View from The Hill: Bill Kelty's five-point plan for coming out of COVID

Scott Morrison wants employers and employees to come out of the COVID crisis with a new level of co-operation that delivers for both sides as well as boosting the economy.

He’s set to outline his push for a compact with business and unions in an address on his economic agenda to the National Press Club next week.

Meanwhile he’s told The Australian: “Businesses have to have a competitive cost base. They have to be able to draw on the best of the skills base that match their needs and they have to be engaged in technology and they have to diversify into markets that will sustain them.

"Employees will be asking for a more flexible workplace … it works both ways, it’s a two-way street.

"There are things that have happened in workplaces in the past few months that may never have happened.

"There will be a new sense of urgency … with the economic devastation that has befallen us.”

Morrison wants to deal with “some sclerosis” he says has developed in the economy during the long stretch of good times.

Bill Kelty, former secretary of the ACTU, was a key figure in the “accord” between government and unions of the Hawke-Keating era. It was a period of major reform that tackled a lot of “sclerosis” very successfully.

Kelty outlined to The Conversation a five-point plan he argues would suit today’s times.

1. Support a small real increase in the minimum wage, but phased in according to economic capacity, so workers “don’t bear the brunt of the COVID crisis as they did in the global financial crisis”.

2. Continue JobKeeper as necessary beyond its six-months September end date, so the economy doesn’t fall off a second cliff. JobKeeper could be rejigged to pick up additional casual workers but with the benefit reduced for those now getting more than they were earning pre-COVID. he said.

3. Have a plan to fund from within Australia the government’s about $200 billion extra spending. Kelty said this could be done by the government issuing “national recovery bonds”, to be bought by the Reserve Bank, which would then sell into the market, primarily to the superannuation funds. “These funds can be the main long-term source of investment in infrastructure and a significant source of capital to companies.”

4. Address a range of labour market issues. These should include improving training for jobs coming into greater demand such as in aged care and the environment, creating a more “positive” climate for enterprise bargaining, and phasing in better pay for occupations such as nursing and teaching.

5. Do not defer the already-legislated 2021 rise in the superannuation guarantee to 10% of wages (considerable opposition has been building including in the Liberal party to the legislated rises, which are due eventually to take the guarantee to 12%). This would ensure there was access to capital for businesses as well as consolidating the long-term retirement strategy, Kelty said.

Kelty maintained these measures would give workers confidence they wouldn’t lose out, and businesses greater certainty about costs, support for their operations, access to capital and a co-operative environment in which to make change.

He said Australia is much better placed to come out of the economic downturn successfully compared with the US because it has a “better framework”, including a superior social safety net, more extensive access to superannuation and a more constructive approach to change.

Australia’s economic exit “is going to be better than most countries’ – because we acted earlier than most, more decisively and effectively”.

His qualification was that initially the government did things in the wrong order by giving stimulus first – that is, the initial incentives for business to invest - before imposing the shutdown.

The order should have been isolation, stimulus, and recovery and reconstruction, he said.

Kelty welcomed Morrison’s attempt to bring employers and workers together. We live in a pluralistic democracy and what was needed now was a mature, non-partisan policy approach, he said.

But Morrison’s idea of a compact is likely to be very challenging to achieve.

Replying to Morrison’s Australian interview, ACTU secretary Sally McManus said on Monday: “The government’s response to this crisis has been strengthened by its engagement with the union movement. Unions have also worked with employers in industries across the economy to keep people safe and to save jobs.

"Tired old union bashing has got our country nowhere. We have always been a better country when the voice of working people is listened to and when people are prepared to work together to achieve common goals”.

When Hawke, Keating, Kelty and others were forging reforms, there had been a recession in the early 1980s though it was not like the traumatic circumstances of today, with the mix of a health crisis and an economic one.

There were big differences between then and now. The Labor government had not just a formal, elaborate “accord” with the union movement (which covered more than 40% of the workforce compared to 14% in 2018) - it also had the movement’s political sympathy.

The unions have been co-operative in the COVID crisis. But there will be increasing divergences of interests between employers and workers (unionised and non-unionised) as the economy tries to navigate its way out.

Kelty has a core piece of advice for the government. “Don’t try to do 20 things”.

Morrison probably doesn’t need to be reminded of over-reach, at least when it comes to industrial relations. He was elected in 2007, at the poll John Howard lost in large part on WorkChoices.