The first industrial revolution could have turned out badly

The first industrial revolution could have turned out badly.

That it didn't, that it created prosperity rather than destroyed jobs, has forever since given technophiles and free-market economists a licence to rubbish anyone who complains about jobs and incomes vanishing as a result of technology, even if they are right.

That's the concern of 64-year-old Kaushik Basu, an Indian economist and expert in game theory who was until a few weeks ago chief economist of the World Bank.

At Melbourne's Monash University this week to renew contacts before returning to Cornell University where he will specialise in macroeconomic research, he says the declining importance of paid work is one of the few things that worries him more than President-elect Donald Trump. In fact, he believes it's behind the rise of President-elect Trump.

Basu says throughout advanced economies the share of national income paid out as wages has dropped precipitously since the start of the information technology and automation revolutions that began in the mid-1970s, the first time this has happened in modern history.

The Australian Bureau of Statistics says the wages share of GDP has fallen from 58 per cent in 1975 to 49 per cent today ahead of the next update due on Wednesday.

In the USnited States it has slid from 61 to 57 per cent and in Britainthe United Kingdom from 69 to 56 per cent. Most of what isn't taken out as wages is taken out as profits. Automation, offshoring and glacial wage growth have kept a greater share for profits, meaning that in the in the US at least, there's been no real growth in the median wage for for decades.

History not repeating

That isn't what happened the first time around, in the great British industrial revolution from the mid 1700s to the mid 1800s, but in his cramped temporary office at Monash, Basu tells BusinessDay that it might have.

"During the industrial revolution it was common for workers to work 12 hours a day, 14 hours a day. Industrialists were patenting spinning machines that could be operated by children as young as five5. Reformers who argued in Parliament for reduced hours and protections were told that poor conditions built character."

The reformers won, on the floor of Parliament. But Basu's point is they need not have.

"People very often say: 'Why are you worried about today, we went through the industrial revolution and we came out fine, we are better off'. What they overlook is that it took dramatic changes in our thinking. That's why the industrial revolution did not cause catastrophe and realised its potential benefits.

"These days offshoring and automation are seen as a labour versus labour dispute – workers in Australia or the US versus workers in emerging economies. What's overlooked is that every time labour is outsourced profits in the country goes up and the wage share goes down.

"It's actually a labour versus capital issue. Workers don't realise this, and engage in hypernationalism or vote for people like Trump in a bid to return things to how they were."

Balance needed

What Basu thinks we should be doing is restoring the balance between labour and capital.

"It can't be done by boosting wages – that'll simply send more to the Philippines. What we need, and this is early thinking, but a number of people are writing beautifully about it, is a mechanism that will share profits."

He says if just $1 in every $10 of profit was retained for distribution to to workers, that would leave $9 in every $10 for the owners of capital, more than enough to maintain incentives.

It's similar to thinking behind Australia's aborted mining super-profits tax, except that those proceeds were to be retained by the government rather than distributed to workers.

Without it, without taking this radical idea as seriously as was taken the radical idea of spreading the benefits of the first industrial revolution, there's a chance ordinary citizens will end up worse off after this revolution than they were at the start of it.

"We are reaching a stage in the world where we have to think of these things seriously," he says.

"Without the same type of action as took place in that revolution, this one could leave workers worse off."

Basu thought the global economic outlook was "grim" even before the election of President-elect Trump. Now he thinks it is also unknowable.

If Trump sequences things right, it might be OKokay. If he quickly boosts infrastructure spending as promised he could lift US economic growth from 1.5 per cent to 3 per cent. Only several years on, after the budget had been replenished, would he be able to afford his promised tax cuts. And his threatened trade and currency wars are too awful to contemplate.

Basu finds much of what's ahead too awful to contemplate. But he says we should.

In The Age and Sydney Morning Herald

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Restoring the ABCC a poor foundation to build an election on

Of all the unlikely reasons to call an election. Industrial relations has never been anything like the most important issue facing Australia in Malcolm Turnbull's mind. Most of his speeches, including his first in Parliament, barely mentioned it.

Instead that speech talked about the green hills and golden beaches of his Sydney electorate, "strung like jewels between the harbour and the sea". It talked about the republic, how Australia's head of state should be one of us. It talked about climate change and the need to better manage water, it talked about the importance of marriage, families and having children.

And it talked about the importance of boosting productivity. But it said nothing about unions or workplace relations, except perhaps this: a reference to Turnbull's first job, loading bananas in the Sydney markets.

He told me about it a few years later: "I think I had been sacked or I was having some problems with my employer so I went down to the Trades Hall to ask for help. [Labour council secretary] Barry Unsworth listened with a modest amount of interest and said, you should see another Trades Hall official, Bob Carr."

"Bob didn't seem particularly interested in my employment issues in the market, but then uttered the line I've never forgotten, which was: 'Do you know, I've just read a fascinating book on the politics of Eastern Europe, would you like to borrow it?'"

Carr went on to become foreign minister, Turnbull prime minister. Neither spent much of their careers complaining about unions. Until now.

"Unlawful conduct on building sites around Australia is holding back our economy," Turnbull told Monday's press conference. The extra costs were "a serious handbrake on economic growth".

What changedwent wrong? Labor abolished a Howard-era "cop on the beat" named the Australian Building and Construction Commission (ABCC) and replaced it with a cop called the Fair Work Building and Construction (FWBC). Whereas the ABCC could compel witnesses to appear and answer questions (contrary to common law principles in the view of the Law Council) after a three-year transition period the FWBC could not. Whereas the ABCC could reopen disputes after they had been settled, the FWBC could not.

These modest changes, along with changes to penalties and the right of union officials to enter workplaces, amounted to something of a silver bullet, in the view of the Prime Minister. "When the Australian Building and Construction Commission was in force, productivity in the sector grew by 20 per cent," he said on Monday. "Since it was abolished, productivity has flatlined."

It's an extraordinary statistic. Rarely does anything have such a clear-cut effect. Turnbull gave a hint as to where it came from when he told  the ABC's 7.30 that there was "plenty of work been done on this by Independent Economics✓ that shows there was an increase in productivity following the introduction of the ABCC".

Independent Economics, formerly known as Econtech, did the work for the ABCC itself. After academics from Griffith University✓ uncovered errors in the analysis, the ABCC removed it from its website. Then the Master Builders Association✓ commissioned Independent Economics to update it. The Productivity Commission examined the findings in 2014 and disassociated itself from them in unusually strong terms.

"When scrutinised meticulously, the quantitative results provided by Independent Economics or others do not provide credible evidence that the Building Industry Taskforce – Australian Building and Construction Commission regime created a resurgence in aggregate construction productivity or that the removal of the ABCC has had material aggregate effects," the Productivity Commission said. "Indeed, the available data suggests that the regime did not have a large aggregate impact."

The absence of a big effect was "neither surprising nor inimical to the need for further reform". It thought productivity in some parts of the industry probably had improved during the ABCC era, and it recommended boosting penalties and adequately resourcing the body that replaced it. But it stopped short of recommending the re-establishment of an organisation with the power to compel witnesses to answer questions. It's a power denied to courts and denied to the Australian Security Intelligence Organisation.

