Event: Shaun Schmitke interview with Kyle Rodda, Ausbiz
Date: Wednesday, 7 June 2023, 11.15 am AEST
Speakers: Kyle Rodda, host Ausbiz; Shaun Schmitke, Acting CEO Master Builders Australia
Topics: industrial relations, ‘Same Job, Same Pay’, productivity
Kyle Rodda, host Ausbiz: Welcome back. Well, the Labor Government has put industrial relations back on the agenda with its same work, same pay proposal. So, for thoughts on this and how it might affect the business community in particular, Shaun Schmitke, head of Master Builders joins me now. Shaun, thank you so much for your time today. It’s actually one that haven’t picked up on just yet or that much lately. A lot going on in the world of course. But industrial relations. We’re talking about real structural things in the economy here. So, can you provide a little bit of context about what’s happening in the space right now?
Shaun Schmitke, Acting CEO Master Builders Australia: Yeah absolutely. Good to be with you, Kyle. Look this is a pretty radical set of changes that the Government has got on the table right now. It has a big potential to fundamentally change how a lot of businesses operate and how a lot of workplaces operate. It is essentially a policy that we’ve been saying for quite some time makes not sense. But effectively what the Government is saying here is that people who are doing the same job should get the same rate of pay. That to us is something it’s completely illogical and will result in outcomes which will be anti-worker, anti-business and make it difficult, particularly for the building and construction sector.
Kyle: So, I mean, what are the fundamental risks here as you see it at the moment? I mean we’re talking a lot about productivity right now and the fact that productivity is lagging. I mean is there an element that if everyone is getting the same no matter the work that they’re doing, it’s sort of stripping out that productivity element of things? Also, is this a concern about the way that higher labour costs might affect business profits as well as hiring intentions going forward?
Shaun: Yes, absolutely right. I mean, look, I suppose there’s three elements to this policy which are really concerning which have a potential for far-reaching ramifications. The first is the ‘what’ they are intending to do. I mean it makes no sense, in fact, it’s contradictory to Australian workplaces laws as they currently exist and the way they’ve existed for a long time to be able to provide a minimum safety net for everybody but also allow experienced workers to get ahead, to reward people with particular specialist skills, or experience, or familiarity with a particular business. Employers will be far more reluctant to pass on big wage increases to those people for fear of being captured by this policy. At the other end of the labour market, I suppose, you have new workers coming into the workforce and essentially this policy could operate to make them be paid the same as those experienced workers. So that’s going to make employers more hesitant to take on new workers and young people. The second element we have a concern about is the ‘how’. I mean, how will this policy actually work in practice? What is a job? What is a pay rate? How do you go and compare those two things for particular circumstances that are unique to each worker and unique to each business. Then the third, and this is the real problem for the building and construction is the ‘who’, and government keeps changing the goalposts here in so far as where this policy intends to apply and who it intends to capture. First, we heard it was about all workplaces. Then it was certain workplaces that use labour hire. Now we’re hearing it’s certain workplaces with enterprise agreements. And there’s a lot of uncertainty and confusion that this is causing. In particular for building and construction, we are very concerned and in fact, the Government’s own consultation papers have made this clear that it opens the door to capture subcontracting and independent contracting which is a feature of building and construction and has been that way not only in Australia but internationally for well over 100 years. We don’t use subcontracting and independent contractors to drive down wages or attack workers’ conditions. We use it simply because that’s the only way that building work can be performed. You can’t put a roof on a house until you get the slab down. So you need to have those specialist contractors engaged at that particular point in time throughout the construction process. So, if this policy applies as we think it will, that’s going to fundamentally undermine building and construction and the way building work is performed. That’s only going to drive up costs for consumers, make it harder for small business, all at a time when the industry faces quite high economic volatility and the community is crying out for their projects to be delivered on time and on budget.
Kyle: So, with the reforms as they are, obviously, have an issue with what’s being proposed especially at a broad level. I mean, from your perspective, what do you think we need and what do you think Australian business needs to obviously ensure both a dynamic workplace where workers are rewarded but also one where businesses are allowed to thrive and obviously deliver the benefits that they’re looking to? Both to obviously their shareholders and interests within the business but obviously also to the broader community.
Shaun: Well, those particular interests aren’t mutually exclusive. We have a very, very comprehensive set of workplace laws in Australia that’s been in place for quite some time. In fact, one of the most comprehensive systems in the world. The system as it currently stands, we think, is working in this respect and doesn’t necessarily need to have too much changed in order to get wages moving. In terms of productivity, what we are seeing is a greater focus on restrictions on conditions and restrictions on when employers can operate their business. And particularly in building and construction, in the period since the ABCC was abolished for example we’ve seen a greater union influence that want to enforce and get businesses to sign up to their one size fits all enterprise agreements which restrict when you can work, how you can work and how much you can get paid. So that’s anti-productivity, that’s anti-flexibility, and what that’s doing is driving up the cost of construction, really in return to give the unions a bit more of a say, in fact, a lot of a say over what happens in the industry. The second thing is that we really need to refocus and get back to basics here. We used to have a system that would allow and encourage productivity improvements in workplaces and have that linked back to wage prices. That is basically something which is a concept of the past. We don’t understand why that’s the case. If we want to get wages moving in Australia and we want greater productivity outcomes, we need to get back to a system like that and ensure that productivity is at the heart of our workplace laws instead of them being anti-productivity as they currently stand.
Kyle: Shaun, really appreciate you sharing your insights and I do feel as though obviously it’s going to be something we’re going to be speaking more about going forward so we’ll have to do it again as it evolves. Shaun Schmitke, Master Builders Australia, really appreciate your time.
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