and more help for child care as more useful than an increase in Government family payments.

The ACTU would not deny working families a dollar of what the Budget offered. But the fact is that the things the ACTU is seeking in the work-family test case are rated higher by voters. 

And yet the Government has foreshadowed that it will oppose our case. 

The union focus on work and family though is only part of our new workplace agenda. The plight of casual workers is also emerging as a key industrial issue.

Overall, what we are developing is a more contemporary agenda - an agenda which is more responsive to people’s concerns. 

Involving people at the workplace
And to address these concerns we are directly involving people in collective bargaining campaigns in their workplace. These campaigns deepen the democratic base of unions.

The days of top-down centralised wage fixing have given way to a grass-roots approach. 

Authority has devolved from the national level to people in the workplace.

To be relevant and effective unions need capable local organisers and workplace delegates.

That’s why we are investing significant resources in the education of people at the workplace and local level of the union. 

In recent years the ACTU alone has educated 500 young trainee organisers. Thousands of full time union officials have been trained in new organising techniques. 

And over the last two years I have committed over $9 million to a new education trust, chaired by Bob Hawke, which will train workplace representatives in collective bargaining.

It’s in the context of union support for collective bargaining that our approach to industrial relations legislation change must be understood.

If Labor is elected we will not be looking to turn back the clock.

Rather, we will want Labor to strengthen the collective bargaining system by getting rid of John Howard’s individual employment contracts (AWAs), and by introducing an obligation on all parties to negotiate in good faith.

Providing value-for-money services
Unions have also been busy developing value-for-money services for individual employees to complement our collective workplace role.

Principal amongst these is industry superannuation. Unions built industry super and we are proud of it.

The industry super funds return all profits to fund members, each of whom has an individual super account. There are joint employer and union trustees, and we are strongly committed to this partnership.

The industry funds have consistently excelled in terms of both high investment returns and low fees.

Over the last five years industry super funds have, on average, outperformed the investment returns of the profit-driven retail master trusts by 2.5% per year. 

It is also a demonstrated fact that fees are lower in the industry funds.

These differences in earnings and fees have a big impact on account balances over time. The difference to a $20,000 account balance over the last 5½ years would have been $6,612. Over 30 years the difference would be in the order of $60,000. 

Through the establishment of industry super alone, unions are delivering huge value for working people.

But there is wide agreement that, at 9% of people’s incomes, the current level of superannuation contributions will not be enough to deliver a decent income in retirement. A contribution level of 15% will be needed.

If we are genuinely concerned about the cost of an ageing population, boosting retirement savings must be a key goal. Labor has taken a step in this direction with it’s commitment to cut the contributions tax from 15 to 13%.

But all of Peter Costello’s guff about intergenerational challenges has amounted to nought. His policy requires people to work till they drop.

The Government’s voluntary super co-contribution scheme is no answer because it is poorly targeted.

The failure of the Government to chart a course for building retirement savings leaves unions with no choice but to put increased super contributions back on the bargaining table with employers.

It is my intention to seek the support of unions and their members for a long-term campaign to lift employer super contributions.

And I believe that if employers make a further contribution, employees will be more likely to contribute as well. And the fact is that increased employer super contributions will generally offset wage outcomes in collectively bargained deals.

Polling conducted by Newspoll for the ACTU shows two things.

Firstly, that a majority of people are concerned that their current level of super will not afford them a comfortable retirement.

And, secondly, that 73% of people would be interested in making a personal contribution to their super if it was matched by their employer or the Government.

The construction union in Queensland recently broke through with an approach like this. Employers will contribute the equivalent of an additional 3% to be matched by 3% from employees and be phased in over time.

The wider union economic and political aims
But union objectives have always been wider than the workplace – we have always worked at a broader economic and political level to advance the interests of workers – to pursue social justice.

So as we approach an election, what are some of the key issues for unions? 

One answer is that unions want a more equitable distribution of wealth and opportunity through the tax and social security systems, but particularly in health care and education. 

On the tax front it is unfair that people earning less than $52,000 per year missed out on any help in the Budget. 

It’s even worse that the Government made no effort to resolve the problem of high effective marginal tax rates for the lowest income earners, and yet gave over $2,000 per year extra to people at the top income levels.

But a key priority for unions is to get bulk billing rates back up. We know that’s a priority for voters. In fact, there’s solid evidence that it’s more of a priority than tax cuts.

The latest Australian Survey of Social Attitudes1 published in May confirms once again that dissatisfaction with health and education services is building strong support for social spending rather than tax cuts – especially when those tax cuts go to the better off.

In fact 69% of those surveyed would pay more tax if it went to health and Medicare.

Importantly, these sentiments are held most firmly amongst middle income groups. 

A Budget with better and longer-term priorities could have addressed this sentiment. 

Just think what could have been achieved if the Government, instead of blowing billions to buy votes, had invested more in health.

The Government’s fiscal priorities need to be subjected to far more scrutiny. Where’s the long-term benefit for the country? We need good policy not pay-offs.