It thought productivity in some parts of the industry probably had improved during the ABCC era, and it recommended boosting penalties and adequately resourcing the body that replaced it.

But it stopped short of recommending the re-establishment of an organisation with the power to compel witnesses to answer questions. It's a power denied to courts, denied to the Australian Securities and Investments Commission and denied to the Australian Security Intelligence Organisation.

Turnbull's office says his claim about a 20 per cent jump in productivity came from the Australian Bureau of Statistics. It's there all right, if you use 2012-13 as the end date for the ABCC even though it finished at the end of 2011-12. But over the same period productivity in the entire market sector jumped 14 per cent. Something other than the ABCC was at play. In the post-ABCC era productivity in the construction sector climbed 3 per cent. Productivity in the entire market sector climbed 7 per cent.

Industrial disputes are indeed high in construction. In the 14 quarters since the ABCC they've totalled 180 working days lost per 1000 workers. But in the previous 14 quarters during the ABCC era, they totalled 164 working days lost.

This week's Essential Poll finds more Australians support reinstating ABCC than oppose it, even among Labor and Greens voters. Civil liberties aside, the ABCC ought not to be particularly controversial, certainly not enough to build an election around.

In The Age and Sydney Morning Herald

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Sunday rates aside, the Productivity Commission finds we set wages pretty well

The most important finding of the Productivity Commission's new report isn't that some workers should receive lower penalty rates on Sundays.

It's that almost everything conservative commentators say about the industrial relations system is wrong. It works well, it isn't creating wages explosions, and it isn't pricing people out of work.

"Economy-wide wage breakouts and associated stagnation – the horror of the 1970s – seem as dated as floppy disks," the commission says, in what may be a gentle dig at one of the ministers who commissioned the report, former workplace relations minister Eric Abetz.

Two years ago, as wage rises began to slide, Abetz warned of "something akin to the wages explosions of the pre-Accord era, when unsustainable wage growth simply pushed thousands of Australians out of work".

During the mining boom, wages in industries that needed workers grew extraordinarily fast, as would be expected, but other wages didn't. During the global financial crisis, wage growth slowed and, as a result, unemployment remained below 6 per cent. As unemployment climbed following the end of the boom, wage growth dived to historic lows, and unemployment fell.

Whatever else you want to say about Australia's wage determination system, its hard to argue that it isn't flexible.

The head of the International Monetary Fund's Australia division, James Daniel, was asked on a recent visit whether our industrial relations system was holding us back. He almost laughed. He replied that he had just come from leading the running in charge of Spain...

Work Choices, the Coalition's mid-1990s attempt to sweep away the old system, had little detectable effect on productivity, the Productivity Commission finds. It certainly thinks there's room for improvement. Fair Work Commission judges act like judges in courtrooms; they weigh up evidence presented to them. But for decisions about the minimum wage and other minimum standards, the Productivity Commission thinks a separate, non-judicial division should go further – it should undertake its own inquiries and pay for independent analysis.

The Fair Work Commission should remain. "Absent specific workplace legislation and oversight, employees would particularly suffer from unequal bargaining power," the Productivity Commission says. "Most stakeholders recognised this."

Far from threatening employment, minimum wages are likely to have a zero "or even positive" effect on jobs, if they are not set too high. The contention that increases in minimum wages lock people out of jobs – while obviously true if minimum wages were lifted to very high levels – hasn't stood up to the onslaught of real-world investigation, much of it recent.

The commission quotes with approval the work of Keith Hancock, who chaired the 1985 review of Australia's industrial relations system. When equal pay for women was introduced in the early 1970s, "so far as could be told from the employment statistics, there had been no adverse effect on the relative employment prospects of women", the review said. Women are today far more likely to be employed than before their pay lifted.

Australia's youth wages are unusually low by international standards, typically 44 per cent of the adult minimum wage, compared to 60 per cent in the United States. Yet youth unemployment is climbing. The commission finds it's been climbing more as a result of the increase in the general unemployment rate (because what happens to the general rate happens more to youth) than because young workers are paid too much.

The commission finds "compelling grounds" for penalty rates for overtime, night and shift work. Night work and rotating shift work has "proven adverse health effects". Public holidays are meant to encourage shared community activities. "As such, there are strong grounds for deterrence against their use for working, but with some flexibility to provide some services on these days," it says.

Weekend workers are also deserving of extra rewards. The commission says many employers would pay them extra on weekends, even if penalty rates didn't exist, to fill rosters.

But weekends are changing. Traditionally a time for socialising, there's now less of it and it is highly likely to be done while shopping. In one survey, 39 per cent of Australians nominated their shopping centre as their most important meeting place. Only 16 per cent nominated a park, and 19 per cent nominated a pub. For some stores, Sunday has become their most important trading day, accounting for 25 per cent of all sales.

Sunday rates are often 150 to 200 per cent of weekday rates, yet the commission finds those working on Sundays often have a work-life balance that isn't any less satisfactory than those who work on Saturdays, where the rates are nearer to 125 per cent.

They are certainly better off than workers on night shift, who receive penalties as low as 15 per cent. It recommends substituting Saturday rates for Sunday rates in the evolving leisure industries of hospitality, entertainment, retailing, and dining.

It would mean less Sunday pay for these workers, but more weekend-style services on the days we want them, and an easier life for cafe and store owners who often feel compelled to work themselves because they can't afford to pay many staff.

The government has shoved the proposal off to the Fair Work Commission, which will most likely implement it. It'll upset some people, but it's not what the report is about.

In The Age and Sydney Morning Herald

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The PC's penalties finding: nothing much wrong here

• Labor, unions in fresh scare campaign on workplace laws

The most important finding of the Productivity Commission's workplace relations inquiry is perhaps the most surprising, given how keen the government was to set it up: "Australia's recent labour market performance does not suggest a dysfunctional system."

Indeed, "strike activity is low, wages are responsive to economic downturns and there are multiple forms of employment arrangements that offer employees and employers flexible options for working".

It's what the OECD found when it visited Australia earlier in the year. Wages respond well to the labour market and the labour market responds well to wages.

Remember how concerned the Coalition was about our unfair dismissal laws back in the early 2000s when Tony Abbott was workplace relations minister? The commission says they are not particularly onerous by international standards. The number of claims lodged is "relatively small". The payouts are "quite low".

The rules are "unlikely to have significant negative impacts on medium to large businesses, especially considering that their purpose is not to minimise costs to employers, but to balance the interests of both employees and employers", it says.

The commission's broader point is that people are not machines. We employ them in accordance with "ethical and community norms".

Without regulation, "employees are likely to have much less bargaining power than employers, with adverse outcomes for their wages and conditions".

While Australia's minimum wage is high by international standards, modest increases in it are "unlikely to measurable affect employment".

The commission reached this conclusion knowing that Labor's shadow assistant treasurer, Andrew Leigh, found otherwise when an academic. But it says his study was conducted when the minimum wage was relatively higher than it is today.

It finds "compelling grounds" for keeping penalty rates. There are "proven adverse health effects" from night work. Public holidays are "by definition, intended to encourage shared community activities".

Not so Sundays. We do one-third of the weekend socialising we did back in the early 1990s, and twice as much shopping. The commission wants to update our workplace relations system. It doesn't want to destroy it.

