ABC Insiders interview
DAVID SPEERS: Brendan O’Connor, welcome to the program.
BRENDAN O’CONNOR, MINISTER FOR SKILLS AND TRAINING: Thanks, David.
SPEERS: And Happy Father’s Day, I should note, to all the dads out there.
O’CONNOR: And same to you. And can I just do a shout out to my dad who will be watching the program no doubt.
SPEERS: I better do a shout out to mine as well, so there you go. Let’s – before we get into some of the detail around industrial relations and your area, skills and training, one of Labor’s key issues leading up to the election was getting real wage growth going and certainly that was one of the ambitions with the summit as well. What’s come out of this summit that’s going to deliver on real wages?
O’CONNOR: Well, I think there’s a lot of goodwill, which leads to good outcomes and there’s been some elements, I think, that are clear now that we – there’s a path forward as far as the Government’s concerned, because we brought big and small businesses, unions, and others together. And I think that’s absolutely critical. There’s been a long period where there’s been very little engagement. Now, we know that the previous Government boasted that low wages was a deliberate design feature of their economic architecture. We want an economic architecture that sees wages grow in real terms, businesses profit and we start to see better productivity because that also will help.
SPEERS: What out of the summit does that – accelerates that path to wage growth?
O’CONNOR: Well, I think it’s clear in terms of the industrial relations system, over the last decade we’ve seen bargaining, in terms of coverage for Australian workers, halve. So, what we’ve had effectively is no bargaining happening in workplaces across all sectors of the economy, and that’s led to the fact that even when we have a tight labour market, we don’t see wages rising; and we’re now confronted with the situation where, as you know, in recent times, wages are 3.5 per cent lower in real terms because of the inflation rate.
SPEERS: Well, let’s talk about that. So, one of the ideas and, in fact, one of the commitments from the Government now is to legislate for multi employer bargaining. As you know, businesses are pretty – most of them are pretty anxious about where this might lead. Just explain to us: what is the Government hoping to achieve with this idea of multi employer bargaining?
O’CONNOR: Well, we need people to start bargaining again to make agreements. We need agreement making. The current system, the way it operates, is not fit for purpose. It is not leading to outcomes that are mutually beneficial, so there are, in fact, disincentives to bargain. The legislation that we enacted when last in Government did have a mechanism for low-paid bargaining across employers, but frankly, it didn’t work, and we need to try something better and more effective.
SPEERS: That mechanism doesn’t have the right to strike.
O’CONNOR: Well –
SPEERS: So, is that what needs to be –
O’CONNOR: Well, there’s that – that has to be examined. But let’s be very clear. The decline in disputation globally is happening in every country whether they have industry or multi employer bargaining. The breathless hysteria about massive disputation happening because we use a new vehicle to bargain is not borne out by the facts. That doesn’t happen where there’s sector bargaining or multi employer bargain. It doesn’t happen in that way. I think that’s a feature of the ‘70s, whether it was here or whether it was in Europe or parts of North America or Great Britain.
SPEERS: But the change you’re suggesting here is that workers would have the right to strike.
O’CONNOR: Well, firstly, there are, of course, people – employers have rights to lock out and there are rights to take action under law presently, and we have to examine how that works. But that’s not –
SPEERS: Where there’s multi employer bargaining, though. That’s the change.
O’CONNOR: But also, what you have to look at is every moving part of this potential policy, and Tony Burke is engaged with employers and with, of course, unions and there’s been I think goodwill, and there’s even been an effort to work that thing through. Why I say moving parts, David, is because with rights to take action, either for employers or for employees or unions, there’s also, of course, the role of the commission in terms of arbitration. And that’s always been a very important mechanism of any form of multi employer bargaining. That also constrains, if you like, the level of action that could be taken.
SPEERS: Just to be clear, the sorts of things your Government is looking at are the right to take strike action and the right for the commission to arbitrate –
O’CONNOR: I think you have to look at all of that together –
SPEERS: That’s a yes –
O’CONNOR: But the real focus is getting agreements. What we’ve seen is collective bargaining halve in a decade and that’s led to the lowest wage growth of any decade in living memory.
SPEERS: And one of the other questions I have on this is would it be compulsory or opt in, because all of the business groups, even the Council of Small Business Organisations says this has to be opt in?
O’CONNOR: Well, again, that will be obviously subject to the discussions between –
SPEERS: So, it might be compulsory.
O’CONNOR: I think that is something that has to be discussed.
SPEERS: So, you won’t rule that out then, that it would be compulsory for employers?
O’CONNOR: I think it’s fair to say that there will be people who want to have an enterprise bargain and want to be separately bargaining. I also understand that COSBOA and the ACTU have talked about making sure it’s fair and fit for purpose for small business.