And it’s the longer term issues that unions are interested in. We are vitally concerned with the outlook for the economy, productivity growth and wealth creation. 

We are so because of the need to create jobs, opportunities, and growth in real disposable incomes for workers.

And there are two issues I consider to be crucial for the future - investment in infrastructure, and vocational training and skill development.

Investment in infrastructure
The stellar performance of the Australian economy in recent years has essentially been driven by consumer demand, fuelled by record household debt. 

Household debt has risen from 76% of disposable income in 1990 to around 150%. People have borrowed against rising house values and spent on consumer goods and services.

This trend cannot be sustained. It is already clear that the housing market is slowing. Borrowing and consumer demand are likely to follow. A cycle of increasing interest rates would be a serious threat.

New drivers of growth are needed.

One of these drivers of growth should be investment in infrastructure.

It is widely accepted that Australia is failing to adequately invest in the infrastructure needed for economic and social development.

As a nation we need to invest more over the long-term in road, rail, air and sea transport infrastructure. Investment is needed in water catchment, storage, irrigation and treatment.

$20 billion will be needed in the next two decades for power generation and distribution alone.

Then there’s gas, environmental degradation, and affordable housing stock.

And that’s before you consider social infrastructure like schools, hospitals, TAFEs, universities, aged care homes and child care centres.

The deficit in infrastructure investment is huge – as much as $150 billion according to the Australian Council for Infrastructure Development. More modest estimates are in the range $30-40 billion.

This failure to invest in the future of the country will impede economic growth and put a brake on job creation, productivity and living standards.

Governments have a responsibility to develop and lead a strategy for this investment. But the Howard Government has no plan and will not borrow money to invest in the future.

To address the need for infrastructure investment there will need to be a reassessment of current economic thinking in Australia about fiscal priorities and Government borrowing.

The only alternative to saving and then investing from the Budget, or borrowing to invest, is to enlist private finance in the form of public-private partnerships. And these have a very chequered history.

The dominant economic view, that all public debt is bad, is failing the Australian people. As eminent economist Fred Argy puts it, it is ‘fiscal conservatism gone mad’.

Government debt in Australia is now less than 5% of GDP, compared to an OECD average of more than 40%.

Social infrastructure in particular, like schools and hospitals, does not easily lend itself to private financing models. Governments should borrow for social infrastructure – it’s the cheapest and most efficient way of financing such investment.

Looking towards the election, it is our hope that the major political parties make infrastructure investment a key plank of their policy platforms – that they articulate a nation building agenda. 

Vocational training and skill development
The second area requiring action by government is vocational training and skill development.

There are few things more important than getting a job and having career opportunities through your working life.

And yet investment in vocational training is lagging, leaving too many people without the skills to get ahead.

Business groups agree with the ACTU that Australia faces a serious skills deficit, particularly in traditional trades. There are shortages of welders, mechanics, electricians, carpenters, bricklayers, plumbers and cabinet makers.

Skills formation as a driver of productivity has fallen dramatically in the last ten years.

It is estimated that skill development contributed about 28% of productivity improvement in the late eighties compared to only 3% in recent years.

It’s a tragedy for young people. 200,000 young Australians are not in full time work, training or education. More TAFE places and more genuine trade apprenticeships are sorely needed.

I say genuine because the Howard Government will tell you that there are now over 400,000 New Apprenticeships. 

But in reality only 126,000 of these are traditional trade apprenticeships, and at least 118,000 in the Government figures are workers doing their normal job. The employer is simply accessing a wage subsidy for existing workers – it’s not a real apprenticeship.

The ACTU would like to see 20,000 additional fair-dinkum trade apprenticeships funded in areas where there are skill shortages. 

And investment is needed in upgrading the skills of the existing workforce. The ACTU is keen to develop an approach with a strong workplace focus – where a training plan is developed to meet the needs of employees and the employer in a particular workplace.

This is where future productivity growth will come from.

Governments and the private sector have important roles to play. Labor has already made a great start by announcing the Youth Guarantee – the choice of either learning or earning. 

Conclusion
So in the context of the forthcoming election, infrastructure and vocational education are two areas that the ACTU will watch closely.

There are plenty of other areas of importance of course, including a strategy for manufacturing based on a long term commitment to research and development, skills and trade promotion – rather than simply reacting to crises like Mitsubishi.

But looking at the political environment more generally, I genuinely think the country does need a change of government.

There’s a need for fresh and more progressive policies which address the inequalities stemming from economic change, a need for a long-term economic agenda, and a lift in the integrity of government.

Australian people deserve a more positive and optimistic form of leadership, one that appeals to our generosity of spirit rather than our fear and insecurity.

John Howard has been around in Australian political life for a long period of time. But it’s time to move on. 

We need once again to bring people together in a cooperative effort to take the country forward.

Unions are prepared to play a constructive role in this endeavour.