In The Age and Sydney Morning Herald

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This Easter give thanks for penalty rates, they keep us human

Have you heard about the member of parliament who couldn't find a bottle shop open on Good Friday? He blamed penalty rates. The real reason was Sydney's licensing laws.

Penalty rates get blamed for almost everything these days, which is odd because they've been around for 100 years. The Chamber of Commerce and Industry wants businesses that are closed over Easter to put signs in their windows saying it's because penalty rates are too high. If they are open it wants them to put signs in their windows saying they are employing fewer staff than they would like because penalty rates are too high. As it tells employers on its website: "There is a poster for either scenario relevant to your business."

MasterChef George Calombaris wants us to believe they are making his restaurants uneconomic. Yet in the past five years spending at restaurants and cafes has climbed 36 per cent. Other retail spending has climbed only 18 per cent. Employment in food service establishments has grown at twice the rate of other employment.

When presented with these sorts of facts celebrity chefs and employer representatives change the subject and say that things are different these days - most Australians no longer go to church and the distinction between weekends and the rest of the week is blurring.

They are right. Penalty rates were introduced for "evenings, weekends and public holidays to be the time when friends, families and social groupings, however constructed, are able to get together" in the words of the old Industrial Relations Commission. We no longer seriously socialise on weekends. The latest time-use survey finds we only spend only 1 hour per weekend socialising, down from 3 hours in the early 1990s. Our time spent shopping has doubled.

But there are other reasons to believe that penalty rates are more important than ever...

Penalty rates penalise employers for rostering people to work outside standard hours. In earlier years it didn't much matter if one member of the household worked outside standard hours. There was typically only one earner in each household, almost always the man. If that single earner was made to work at night or on weekends it wouldn't much harm his ability to get together with his wife. She would be at home whenever he was at home.

Not any more. These days if one partner works outside standard hours and the other works within them the penalty is real. Economists use the term "co-ordinated leisure" to describe what's at risk. The Melbourne band Weddings Parties Anything used lyrics:

Late at night when I come fumbling for my keys, the house is dark and all is quiet, get into bed, it is so hard for me to please, you're barely hours away from work, and you're so tired.

Australians who complain about penalty rates are often not themselves required to work unsociable hours. Assistant Infrastructure Minister Jamie Briggs told a business audience last year he was unable to dine at his favourite restaurant on New Year's Eve because penalty rates forced it to close. I phoned his office on Good Friday. He wasn't there.

Reluctant though we might be to admit it, there's a class element to complaints about penalty rates. The people who complain about them are those least likely to be forced to work at night or at weekends. The people who serve those people at night and on weekends are often lower paid (without the penalty rates) and less educated.

There's no doubt that we need retail workers, nurses and hospitality and emergency service workers to stay on duty after the rest of us have gone to bed. But to act as if we are in a 24-hour world where there's no longer any penalty attached to working non-standard hours is to invite the breakdown of those standard hours altogether. It's to invite employers to roster on all of us at all hours, making co-ordinated leisure and co-ordinated sleep almost impossible.

Easter is one of the few times most of us are guaranteed co-ordinated time off. Many parents stagger their annual leave with one taking four weeks off in one part of the school holidays and another taking four weeks off in another in order to try to cover the entire 12 weeks. Even for the non-religious and the non-Christian, Easter has become sacred.

This year Victoria joined NSW in making Easter Sunday a public holiday in addition to Friday, Saturday and Monday. It's important. It matters more than whether or not we are able to dine out.

In The Age and Sydney Morning Herald

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Minimal evidence against the minimum wage

There's nothing more Australian than the minimum wage.

Now on the eve of Australia Day it's up for grabs.

As Australian as Vegemite, the bionic ear and the preferential vote, the national minimum wage sprang to life in 1907. Victoria had gone out on its own a few years earlier. Britain, the United States and most of the rest of the developed world followed later. Even now their minimum wages are nowhere near as generous as ours.

It's why on Tuesday President Obama used his State of the Union address to call on Congress to lift the US minimum wage. And it's why on Thursday Australia's Productivity Commission raised the prospect of dumping it.

"What is the rationale for the minimum wage in contemporary Australia?" it asked in the issues paper that kicked off its inquiry into Australia's workplace relations framework.

And: "how effective is the minimum wage in meeting that rationale?"

The minimum wage is $16.87 an hour. The Commission is worried it's going to families that don't need it.

"Not all minimum wage earners are members of low-income households," it says. Only around one third of adult minimum wage earners are in the poorest 20 per cent of working households. The rest are in better off households.

The Commission cites Labor's assistant treasury spokesman Andrew Leigh who as an economics professor before entering politics wrote that high minimum wages might lift inequality if they lowered employment in low income households.

But Leigh's concern, and the Commission's, depends on the assumption that minimum wages boost unemployment.

It's a reasonable assumption. If employers can pay employees as little as they like, they'll have more spare cash to spread around employing more of them. It used to be the conventional wisdom, until researchers went looking for evidence...

Like the Loch Ness Monster, many have now reluctantly concluded that it's not there. Joshua Angrist of the Massachusetts Institute of Technology is one of the world's leading experts in the use of statistics.

He told American radio last year that the burden of proof had shifted from those who wanted to argue for a minimum wage to those that wanted to argue against it on the ground that studies show it cost jobs.

"It's been hard to find those," he said. It wasn't that the evidence against minimum wages wouldn't be found, it was just that "the scholarly work on the minimum wage today is in a very different place than it was before."

Last May The Economist magazine admitted it had been wrong. It had opposed the introduction of a nationwide minimum wage in Britain on the ground that it would cost jobs.

"No-one who has studied the effects of Britain's minimum wage now thinks it has raised unemployment," it wrote. It had "changed its mind".

A few months earlier more than 600 US economists – including seven Nobel Prize winners – signed an open letter to Congress calling for an increase in the minimum wage. They said the weight of evidence now showed increases in the wage had "little or no negative effect on the employment of minimum-wage workers".

One of the key pieces of evidence was gathered in the early 1990s when New Jersey lifted its minimum wage from $US4.25 to $US5.05 per hour.  Neighbouring Pennsylvania did not. Princeton University economists David Card and Alan Krueger surveyed 410 fast food restaurants in New Jersey and in Pennsylvania before and after the change. If minimum wages did hurt employment, employment would have suffered more in New Jersey fast food restaurants than in Pennsylvanian ones. But that's not what they found.

"Relative to stores in Pennsylvania, fast food restaurants in New Jersey increased employment by 13 percent," they wrote. They also examined employment growth elsewhere in New Jersey at stores already paying above the minimum and unaffected by the change. They found no change in employment, suggesting no statewide phenomena was in play.

Their curious conclusion was that higher minimum wages didn't hurt employment. If anything, they helped it.

Among the possible reasons is that higher wages might make it easier for firms to attract good workers and lift profitability. It's certainly not a settled question. But the cards are stacked against those who'll want to tell the Productivity Commission Australia's minimum wage costs jobs. The Commission itself quotes a finding by the expert panel of the Fair Work Commission that "modest minimum wage adjustments lead to a small, or zero, effect on employment".

The Commission says it wants evidence. Evidence against the minimum wage is hard to find.

