Interview - Mornings ABC Brisbane with Steve Austin

STEVE AUSTIN, HOST: Well, as we heard in the news headlines, at a time when charitable organisations are facing unprecedented demand, some community service charities are closing their programs across the south east. You’ve heard the news today that one in particular has to repay $9 million in what turned out to be underpaid wages to current and former workers. Mercy Community estimates that 1,700 current and former staff have been affected by the underpayment.

Now, you’d be aware that here in Queensland it’s a criminal offence where you could face jail if you are found to have underpaid employees. As a result, they have to pay the former staff and current staff what they’re owed. To do that, they need to close their residential care, their transition services, their foster and kinship care, supported independent living services and an asylum seeker centre. You heard the details on the news.

As fate would have it, Australia’s Assistant Minister for Charities, Employment, Competition and Treasury is Andrew Leigh. He’s in Brisbane. Thanks for joining me in the studio.

ASSISTANT MINISTER FOR CHARITIES, COMPETITION, TREASURY AND EMPLOYMENT ANDREW LEIGH: A real pleasure, Steve. Great to be with you and your listeners.

AUSTIN: There seems to be an issue with not just this charity but others – Uniting Care here in Brisbane announced the sacking of 350 workers yesterday. Are charities under financial pressure at the moment?

ANDREW LEIGH: Certainly charities are feeling the squeeze of the cost of living crisis, Steve. We’ve seen this particularly with food bank charities, which is why we gave an additional top-up funding to those food bank charities to get them through the year. Many Australians are feeling the pinch and for low and middle-income Australians often they’ll turn to charities for assistance.

We’re doing what we can both through the increases to the income support system in last year’s budget, the tax cuts which we’ve adjusted and so every taxpayer will get a tax cut on the 1st of July, and then supporting charities. The former government had an attitude of declaring a war on charities. The Albanese government wants to work with charities and engage with them to reduce the reporting challenges that they face and ensure that they’re able to thrive and grow.

But obviously, as you’ve said today with Mercy Community closing a number of services, paying your staff isn’t optional. Charities, like businesses, need to get that right. Mercy Community has a storied history in Brisbane going back to 1861. They’ll remain an important part of the social fabric here, and they’ve done the right thing in making sure they repay those staff who were underpaid.

AUSTIN: Is there any way that that the federal government would have a loan facility to carry them over, that they’d have to repay the federal government, but at sort of minimal interest rates so they don’t have to close services but they can still meet their commitments?

LEIGH: That’s not normally the way in which we’d operate, and those programs, to the extent they exist, would tend to be run by state governments.

AUSTIN: How would you fix it? Because your government’s been very hard on underpayment issues.

LEIGH: I think it’s entirely appropriate that workers should expect to be paid the right amounts. There are a range of complexities involved in running a business or a charity, but paying your workers what they’re owed is just part of being in business, part of having employees.

The Fair Work Ombudsman provides oodles of advice to employers who are looking to do the right thing. Employers need to make sure they get proper advice. Employers need to make sure they keep appropriate records. All of that is essential to operating a modern business or a modern charity.

AUSTIN: Isn’t it proof that the industrial relations and wage system is too complicated, Andrew Leigh? Because we’ve had Woolies, Coles, BHP, McDonalds, universities, Flight Centre, even the ABC was found to be underpaying some categories of employees. I mean, that’s both public and private sector. That seems to indicate that everyone – and these are big players – have difficulty getting the right category. What hope does a small organisation have?

LEIGH: Steve, I’ve heard that critique and, frankly, I don’t buy it.

AUSTIN: Why not?

LEIGH: Because I think that most organisations manage to do the right thing. There are inadvertent underpayments, and those you’ve talked to are largely inadvertent, unlike the wage theft scandals that we saw, for example, in 7-Eleven. Firms need to take on appropriate advice. They need to have good recordkeeping. They should reach out to the Fair Work Ombudsman. They should see this as an essential part of doing business. Tax can be complicated. Working through planning approvals can be complicated. All of those complexities are part and parcel of being in business or operating a charity. You simply need to comply with the law, and paying your employees the right amounts is non‑negotiable.