And if given the opportunity, you can be sure that we’ll be drawing on our values and working to achieve a fairer and more just society.

Footnote

1	Published in the Australian Journal of Social Issues Vol. 39 No. 2 May 2004

Appendix 1
Union membership 2002-03

Union membership grew by 33,000 members or 1.8% lifting overall union membership numbers to 1,866,700.  
For the first time in many years union density in Australia did not fall in 2002/2003 remaining steady at 23%.  
The 2002/2003 union membership figures represent the third time in the past four years that over-all union membership numbers have increased.  
Industry Outcomes
Many industries experienced an increase in union membership numbers in 2003 including:
•	Transport, (up 16,200)
•	Retail trade (up 14,500)
•	Electricity, gas and water supply (up 10,800)
•	Personal and other services (up 9,400)
•	Government administration and defence, (up 7,200) 
•	Property and business services, (up 6,300)
•	Wholesale trade (up 5,600) 
•	Finance and insurance, (up 3,800)
•	Agriculture, forestry and fishing (up 1,500)
In a number of industries union membership numbers fell including:
•	Manufacturing (down 28, 300)
•	Health (down 15,000)
•	Accommodation (down 11,000)
•	Mining (down 1,700)
•	Cultural services (down 1,500) 
Union density also increased in a number of industries including:
•	Personal services 26.9% - 28.7% (up 1.8%)
•	Finance 17.6% - 18.7% (up 1.1%)
•	Retail 16.5% - 17.3% (up 0.8%)
•	Electricity and gas 47.7% - 53.7% (up 6%)
A number of industries also experienced falls in union density including:
•	Accommodation 11.8% - 8.7% (down 3.1%)
•	Manufacturing 27.3% - 25.7% (down 1.6%)
Employment Outcomes
Overall membership for full-time employees was up by 2 per cent to be 28,400 higher in August 2003 than in August 2002.
This was the first increase in recent years.  However, at 1,460,040 membership amongst full time workers is still not as high as it was in 2001.  
There was a 1.1 per cent (or 4,600) increase in union membership for part-time employees over the year to August 2003.  
Wages
Average weekly earnings for union members is approximately 15 per cent higher than non-union wages, with union members earning $807 per week on average while non-union members earning $701 per week on average.  
Union members in all but two occupational groupings (Managers and associates, and Professionals) received higher average weekly earnings when compared with non-union workers.  
Source: data is for the period August 2002 to August 2003, ABS 6310, released 11 March 2004.

Appendix 2
Work and family — Newspoll results

Q4. Which of the following options would be the most useful for 
managing the balance between work and family? 

	Full time workers	
	Rank	%	
AN INCREASE BY THE GOVERNMENT IN FAMILY PAYMENTS	5	11.1	
MORE GOVERNMENT HELP FOR CHILDCARE	3	21.5	
A CHOICE FOR PARENTS TO WORK PART TIME RATHER THAN FULL TIME	4	11.3	
AN OBLIGATION FOR EMPLOYERS TO PROVIDE FAMILY FLEXIBLE WORKING HOURS 	1	27.6	
A RIGHT TO TIME OFF WORK FOR FAMILY EMERGENCIES	2	26.6	
NONE / DON'T KNOW		1.7	
		100.0	

Source: National capital city poll conducted by Newspoll 21-23 May 2004. 700 respondents.

Appendix 3
Industry super fund performance

The industry super funds return all profits to fund members, each of whom has an individual super account. There are joint employer and union trustees, and we are strongly committed to this partnership.
The industry funds have consistently excelled both in terms of investment returns and fees.
Over the last five years industry super funds have, on average, outperformed the investment returns of retail master trusts by 2.5%.  In the last three years the industry funds earned 5.1% compared to 1.4% for the profit-driven master trusts.
It is also a demonstrated fact that fees are lower in the industry funds.
These differences in earnings and fees have a big impact on account balances over time. The difference to a $20,000 account balance over the last 5½ years would have been $6,612. Over 30 years the difference would be in the order of $60,000. 

Source: Industry Funds Super – www.ifs.net.au

Appendix 4
Superannuation & retirement — 
Newspoll results

Q1. Thinking now about your savings for retirement and superannuation. Are you confident or not confident that your superannuation will provide you with enough income to live comfortably during your retirement from the work force?	Very confident	13.8	
	Somewhat confident	22.5	
	Subtotal confident	36.3	
	Not very confident	29.9	
	Not at all confident	26.5	
	Subtotal not confident	56.4	
	Don’t know	7.3	
	Total	100.0	

Q2. And would you be interested or not interested in making a small additional personal contribution to your superannuation if that additional contribution was matched by the Government or your employer?
	Very interested	44.4	
	Somewhat interested	28.8	
	Subtotal interested	73.2	
	Not very interested	8.5	
	Not at all interested	12.0	
	Subtotal not interested	20.5	
	Don’t know	6.3	
	Total	100.0	

Source: National capital city poll conducted by Newspoll 21-23 May 2004. 700 respondents.