SPEERS: But they say it must be opt in. You’re saying it might not be –
O’CONNOR: And I’m saying they’re the discussions that will be had, and they have to be had by the Government and all of the players, but I think the tone of the summit will inform those negotiations.
SPEERS: The New South Wales Premier Dominic Perrottet is threatening to tear up an enterprise agreement with rail workers. There’s a big dispute going on in Sydney at the moment. Your colleague, Tony Burke, the Workplace Relations Minister, has written to the independent umpire, the Fair Work Commission saying the Government intends to remove the ability for employers to terminate agreements. Nothing yet has gone before Parliament, but he’s written to the umpire nonetheless about this and the Opposition has raised concern about it. Here was Michaelia Cash this morning on Sky.
MICHAELIA CASH: For a Minister in the Government to write to the independent Fair Work Commission and seek to influence them in how they make decisions – that should deeply concern all Australians.
SPEERS: Why has the Minister written to the umpire at the moment?
O’CONNOR: Well, I think, firstly, I think the first time it was raised by the Government was in relation to the tugboat dispute where the New South Wales Government was looking to terminate that agreement, which would have reduced their wages by 40 per cent. I mean, these were people that the Premier himself called heroes and that was the first time, I think, Minister Burke then raised concerns about that quite rightly, and I think the letter has just been a foreshadowing of our intent to the Fair Work Commission.
SPEERS: Why does the Minister need to foreshadow with the independent umpire what the Government is going to do before anything’s gone to Parliament? Is that appropriate? The Fair Work Commission is meant to be independent.
O’CONNOR: Well, the Fair Work Commission is independent, and the President and the Commissioners will work pursuant to the Fair Work Act. The Government, I think, as a protocol was just foreshadowing our intent, and we know there may well be some employers that may seek to terminate agreements before the legislation –
SPEERS: And is it just entirely coincidental that he’s done this while this big dispute is going on in New South Wales where the Premier is threatening to terminate an agreement?
O’CONNOR: Well, the first time he did air it, I think, was at an employer body conference.
SPEERS: But he’s written the letter this week.
O’CONNOR: Sure, but that wasn’t the first time he indicated it publicly –
SPEERS: But the timing looks like it’s aimed at this New South Wales dispute. Is it?
O’CONNOR: I’m just making the point that he did first raise it in relation to another matter not to do with the matter that’s now before the – where there’s a conflict between the State Government of New South Wales and the RTBU.
SPEERS: But was this week’s letter about New South Wales and the rail dispute?
O’CONNOR: I think it was a general foreshadowing of change to the Fair Work Act.
SPEERS: Just coincidence then?
O’CONNOR: As I say, it reflected comments he’d earlier made in relation to another matter.
SPEERS: Let’s move to migration. The Government is lifting the permanent migration intake to a record 195,000. There was clear consensus at the summit that there needed to be movement here to deal with skills shortages, but in the long term, is this the best way to fill those gaps?
O’CONNOR: Well, it’s one of the ways. It’s not a binary choice. And, of course, in my portfolio, we want to see better investment in VET and higher education. We need to reform the VET sector. We need to put TAFE back at the centre. We need to deliver courses, apprenticeships and traineeships that are actually filling skills shortages and we need our new body, Jobs and Skills Australia, to precisely anticipate the changing nature of the labour market, so when we invest billions of dollars to ensure that we have the skills that we need, there is emerging demand as well. So, that has to happen as well.
But of course, the immigration decision is important. What we had under a previous Government, Peter Dutton and Scott Morrison did not understand that immigration is also an economic portfolio. We had almost a million visas that have not been processed. We’ve got thousands and thousands of temporary visa holders who have been here for a decade in areas of skills shortage who can’t get permanent residency. And we had, of course, the temporary visa holders, who were not provided any JobKeeper or JobSeeker, flee the country. It was either starve or leave.
So, we were left with greater skills shortages than should have been the case if the previous Government understood the importance of immigration and temporary and permanent skilled migration to the economy.
SPEERS: Let me ask you about the temporary skilled migrants. They currently have to be paid at least $53,900. That’s at the minimum. That figure hasn’t moved for nearly a decade. Will that threshold be increased?
O’CONNOR: Look, we have to examine that. That has meant it’s fallen in real terms – obviously it’s nominally the same for nine years. We have to make sure it’s not about bringing people in to displace local workers.
SPEERS: Where should it be? Three years ago, you said it should be $65,000 –
O’CONNOR: I think, well, look, it’s really – it’s now subject to negotiations. I think there has to be a lifting of that measure.
SPEERS: You obviously think it needs to be $65,000 or more because –
O’CONNOR: I think the critical problem here is we have on the one hand temporary visas that are focused on high skills, and then we need to target that and not be looking to displace Australian workers. On the other hand, there is another issue which is even in areas of relatively low pay, like aged care, we have a supply shortage as well. So, I think we have to think about this. These are complex issues, and we need to work out how we deal with each sector.