In The Age and Sydney Morning Herald


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The truth about women. Why Abbott's Cabinet won't last

Sunday column

Never has a prime minister’s first Cabinet been more insulting. Never has it mattered less.

I can understand the bewilderment many Australians felt hearing we were going to be run by a board of 19 men and 1 woman. Junkee.com reckons there are more women on the board of AFL, the Prostate Cancer Foundation, the executive of Zoo Magazine, in the Iranian Cabinet and in Saudi Arabia’s Olympics team.

It’s not as if women aren’t qualified. An extraordinary 30 per cent of Australian women in their thirties and forties have university degrees. A less-impressive 27 per cent of similarly-aged men are so qualified.

Should we be worried about the Cabinet? Not in the least. It’s the Coalition that should be worried. It has a serious problem using and finding talent. Australian men should be worried as well, because away from the Cabinet things are moving against them at a blistering pace, so quickly most don’t have a clue what’s happening.

Professor Sue Richardson spelled out the changes at this week’s Social Policy Conference at the University of NSW. One of Australia’s leading labour market scholars, she directs research at the National Institute of Labour Studies and sits on Fair Work Australia's minimum wage panel. Delivered just hours after Abbott unveiled his Cabinet, her address was entitled Breadwinner Men and the Gentle Invaders. It showed women grabbing men’s jobs, their incomes and their prospects in marriage.

It starts with education. Back at the start of the 1980s an impressive 11 per cent of men in their thirties and forties had university degrees. Only 5 per cent of women did. Now it’s 27 per cent for men and 30 per cent for women. The job market has been flooded with graduates, especially women graduates.

What has it done for male earnings? In the past three decades the earnings of male graduates have increased not at all when adjusted for inflation. That’s right, not at all. It isn’t that the wages for particular jobs haven’t increased, it’s that male graduates are being elbowed out of the way for the good jobs, forcing them to take jobs that would have once been done by less qualified people.

Richardson was surprised. She and her colleague Josh Healy had thought that low income blokes would be suffering the most. Instead “it’s the high education blokes, they no longer have a monopoly over well-paid jobs”.

Many no longer have jobs. Richardson flashed on the screen a graph the proportion of men in each age group with jobs in 1982. Then she showed the proportion with jobs now. The proportion in work in each age group had fallen, right up to the age of 60...

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It’s unlikely to be voluntary. “In our culture men work,” Richardson said. “Who is supporting them. Is if their parents, their girlfriends, the government? Or are they just poor?”

“The contrast with women is spectacular.”

At each age group a much greater proportion of women are employed now than in 1982 - in some cases 50 per cent more. The traditional dip in employment seen in the ages when women had babies has all but vanished.

Displaying a slide that read “Are men still marriageable” Richardson asked why a rational woman would bother to marry a man who couldn’t earn an income.

“You’d just have another dependent in the house” she said, to nervous laughter all around. For highly educated men marriage rates are little changed, but for low-educated men the marriage and cohabitation rate has plummeted. It’s fallen from 80 per cent three decades ago to less than 70 per cent.

Richardson doesn’t think this is because low income men are choosing not to marry. “They are finding it hard to attract a mate,” she says.

Three decades ago there were three low-educated women for every two low-educated men. Those were very good odds. Now it’s one to one, and many of the women are looking for men with better prospects.

Employment-wise that change ought to be good for low educated men. They are competing with fewer women. But (notwithstanding the mining boom) it’s the traditionally male industries that are shrinking.

“It’s the feminised areas of the economy that are growing; things such as aged care, child care, health care, retail, tourism,” Richardson says. “But men are reluctant to equip themselves to enter these industries, and they can face gender bias when they try.”

Richardson says men are accustomed “to being on top”. When they are not, they often “don’t know what to do”.

Women by contrast have faced centuries of disadvantage. They are used to turmoil and they know how to take advantage of it. Abbott’s Cabinet won’t last long.

In The Canberra Times, The Sun Herald


Sue Richardson, 2SER Thursday September 19 2013 Right click to download




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Europe ought to be a wake up call. David Murray on the future

Future Fund chief David Murray has backed Qantas in its dispute with its workforce saying unless it and companies like it tackle entrenched union privilege Australia risks the same fate as Europe. And he says the government is aping Europe by borrowing to buy votes.

“My European banking counterparts tell me they can’t cut jobs without offering three years redundancy,” he told an forecasting conference in Sydney. “We are creeping towards that in the new industrial relations framework. It gives unions a right to bargain in areas traditionally the management's prerogative.”

“Australia started out after the second world war making work arrangements a little bit more reliable, introducing the rule of law, but the process has gone too far - it gets to the point of unaffordability.”

“Qantas management have no option but to do what they are doing. They are running an unviable airline. With terrible productivity internationally they are hostage to competitors domestically.”

“The stakes are high. Qantas is not the only companies,” Mr Murray told the business economists.

Appointed chairman of the Future Fund in 2004 by Coalition Treasurer Peter Costello the former Commonwealth Bank chief steps down in April. He has already accepted a part-time role with the global investment bank Credit Suisse.

“I don’t see anything concrete on productivity,” he said. “I don’t see governments trying to wind back their debt positions rapidly, I don’t see people coming off subsidy arrangements for industry, in fact new arrangements are more the norm.”

“I would have thought what is happening in Europe would be one of the most timely wake up calls in Australia's history... Yet it is being completely ignored because we’ve had twenty years of growth. The size of complacency here is outrightly dangerous.”

“What is it that’s wrong? It is the process by which public debt is used to buy votes with the promises of entitlements. If you borrow to buy votes you are expropriating the savings of other people.”

Asked whether now was the right time to slash spending and cut back on debt Mr Murray said it was better to do it when unemployment was around 5 per cent than later when it went higher.

The carbon tax and the mining tax were also badly timed.

“Irrespective of what you believe about climate change, given what’s happening in the world the timing of the the policy response is not good at all. The timing of introduction of a mining tax when the terms of trade boom was just about to end is not good at all either.”

Mr Murray said a simpler way of redistributing mining income would have been to end the tax deductibility of royalty payments and use the proceeds to cut company tax. “It could be done in two lines of code, a few lines of legislation,” he said.

Mr Murray acknowledged that government debt was low by world standards, but he said Australia’s net foreign liabilities were high by world standards. “And its the second one that matters, because it’s all got to be repaid.”

Treasury chief economist David Gruen disagreed telling the conference later Australia had high foreign liabilities because it was investing a huge amount in order to “most likely generate future export earnings”.

“We have yet to get the output from the mining boom that we expect to see. Some of our productivity will recover naturally as those investments coming to fruition,” he said.

Published in today's SMH and Age


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Tax forum. Were the unionists "stupid," or acting in bad faith?