STEVE AUSTIN: Do you think more charities are going to have difficulty surviving? Uniting Care announced this week they were cutting 300 – or 300 to 350 staff to cope with increased costs. Now, my assumption is that’s an inflation problem, but I’m assuming that, Minister.

ANDREW LEIGH: I’m aware that charities will come and go from certain services. And some charities will be scaling up at a time when other charities are scaling down. That’s not always a bad thing. But I do want to make sure that as a whole our charity sector grows, which is why we’ve set a target to double philanthropy by 2030. We’ve got a Productivity Commission review right now looking at ways in which we can get more funds flowing into the sector. As a government we’re working constructively with charities over issues of indexation of their funding and making sure they’ve got longer-dated agreements and so they’re not coming back cap in hand every year asking for funds. We want to treat charities with respect, work constructively with them and grow that valuable community sector and the volunteering base.

STEVE AUSTIN: My guest is Andrew Leigh. Andrew Leigh is the federal Assistant Minister for Employment, Assistant Minister for Competition, Charities and Treasury. This is ABC Brisbane, Steve Austin’s my name.

You have a goal to double philanthropy by 2030. Let me ask you about that, because I know do a great deal of work in the area of sociology as well. So the United States has one of the world’s strongest cultures of philanthropy. Now, it’s been said to me that it’s because of their sort of Judeo-Christian cultural upbringing or cultural growth or national growth. Why doesn’t Australia have the same culture of business or corporate philanthropy do you think, Andrew Leigh?

ANDREW LEIGH: Steve, the US tradition, as you know, goes back to Alexis de Tocqueville's writings in the 1800s where he travelled through America and noted an extraordinarily high degree of community and social bonds which translates into levels of philanthropy that are much higher than you see in other advanced countries. But in Australia, we haven’t just lagged the United States, which maybe wouldn’t be so surprising; we’ve also lagged, for example, New Zealand in terms of giving per capita. So I think we can do better. I think as a community it’s important for us to look at the barriers to giving. And sometimes that’s as simple as people just not being aware of opportunities to give. About half –

STEVE AUSTIN: However, we have one of the highest rates of volunteerism in Australia, but not so much philanthropy, as I understand it.

ANDREW LEIGH: We do well on volunteering, though, again, that’s declined. And many of these measures of community engagement were going in the wrong direction for the first couple of decades of the 21st century. What we’d like to see, Steve, is more people using workplace giving, which is – exists for about half of all Australian employees but is only taken up by about 2 per cent. It’s a very simple way of making donations to a cause that you support without the complexity of needing to keep receipts at tax time.

We’d also like to have more people using bequests and thinking about how they might pass on a portion of their wealth to their favoured causes rather than leaving everything to their heirs. Bequests are more common again in other countries, and making that conversation more present for people is one way in which we might look to boost philanthropy.

STEVE AUSTIN: Yeah, we have a lot of charities in Australia, don’t we? A very high number of charities in Australia.

ANDREW LEIGH: About 60,000 of them. Whether that’s too high or too small is really a bit of an academic exercise. What I’m more interested in is the opportunities for people to start charities where the need arises. So you look at Orange Sky Laundry, started by a couple of terrific young Brisbane blokes who found a felt need for homeless people to have a chance to do their washing and have the conversations that went alongside it. That added another charity, but it’s no bad thing because it was filling a void.

In other cases, it will be appropriate for charities to look to merge. And there’s a range of merger activity going on in the sector. And sometimes, as with the way the Cancer Council operates, they will auspice a giving fund. If you’ve lost a loved one and you’d like to raise money in the name of that loved one, you don’t need to set up your own cancer charity; you can speak to the Cancer Council about the ways in which they can help you fundraise without the administrative overheads.

STEVE AUSTIN: Could a group like Mercy Community, which is today, you know, getting rid of a whole lot of services, could they look to or pursue philanthropic donations?

