Tuesday, June 12, 2007

Garbage in, garbage out. What Joe Hockey specifies in economic modelling.

The Department of Workplace Services is seeking economic modeling designed to make the government’s industrial program look good and the opposition’s look bad.

One request for tender seeks a consultant to model what it calls “the economic benefits” of the Coalition’s agenda. The other seeks a consultant to model what in that case is called “the economic costs” of Labor’s program.

Both tenders are due to be awarded on Thursday.

The process came to light in question time yesterday when the Labor’s Deputy Leader Julia Gillard brandished the 2 tender documents she said were distributed to economic modelers early last month. Both set tight timetables for the work, demanding final reports by mid-July.

The Workplace Minister Joe Hockey confirmed that the documents were genuine and described them as requests for “standard economic research”.

But the document dealing with the Coalition’s program asks the tenderer to include in the modeling the impact of a higher working age labour force participation rate – 78 per cent instead of the present 76 per cent - apparently on the assumption that is what the Coalition’s program would bring about.

The document dealing with Labor’s program asks the tenderer to include a lower participation rate – 74 per cent as opposed to the present 76 per cent – again on the apparent assumption that that is what Labor’s program would do.

Including those participation rates as specifications in the tenders rather than allowing them to be determined by the modeling would as good as guarantee that the modeling would conclude that the Coalition’s program boosted employment while Labor’s harmed it...

The document dealing with Labor policy asks the tenderer to also assume it brings on an explosion in “pattern bargaining and/or industry wide bargaining as opposed to having collective and individual agreements that are able to take account of firm-specific circumstances”. In truth neither pattern nor industry-wide bargaining is Labor Party policy.

The tenderer is also asked to model the effect of an increased number of working days lost due to industrial action under Labor’s policy even though it is little different to the Coalition’s in its approach to strikes.

The brief is also quite specific about the type of damage it expects the tenderer to find as a result of Labor’s proposed abolition of Australian Workplace Agreements.

It says it expects the cost to include “the loss of flexibility and the ability to negotiate mutually beneficial outcomes that are currently available in AWAs. Regional and industry differences are expected to be substantial - for example the impact on productivity in the Mining industry in Western Australia”.

Julia Gillard said the tender documents laid bare plans for a “negative, blatant misinformation campaign against Labor’s industrial relations policy”.

The Minister Joe Hockey said Ms Gillard was attempting to “twist standard economic research into some kind of workplace relations conspiracy theory”.

The leaked brief relating to the Coalition’s workplace policy also provides insights into the direction the department believes it might develop.

It asks the tenderer to determine the likely economic benefits of universal coverage under which every state government transferred its remaining power over industrial relations to the Commonwealth.

And it asks for an examination of a drop in award coverage from 19 per cent to 10 per cent of Australian workers, and an increase in the proportion of workers on Australian Workplace Agreements from around 5 per cent to 20 per cent.

The change is expected to “further enhance the flexibility of the workplace relations system and allow employers and employees to tailor agreements to suit their individual needs”.