Harry Clarke reports back

"I have been attending the Tax Forum in Canberra for the past two days. I made a submission to this Forum on congestion pricing on roads and I made a presentation based on this submission in the Environmental and Social Taxes session. To be honest this was the only session at the Forum where I had expertise. I must say too I was disappointed with the session. Many wrong views (particularly from the ACTU/AWU) were presented and, because there were many participants who wished to talk, these erroneous views were left unrefuted and the discussion was relatively diffuse. Paul Howes, National Secretary of the AWU, thought that a binding case against congestion taxes was that they were regressive. Of course, so too are taxes on cigarettes, booze, carbon, gambling, fat etc etc. The standard counterargument is that one should not evaluate the equity implications of particular environmental or social taxes but at the impact of the overall tax/transfer mix. This is a crucial – and well-recognised point – because these individual taxes have revenue implications. Indeed all redistributive objectives can be carried out by means of the income tax.

Generally I found the trade union representatives at this meeting were among the least interesting of the various groups who attended. I couldn’t work out if they were intrinsically stupid or just outlining a preconceived union viewpoint in bad faith - certainly they were not engaging with those who showed their views were wrong. A number of other attendees of various political persuasions made the same observation. I recalled with sadness the reasons I abandoned Labor in the mid- 1970s. These unionists embodied a kind of bullying stupidity that must constrain the Labor Party and Australian politics.

The other sessions on corporate taxes, state taxes, personal taxes and tax administration were much more interesting to me because they introduced me to broader areas where I had less expertise. Again the union representatives did not distinguish themselves either in terms of intelligence or good faith. They are a bunch of reactionaries. On corporate taxes these representatives did not seem to understand the idea of effective tax incidence.

Almost everyone in public finance agree that in an open economy with freely mobile capital that the corporate income tax falls primarily on labour creating a case – from the viewpoint of labour – for cutting corporate taxes to levels comparable to those of our major trading partners to increase investment and drive up labour productivities and hence wages. The ACTU dinosaurs saw arguments for cutting the corporate tax rate as a move that disadvantaged labour by giving a greater fraction of income to profits. They refused to even engage with the alternative consensus scientific view. These unionists act in ways that disadvantage Australia and their own members..."

Continued here

UPDATE: Ken Henry made similar points at the forum:

"It can be very hard, even for a seasoned policy adviser, to
know what is a new idea and what is well understood, what is
unexceptional. Consider, for example, the discussion we had
yesterday about the incidence of the company income tax in
Australia. The question of the incidence of the company
income tax has exercised the minds of public finance
academics since 1960, if not a good deal earlier. But in the case
of a relatively small, open economy like ours, there is simply no
debate in the academic community, there is a strong consensus
among tax academics that the incidence of the tax falls
predominantly on labour. Indeed in an academic conference that
proposition would be considered so obvious that it would
excite no interest at all. Yet, remarkably, we had no such
consensus yesterday...

A final point. In thinking about tax and transfer system
requirements for the Australia of the future, it certainly makes
sense to identify a set of high-level objectives against which
various proposals might be assessed. This is the approach the
review panel took. But we should not fall into the trap of thinking
that absolutely every element of the system has to ‘tick all the
boxes’ against those various objectives.

For example, I heard a number of times yesterday that
all taxes, every tax, should be fair, should be equitable. That
proposition makes no sense. Instead, as other speakers noted,
the fairness of a tax and transfer system should be assessed in
respect of the incidence of the system as a whole. More importantly,
there is a very strong argument for insisting, as the review panel did,
that equity objectives be pursued only through the personal
income tax and transfer system – taking full account, obviously,
of the incidence of the various other components of the tax
system, but not affecting their design. I know that many of you will find
that proposition too confronting. But, as we go through today’s
discussion, I would ask that you keep it in mind. Because if we could
secure agreement on this proposition we would have a very
powerful motivator for addressing tax system complexity. The
implications for the Australian tax system would be profound."



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We think the rich are too rich. But they're even richer..

New research

When it comes to wealth even the richest among us think the rich have too much - but we’ve no idea of how skewed the distribution really is.

A study prepared by Empirica Research and the Harvard Business School for the trade union movement as part of its planning for the October tax summit finds Australians of all incomes believe the richest 20 per cent of us have around 40 per cent of the wealth.

We think that’s too high. We would prefer a more egalitarian society in which the top 20 per cent have somewhere around 24 cent of the wealth. We would also like the poorest 20 per cent to have 15 per cent, which is a good deal more than the 10 per cent we think they have.

The survey finds us oblivious to the far more skewed truth that the best-off 20 per cent have 60 per cent of the wealth and the worst-off 20 per cent a mere 1 per cent.

The Australians least in touch with reality were the very richest and the very poorest, each believing the richest 20 per cent had 40 per cent of the wealth and the poorest had 9 per cent. Those most in touch with reality were the second-richest group who believed the best-off 20 per cent had 45 per cent and the worst-off 8 per cent.

Presented with three unlabeled pie charts showing Australia's actual wealth distribution, a distribution a United States survey had found to be ideal and an completely even distribution, and overwhelming two-thirds wanted to live in the completely even society.

Presented with two unlabeled charts showing the actual Australian distribution of wealth and the more unequal distribution in the United States only 22 per cent wanted to live in the US... Among Coalition voters the proportion preferring to live in the US was 24 per cent, among Labor and Greens voters 20 per cent.

“Australians apparently favour a significantly more equal distribution that they believe currently exists and a dramatically more equal distribution than actually does exist,” the researchers conclude.

Asked how much tax Australians on a range incomes actually paid the survey group overestimated every one. Australians on $200,000 were thought to pay an average of 38 per cent instead of 32 per cent. Australians on $79,000 were thought to pay 27 per cent instead of 22 per cent, and Australians on $36,000 were thought to pay 18 per cent instead of 12.9 per cent.

The group wanted all tax rates cut, but curiously wanted them cut from the high rates they imagined to near the actual rates.

Australians on $79,000 were felt to deserve an average tax rate of 21 per cent, close to the actual rate of 22 per cent. Those on $36,000 were felt to deserve 12.1 per cent, close to the actual rate of 12.9 per cent.

The researchers were perplexed by the finding. “While people strongly favour increasing wealth within the lowest 20% of households, they do not spontaneously translate these attitudes into support for policy mechanisms that could realise that goal,” the report concludes.

ACTU secretary Jeff Lawrence said the survey showed tax reform need not mean an unending series of tax cuts.

“Real tax reform is directed towards satisfying Australians’ needs and preferences. It must reflect the type of society the majority of Australians aspire to be,” he said.

Seperately the National Alliance for Action on Alcohol has complained the October 4 tax summit will have no public health representative.

Co-chair Todd Harper said it showed the Government had “taken alcohol tax off the agenda – even as an issue for discussion”.

Published in today's SMH and Age


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NewsCorp, the Governor and Industrial Relations.

The Australian thinks Reserve Bank governor Glen Stevens called for a review of industrial relations laws:

Lucky to lazy country: review IR to stop decline

RESERVE Bank governor Glenn Stevens has called for a review of Julia Gillard's industrial relations laws, warning that Australia's prosperity is making the country lazy about productivity reform.

Addressing the House of Representatives economics committee in Melbourne yesterday, Mr Stevens said he did not expect the world economy to enter a new downturn and added that the bank would hold interest rates steady until clear evidence emerged of the effect on consumer and business spending of recent turmoil on the markets.

However, he said persistent inflation at a time when much of the economy was slowing made the Reserve Bank's task more difficult. He laid the blame on rising business costs caused by weak productivity.

``We do tend when times are good not to press as hard on some of those reforms as we might,'' Mr Stevens said.