ANDREW LEIGH: They can, and I’m sure they do, Steve. They’ve relied on philanthropic donations going back to their history with Catherine McAuley in 1861. It’s an organisation that has been strongly backed by the people of Brisbane, and its refocusing of their mission is unfortunate but it is essential that they continue to pay their workers what they deserve.

STEVE AUSTIN: This is ABC Radio. It’s a quarter to 9. My guest is Andrew Leigh.

You’re in Brisbane because I believe you’re talking with state people about competition between the states of Australia. Now, normally that would make my eyes glaze over. But apparently, you think there’s a benefit for Brisbane families, so you give me yours and I’ll give you mine.

ANDREW LEIGH: Competition is the lifeblood of a well-functioning economy, Steve. When competition works, consumers are better off and workers are better off because workers depend on having a range of employers to whom they can sell their labour. We’ve got in a situation at the moment where market concentration has gotten worse, where markups have increased, where the economy has become less dynamic, and we’ve just had the worst decade of productivity growth in the post-war era. So in that environment competition policy is really essential. And that doesn’t just lie with the federal competition.

So the competition workshop which is taking place yesterday and today brings together states, territories and the Commonwealth in order to talk about reforms that can make the kind of difference that the 1990s competition reforms delivered for Australian households – about $5,000 for the typical Australian household last time, and we’re looking to replicate that this time.

STEVE AUSTIN: Here in Queensland Minister Mick de Brenni has got a nice little fix in many of the big government contracts – it’s called the best practice industrial conditions. And it ensures that on projects, government projects, over $100 million there’s this very high benchmark – I won’t bore you with all the industrial relations details of it – but what’s apparently happening is that it’s sucking workers and skilled workers from other states because the potential minimum wage here is so much higher. Are you speaking with Mick de Brenni about some of the provisions in procurement policy here in Queensland and things like that?

ANDREW LEIGH: I haven’t spoken with him directly, but certainly if there’s a race between states to pay workers more, then as a Labor person then I wouldn’t see that as a bad thing. We want Australians to earn more and to keep more of what they earn.

STEVE AUSTIN: At the moment our police service is poaching police from interstate as well because we have a shortage of police here and we’re actively going after police who’ve been trained by other states.

ANDREW LEIGH: This is a constant dynamic across the country. I’m from the ACT and we’re often poaching doctors from other jurisdictions as well. If that leads to a race towards the top, that’s terrific. What we want to ensure is that there is strong competition in the private sector as well and that we don’t have a situation in which any industry you go into you’ve got just a couple of supermarkets or a few banks or a few telcos. We need more competition in Australian markets, and that’s my main focus in the competition portfolio.

STEVE AUSTIN: I’ll check traffic in a moment, but I’ve got a range of further questions I want to put to you yet.

ANDREW LEIGH: Great.

STEVE AUSTIN: Is there enough competition in banking and supermarket sectors? So you know there’s a supermarket inquiry underway at the moment, but the ANZ Bank has just been allowed to take over Suncorp. We’ve spoken about this briefly in the past. The ACCC said they were worried about it; would reduce competition. The tribunal said. “No, it won’t, we think it will help competition.” The ACCC then said, “Okay, we’re backing out. We’re just going to let the thing go ahead.” But we’ve had Bankwest – or the Commonwealth Bank which owns Bankwest say they’re going to shut down all the Bankwest branches in Australia and go entirely digital. That looks to me like the banking sector is entirely shrinking. How is it – how is this healthy competition, Andrew Leigh?

ANDREW LEIGH: Yeah, our banking sector is relatively concentrated compared to other countries, Steve, and I’d certainly like to see a dose of additional competition. That may come with FinTech and some of the banks which don’t have branches. I don’t expect we’re going to see a whole lot more competition in terms of the provision of branches. And that’s a huge pressure on people who rely on branch services. People who might not be comfortable using digital technology, older Queenslanders who want the security of a face‑to-face transaction. When I was in the House Economics Committee and we were scrutinising the big banks, I'd be constantly asking them about branch closures and trying to get commitments from them about the impact of branch closures. It’s a big challenge for some Australians.