``I don't think there's any doubt that the period of maximum focus on productivity-enhancing reforms was in the period when the banana republic issues were debated,'' he added, referring to Paul Keating's years as treasurer in the 1980s.

``We felt we had to do it better and we did do it. It perhaps proves harder to do that when affluence has been better for a period of time.''

Mr Stevens said the government had a ready source of advice on what to do from the Productivity Commission. Its agenda included the efficient pricing of utilities and infrastructure, improving competition, reducing inefficient regulation and reforming zoning and planning rules.

However, pressed by Coalition and government members on the committee, Mr Stevens said the business people he spoke to believed that the government's industrial relations reforms, imposed to replace the Howard government's Work Choices regime, had reduced the flexibility of the workforce.

``They might be wrong in their assessment of the system, but I think there are people who feel that,'' Mr Stevens said. ``If they are wrong, then it would be good to get the heads together and show how the system is actually very flexible, because I think there are people whose instinct is that it has gone back the other way.

``While I do not have a silver-bullet policy to fix the problem, I can do no other than say as a public official that we should be giving careful consideration to these matters but, by all means, on as rigorous evidence as we can find.''

The Prime Minister yesterday defended her record on productivity, including dumping Work Choices. She said that rather than compete with the world on low wages and conditions, ``I put in place a plan to compete with the world on knowledge and skills . . . to unlock the real drivers of future productivity"...

Except that he didn't. He did not call for a review of Julia Gillard's industrial relations laws.

The nearest he came was when he he said:

"What businesspeople say to me — and I think this would be a theme I have heard from a number of quarters — is not so much that wages are excessive and indeed at this point in time the aggregate data on wage growth which is probably fourish, a touch under maybe, is on a par with what we have seen over the years. What people say to me, I cannot verify it obviously, from their individual businesses is that they find it harder to negotiate flexibility. That is something that is said. If that is true that I think is a matter for concern... If they are wrong, then it would be good to get the heads together and show how the system is actually very flexible, because I think there are people whose instinct is that it has gone back the other way."

A long bow.


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Industrial chaos. Not. Yet.

The apparent upswing in industrial disputes is yet to show up in the official figures with the latest total - for the March quarter - the lowest in four years.

The Australian Bureau of Statistics compilation released yesterday identifies just 37 industrial disputes in the three months to March, well down on the 70 in the three months to December and the 54 in the previous March quarter.

The total is lowest since June 2007.

In the year to March just 53,800 workers were involved in industrial disputes, the lowest number for any 12-month period since December 2007.

Around 117,000 working days were lost in the 12 months, the lowest number since the year to March 2008.

None of the working days lost were in mining or manufacturing. Almost all were in the construction or transport, postal and warehousing industries.

The Treasury’s head of macroeconomics David Gruen told a Canberra hearing that while Treasury kept an eye on industrial disputes it was so far unconcerned...

“We monitor what is going on in the industrial relations arena and I guess ultimately what matters is outcomes rather than necessarily the process by which they are achieved,” he said.

“I think it is fair to say that wage growth slowed considerably during the global financial crisis and is now around where you would expect given that we are close to full employment.”

“The pleasing sign is the flexibility we are seeing where we are getting significantly different outcomes depending on the sector.”

“We are seeing quite strong wage growth in mining and quite moderate wage growth in retail trade. It is a sign of a labour market operating in a way that is consistent with more efficient labour allocation across the economy.”

“The future may hold surprises for us, but so far we think things are working as we would want.”

Published in today's SMH and Age


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What an impressive Australian. Meet Ron McCallum.

Senior Australian of the Year

A few years back Julia Baird and I conducted a remarkable interview with him.

Enjoy to the audio here, or read it below the fold.

Ron McCallum is a passionate and extraordinary Australian. The Dean of the Sydney University Law School, it is a position he has reached against near-overwhelming odds.

That’s the sound of him reading, Or rather the sound of Professor Ron McCallum being read to by an electronic voice.

It’s a rate of audio information input most of us can’t begin to comprehend.

And yet it’s how one of Australia’s foremost experts in industrial relations law reads everything.

Professor Ron McCallum is the first totally blind person to have been appointed to a full professorship at any Australian university.

He has been driven to succeed, but also driven by a sense of justice - one that’s been deeply offended by the new industrial conditions introduced as a result of the government’s WorkChoices legislation.

Just this week there have been reports of one employer using the legislation in order to remove its workers rights to penalty payments, bonuses and public holidays in return for a pay increase of just two cents an hour.

Ron McCallum says more like that is around the corner. And he’s worried too about the way in which WorkChoices has been introduced.

The Commonwealth government has purported to grab control of industrial relations from the states using the power to make rules governing corporations given to it in the Australian constitution.

Professor McCallum says there’s something wrong about using a power over corporations in order to control the working conditions of human beings.


Ron McCallum:

I think it’s the most significant case on federal state powers since the high court disallowed the nationalisation of the banks in the Chifley government in 1949. The High Court and the Privy government said the federal government didn’t have power to nationalise the banks, it’s of that level, because if the federal government wins in this case then it seems to me they can establish a whole lot of other laws governing all the things that corporations do and corporations do most of the things that happen in private sector economy.

Julia Baird:

What is it about the things that happen in a private sector economy that particularly disturbs you?

Ron McCallum:

I’m a fairly simply fellow Julia. Corporations power should be for corporations, the labour power, that’s the consolation power should be for settling and preventing labour disputes. By using the corporation’s power to enact our labour laws we’re corporatising labour law. We’re making it a subset of corporations law.

Julia Baird:

And therefore making workers a commodity.

Ron McCallum:

Exactly, I have put this view up by using examples which may seem frivolous but it’s to make a serious point. Supposing we had a power in the constitution called the women’s power and it allowed parliament to make laws about women. Could we use that power to make laws allowing women and men to marry each other and divorce each other and the answer is, yes. But wouldn’t we say that these laws are a bit lopsided and that we gentlemen are but mere appendages? The point I’m trying to make is that if you put labour law as an appendage to corporations law, it’s corporation law that always wins.

Julia Baird:

Look those that have followed your public speaking and commentary and your work on Industrial relations would know that you’re very passionate about it and this might be a stereotype, but we can usually expect expertise from a Dean of Law but not always passion. Can you explain what it is about these laws particularly which invoke such passion in you?

Ron McCallum:

I’ve worked all my life around the world and in Australia to find balances between the rights of employers to operate their businesses and the rights and obligations of employees. These laws are unbalanced. I find it unjust for example that if the majority of workers at an enterprise want to be dealt with collectively, they can’t insist upon that right. I find it unjust that if your employer which is incorporated and has a hundred or less people and you are terminated because arbitrary capricious or unfair behaviour, you have no remedy other than the common law. I live and breathe these laws. I have friends and acquaintances and family working, I’m a worker myself and it’s only really through our passion and commitment that we can really get things done.

Julia Baird:

Let’s talk about some of your life now. You’ve said that this has been something which has preoccupied you ever since you were young and one of the extraordinary things about you is that the area of your expertise, the law requires many long hours of reading and you’ve reached the top of your field despite the fact that you were blind. I understand that when you were born in 1948 you had perfect site but your eyes were damaged while you were being looked after at the hospital as a premature baby. What happened?

Ron McCallum:

I’m what’s called a retrolental fibroplasia child. When I was born ten weeks premature, they put me in a humidicrib and the only way they could keep me alive was by using pure oxygen. It caused blood vessels to grow, which pulled the retinas off the back of my eyes, so I guess I lost my sight a few hours after birth.

Julia Baird:

That must have been a terrible accident for your parents to come to terms with, how did they react to that?

Ron McCallum:

My mother was a very strong woman, she reacted very well, my father, it was his second marriage, it was after World War 11, he had post traumatic stress, the way we would describe it now. I don’t think he handled disability, the fact that I was disabled you know, he just found me as I perceive it now, hard to accept.

Julia Baird:

That must have been very hurtful for you as a child?

Ron McCallum:

I’m not sure that I found it hurtful. He was a strange very ill man when I look back on it now. He used to push my mother around a little and I, you know I’ve got teenaged children who are going to be listening to this, he was a sick man I think it would be fair to say. I don’t know that it was after any event, it was the coming to realization that, I decided at the age of thirteen that I was going to be my own person and that I would not be put down by anybody and that I would say what I think and always be me and maybe that had something to do with the fact that now I speak out on things and I try and be me all the time.

Julia Baird:

You said to a journalist once that your great passion in life was to read…

Ron McCallum:

Absolutely.

Julia Baird:

At what age did you become aware of this and why were you so keen?

Ron McCallum:

About two and a half or something. My Mum was reading to my older brothers and to me, they were looking at pictures on the page and I went up like to try and feel the page and my Mum explained to me I couldn’t see the pictures and that what she was doing was reading print that I couldn’t see and would never be able to read and from that time onwards I would have loved to read. I had to spend all my time when I was a high school student getting people to put things on tape. When I was at university, I could always get students to read criminal law but as to reading conveyancing, no way.

Julia Baird:

Did any of your readers ever kind of fall asleep or nod off while they were going through it?

Ron McCallum:

No, but I did.

Julia Baird:

Did all these huge number of hours, you talked about kind of living on your own, did this affect your social life, the number of hours you would have had to put in to all your study and listening to these tapes?

Ron McCallum:

I think so; I just had much less social life because I was busy working.

Julia Baird:

Were you expecting to marry or have children, did you want to have kids?

Ron McCallum:

Yes, when I was a young teacher at Monash I would spend every Friday morning every couple of weeks at the creche where they asked me to help run the four-year-old program. That was a great outlet to me, I didn’t expect to have children and when I met Mary and we were getting engaged I said, “Well look, this is great getting married but you’d better get the thumbs up from my creche class because…”

Julia Baird:

I gather she got it!

Ron McCallum:

She got it and one of the students came up to me after Mary visited, Jennifer I think it was, who would now be 25 or 26 and she said, “Mr McCallum we’ve been talking and we think you ought to marry her.” I said, “Okay, I’ll do it.”

Julia Baird:

And how did, were there things that she had to come to terms with about the fact that you were blind?

Ron McCallum:

Her father is a world famous ophthalmologist, he was first professor of Ophthalmology in Australia, Gerard Crock. You know he has given sight back around the world to thousands of people and he has a blind son-in-law and a blind father of his grandchildren so it’s quite extraordinary. Which you know I think, there are frustrations. I think most ladies would say there are frustrations living with any man and perhaps vice versa but you know, I can’t drive a car, when I get very tired, I get very confused. I don’t always look this organised. She’s never complained in the sense of my disability which I think is extraordinary, I think if the boot were on the other foot, I’d say, “Oh for God’s sake”, so I think that’s truly amazing.

Julia Baird:

What did falling in love and getting married change for you?

Ron McCallum:

People didn’t perceive me, when I became a husband and a Dad, people seemed to perceive me more in the mainstream. Now I could be misconstruing that but that’s my perceptions, suddenly people looked at me and thought, “Yes, he’s doing all the things we do.”

Julia Baird:

And had you expected to do all the things that everyone else does?

Ron McCallum:

No, at that time technology came along and technology altered my life because they were now inventing synthetic speech which could be used with computers and also scanners where you could scan books and by 1989 I could scan a book, I didn’t have to get someone to read it. I could put a book on a scanner and it would be read out synthetically. It’s liberated me, I can be not only hopefully a good husband and Dad but I can be a government advisor and Dean of a law school.

Julia Baird:

I think you said once, “It was like saying to a paraplegic, ‘you can walk now’.”

Ron McCallum:

Yes. You know people say to me and you can cut this out of the interview if you like, people say to me, “Wouldn’t you like to see your wife and see your children?” And I think in an abstract way, I suppose if you could see it would be good, but I’ve never seen and I know that Mary and I bathed the children when they were born, I know them, I don’t need to see them, doesn’t mean anything to me, but if you’d said to me at the age of ten, “Would you like a machine that would read to you automatically?” I would have said, “Yes.” Look it got so complicated that I had a little bit of counseling, I married Mary in 1986 and we had a child a year later and then technology, the first talking computer, I had sexuality and being a Dad and technology and they all hit at once and suddenly I was liberated and I could read whatever I wanted to read. I could actually put on the scanner pornography in theory!

Julia Baird:

And did you?

Ron McCallum:

No but I wrote my first book from memory on a typewriter and if you’d come into my office I would have said, “Look would you read me the last sentence I wrote, because I can’t remember and I’d keep on typing.”

Julia Baird:

Right.

Ron McCallum:

Someone recently wrote that Ron McCallum’s writing had become crisper and I thought, “Yes, I can now read it back.” But yes, if you’re an academic and you want to read and you want, information is power and now I can do it, it’s extraordinary; I never imagined it could happen. You know I didn’t imagine marrying or having children but I knew people did marry and have children but at that stage I never knew that we would invent this technology. Sometimes in the middle of the night, Mary will reach over and feel my ears, this is nothing to do with amorousness, we’ve been married twenty years, this is, “Are you still plugged in and would you try and get a balanced life!”

Julia Baird:

You described it as when you first made this discovery and I think it was in December 1989, it was orgasmic…

Ron McCallum:

Yes.

Julia Baird:

Can you tell us about that actual moment when you were able to scan material into your computer?

Ron McCallum:

Yes, the scanner had arrived and each week on my desk comes a loose part of the law reports from around the world and you can read cases and the first part that came to me as soon as I got the computer was from England, it was the House of Laws decision on Occupational Health and Safety. Now I teach that law. Normally I would have had to go and find someone to read it, I said, “No, no, no. I’m going to read this myself now.” I walked into the room, I put it on the thing and I read it and I came out and I thought I can do this. The days of asking someone to read me something are over. It’s a bit like you know if I hadn’t learnt to do up my shoes or my buttons, would I have to say to someone everyday, could you please do up my buttons? I can read what I want to read, when I want to read, I can read whatever I like to read whether it’s permissible or impermissible.

Julia Baird:

I think you’ve got your, we might call it a talking machine but its actually called something else.

Ron McCallum:

This is a computer with a synthetic voice.

Julia Baird:

It reads to you from things which are scanned into it right?