STEVE AUSTIN: I understand that not many people are going into branches anymore. Sure, I get that. But the competition is not being lifted. The competition is also being reduced.

ANDREW LEIGH: Yes, and there’s challenges of competition both in terms of the deposit-taking side and also in terms of mortgage lending. So we do need to make sure we’ve got more competition in both of those markets. Competition, as we know, drives better outcomes. So encouraging competition right across the economy, including in banking, is a big priority.

STEVE AUSTIN: I want to take a call from a listener in a moment, so I’ll get you to put your headphones on, and we’ll check traffic.

Thank you very much. This is ABC Radio Brisbane. My guest is Andrew Leigh. Andrew Leigh is the Assistant Minister for Charities, Employment, Competition and Treasury. Anything else you’d like, Andrew Leigh?

ANDREW LEIGH: I’m very happy with what I’ve got, thanks, Steve.

STEVE AUSTIN: I’m very glad. So just the other issue is the ANZ takeover of Suncorp. Is the federal government entirely happy with that?

ANDREW LEIGH: The Treasurer still has to make a decision on that, Steve. So it wouldn’t with appropriate for me to comment on that particular decision. I’m very happy to talk about competition in the broad, but I can’t be speaking about it a decision that is literally on the Treasurer’s desk.

STEVE AUSTIN: Because Jim Chalmers will have to formally approve it and pass through legislation, I think, at a state and federal level to allow it to happen?

ANDREW LEIGH: He definitely has an approval process. I’m not sure about the legislation.

STEVE AUSTIN: We were talking about charities earlier on. David from Grantham, you have a question for Andrew Leigh.

DAVID: Yeah, thanks for having me on. The question was: what role does the auditors have in all of this? I would have thought that the auditors would have had to have looked at all the payments and that sort of structure. Just curious.

STEVE AUSTIN: Good question, David.

ANDREW LEIGH: Yes, great question, David. The auditors should be looking through some of the details, and it will be a question as to the depth of the audit report and whether they will have been required to look at things such as the payroll systems. Sometimes auditing can take place at a slightly higher level, and so they don’t look specifically at compliance with the appropriate awards.

What they should be asking is: what advice have you gotten? Have you got the appropriate payroll system in place? Have you checked with the Fair Work Ombudsman? The vast majority of Australian businesses, the vast majority of Australian charities get this right. They pay their workers what they’re owed. And so that’s the obligation of all organisations in Australia to do the right thing by their workers.

STEVE AUSTIN: Appreciate your call, David. Thank you very much. Minister, it’s International Women’s Day. I could rattle off half a dozen names of male economists. You’re an economist yourself. Give me half a dozen names of female economists who we should start reading.

ANDREW LEIGH: Well, let’s start with Joan Robinson, a Cambridge University economist who wrote in the 1930s about monopsony power. Monopsony power, Steve, is the fancy word for what we were talking about when a lack of competition hurts workers. It’s the idea that in hiring, if you’ve only got a one-company town, you won’t earn the wage you’re worth. And if you’ve only got a couple of employers, you’ll earn less than what you’re worth. Joan Robinson fought against prejudice within Cambridge. She should have been the first woman to win the Nobel Prize but ultimately didn’t manage to get it.

More recently, though, Elinor Ostrom was the first woman to get the Nobel Prize. She got it for her work on the tragedy of the commons – this is the notion that if there’s a common pool resource it will tend to be overused. And yet Elinor Ostrom showed that in various hunter-gatherer societies people had actually settled ways of dealing with the tragedy of the commons.

And I’m happy to give you six, Steve –

STEVE AUSTIN: That will do.

ANDREW LEIGH: Let me just finish with Claudia Goldin who won last year’s Nobel Prize for her work on the gender pay gap and showing that the gender pay gap was primarily driven by the differences between mothers and fathers. That as soon as women had kids the gap began to emerge, and over the course of a career a mum could end up earning half as much as a dad.

STEVE AUSTIN: Andrew Leigh, thanks for coming in.

ANDREW LEIGH: Always a pleasure, Steve. Thank you.