Ron McCallum:

Yes will this one, some things are scanned in and other things are taken off the net. What I took off the net was the work choices bill scanned it into that and I can now read it by pressing these buttons here.

Julia Baird:

Can you play it for us?

Ron McCallum:

I will, I’ve put it on the very slow speed.

Julia Baird:

Okay....

It’s like Star Trek.

Ron McCallum:

I can slow it down more…Now if I were going to read it myself, I would read it like this…

Julia Baird:

Oh my goodness.

Ron McCallum:

But I’m trained to do that.

Julia Baird:

But it’s like another language.

Ron McCallum:

Yes but it’s like when you are using your eyes reading, you read far quicker than you could speak, that’s only about 500 words a minute.

Julia Baird:

So you can understand that easily?

Ron McCallum:

Yes. I do get some headaches but my friends get headaches after reading for a long time and I think when I became blind shortly after birth the brain hadn’t developed, in fact quite a lot of my cohort had brain damage, you know I went to school with brain damaged kids at first because they put us all together but often I think there are big spaces in my head, there are big blanks, but I think some of those blanks are used to help me use my hearing and touch and smell senses better. I’m quite amazed about how clever people with vision are, grown ups. When the children were smaller my wife could drive the car, talk to me and where necessary yell at children in their car seats in the back. I just can’ t do all that at once and my nearly 19 year old who can drive me somewhere I think this child whom I held in two hands and he can do those things that I can never even conceive of doing, it’s quite extraordinary.

Julia Baird:

You’re listening to Sunday Profile, my guest is Professor Ron McCallum, the Dean of Law at Sydney University.
Well with all those sounds and that kind of noise going into your earphones and all these words swimming around your mind, what do you do to relax or to still your mind?

Ron McCallum:

I meditate morning and evening. I’ve done that ever since I got stressed in the early 1990’s. I am a Christian meditator, but you can be whatever meditator you like and I say my mantra morning and evening.

Julia Baird:

What’s your mantra?

Ron McCallum:

MA-RA-NA-THA. It means come lord. It’s in the old Aramaic which was the language Jesus spoke. So I mediate morning and evening, get up at quarter to five to meditate. I find relaxing very hard but I find meditation is cheaper than the shrink, you know, it’s not chasing other ladies, it’s not drinking too heavily but seriously I find I need times of absolute quiet and meditation to centre myself. I find my job difficult. Not only am I Chief Executive but I still teach and research, I’m responsible for significant educational institution, a significant part of Sydney University. I need that meditation and calm time to still all the stuff going around.

Julia Baird:

Do you think that meditation means something different to you than it would for a sighted person?

Ron McCallum:

I don’t know, I don’t see things in my dreams, I don’t dream that much. I know that my mind is different and that it has these gaps but I’m still trying to do what you’re doing.

Julia Baird:

You’ve said it was a form of Christian meditation, what does it mean to you in your work to be a Christian?

Ron McCallum:

I’m a believer in Jesus Christ and I believe in the Ten Commandments and his good neighbour philosophy. I try and live that life as best I can. I know I don’t always live up to the Christian ideals and to me there’s a lot of elements of Christianity in labour law. We were a Christian country particularly in 1900. When we developed our system of conciliation and arbitration it was backed by the Catholic church, to a lesser extent by the Protestant churches, it was backed by people concerned with fairness, there are a whole lot of stories in the Bible of Jesus speaking about how masters should treat servants and vice versa. Our law is based upon Judaic Christian principles.

Julia Baird:

So you feel probably that part of your work in IR would be about protecting the vulnerable or seeking a fair deal for workers.

Ron McCallum:

Absolutely.

Julia Baird:

I mean there must be some different views out there on that as well, I mean given that Ian Harper who’s the head of the new fair pay commission is an Anglican as well?

Ron McCallum:

Absolutely, I mean there’s another view that we should reward merit, that we should employ people at all costs, even if that means lowering wages, that there is an ordained order of things, that we will get better productivity for all if we pay the higher skilled workers more. They look at labour law I think in a collective or overall national sense. I came from the other side of the tracks, from the poor side of the tracks. I look at it from the plight of the individual. I think once you move law away from the individual you lose its humanity. We might want to say, “Okay, it’s nice for businesses who have a hundred or less employees not to worry about their unfair behaviour if they dismiss someone unfairly,” what about the individual who’s felt injustice? You know, we can all remember from childhood something that went wrong in our lives when we were unjustly dealt with. We may have been unjustly punished at school or our parents may have misconstrued something. Dickens wrote that every child has an innate sense of justice and I think we have it and we can all remember injustice. If the law means anything, if it’s not going to clang like an empty symbol it has to have justice at the core and justice and must be centred in the individual worth of individual human beings.

Julia Baird:

So there’s also a battle of ideas amongst people of faith in the industrial relations tradition perhaps?

Ron McCallum:

Oh absolutely, you know one person said in the early days of the church, “You could tell Christians from the way they looked at you with their eyes.” I’m not sure that we Christians stand out like that anymore.

Julia Baird:

Recently we have seen the High Court decided in a case about wrongful life. In a situation where parents claimed they would have aborted rather than give birth to severely disabled children had they been told about the rubella which the woman had contracted during her pregnancy. This case is ultimately involved comparing a disabled life with no life, and as you would know, the High Court threw it out, saying, “It would be odious and repugnant to suggest a disabled person would be better off not being born.” As a Christian, a lawyer and a blind person, what were your thoughts on this case?

Ron McCallum:

I would never question someone who wanted to abort because there was evidence of disability, if that was their choice I wouldn’t jump up and down about it. I think we disabled people do have a valuable life. Now it might be easier to say it of me, even those with brain damage have right to live unless someone’s in extreme pain, people have a right to live. On the other hand, I can see why people who are bringing up a disabled child should be allowed to get damages; it’s a bit emotive to call it ‘wrong for life’. The real issue is over damages to help bring up a disabled child which costs a lot of money. So I’m torn, I’d probably in the end side with Justice Michael Kirby that I would have probably allowed the case to go to trial and assess for damages but that would mean my view is that disabled people have a worthless life. I think all of us have a place in the procession, young and old and disabled.

Julia Baird:

Well in this instance the parents were angry with the doctor who was involved, what would you say to parents who are angry with God when their children are born disabled?

Ron McCallum:

I had a father who was angry; I don’t know what God’s plan is. When people say, ‘It’s God’s will’, I don’t know that I want to subscribe to that theory. I think you’re very lucky if you have a child with ten fingers and ten toes. We’re not in a world of designer babies, I wasn’t a designer baby, who would have thought of me in a humidicrib with a post traumatic stressed father that I would have ended up being Dean of a Law school and leading what I hope is a useful life? We don’t know where we’re all going to end up so you know we all have value.

Julia Baird:

Professor Ron McCallum, thanks for joining us on Sunday Profile.

Ron McCallum:

Thank you very much Julia.

Julia Baird:

And that’s Ron McCallum – by any standard an extraordinary and a committed human being.

I’m Julia Baird – thanks for listening.

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"I've had a Westpac of a day"

Up on Westpac's tweet site late this afternoon:

A concerned Simon Thomsen tweeted in response: Gail, step away from the window...

HT: Julie Posetti


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