SPEERS: Let’s turn specifically to your portfolio skills. You mentioned just a moment ago what was announced, a billion dollars, $1.1 billion from the Commonwealth for the States and the Territories to fund 180,000 fee free TAFE places. But I think you just said “billions”. So, that money is for next calendar year, 2023. What happens after that?
O’CONNOR: Okay. So, the first thing is it’s very important we have got some certainty next year and focusing on TAFE in particular but other VET providers. But what it has done is allowed us to create five guiding principles to negotiate a five year-long agreement with State and Territory Governments. They’re the deliverers of the sector. But it does need reform. And the state and territory ministers agree in principle with me that we need to reform the sector, so we are providing the skills necessary. Frankly, this is one of the biggest, most important areas of public policy in relation to feeding the labour market, providing the skills employers are crying out for, and in terms of secure employment, what more important thing could be for a worker to have the skills in demand? So, if we don’t get the skill set right, we don’t provide secure employment, skills that employers need and a growing economy, improved productivity which, of course, places downward pressure on prices at a time of high inflation. These are critical areas.
SPEERS: It’s hugely important. Everyone at the summit agreed we’ve got to get better at how we do this. You mentioned a five-year agreement is what you’re after here. How much is the Commonwealth putting on the table to secure a five-year deal with the states?
O’CONNOR: We’re looking notionally potentially at a $3.7 billion over the five year period.
SPEERS: From the Commonwealth?
O’CONNOR: From the Commonwealth and that’s on top of what payments have been made. That’s subject to negotiation. But we understand; we are the big funder of the VET sector, and we need to make sure. But let’s be very clear. We’ve got all of – leading up to – that would commence January 1, 2024.
SPEERS: So, $3.7 billion in additional funding from the Commonwealth from ‘24?
O’CONNOR: That’s certainly the amount that we’re hoping to be able to provide, but we need to ensure –
SPEERS: Jim Chalmers ticked off on that?
O’CONNOR: Well, those discussions have been had, but remember it’s predicated on agreement with the states and territories in order to ensure that we have the reforms so that it’s fit for purpose for students, current workers and the labour market that needs the skills now and the skills that are in demand in the future.
SPEERS: A couple of other quick ones on all of this. Again, at the summit this came through; we’ve got to do better on apprenticeships. Was it one in every two trade apprentices are actually dropping out before completing their course, and the figures are worse in the regions. Every business group and the ACTU ahead of the summit said they want to see wage subsidies and completion bonuses boosted. We didn’t get an announcement on that. Are you going to do something there?
O’CONNOR: Well, again, there’s multiple reasons why people don’t complete apprenticeships, and there – so I’m looking at best practice, which shows much higher completion rates. It does go to support, obviously, by the Government, but also support from employers, nurturing and mentoring apprentices.
SPEERS: Sure, but will you boost the wage subsidy?
O’CONNOR: Well, as I said, I’m looking at all the things that will improve the likelihood of a greater completion rate, but it goes – it’s not just a Government. It’s employers putting in as well. It’s also for apprentices, if they can see a line of sight to a guaranteed job, then their likelihood of completing an apprenticeship is much, much higher. So, I think we have to have an honest conversation about how – what sort of commitments are not only the Government making but employers are making in relation to apprenticeships –
SPEERS: Back to your part, the ACTU says, “Let’s go back to the pandemic era, 50 per cent wage subsidy.” Will you do that?
O’CONNOR: Well, as everyone has been saying, we’ve inherited one point, well, over $1 trillion of public debt. We’re fiscally constrained to some extent –
SPEERS: Too expensive?
O’CONNOR: Well, we’ll examine it because it’s so important. But let’s be honest. It’s not just for Governments to be providing support. It has to be a commitment from employers and where you see employers provide, for example, employment guarantees or future ongoing work, you see a greater likelihood of completion of apprenticeships and traineeships.
SPEERS: And a final one: Dylan Alcott, the Australian of the Year put to the summit there’s a huge pool of people with a disability who could be, you know, put to work. He’s basically after what the Government announced for pensioners. Let them work more while keeping their disability support pension. Why won’t you do that?
O’CONNOR: Well, the DSP will apply – the $4,000 increase will apply to DSPs as I’m advised*.
SPEERS: Okay, so it is the same deal for people on the disability support pension?
O’CONNOR: Well, I’m not sure if there’s any different mechanism, but the $4,000 increase without being – without a pension being affected would apply, and it’s not just – when we’ve got a tight labour market, we have an opportunity here to make sure that people can access the labour market who have been locked out for years. That includes people with disability, First Nations people and other – long term unemployed. We should be making sure that they’re not forgotten here either.
SPEERS: Okay. Brendan O’Connor, we’ll leave it there. Thanks for joining us.
O’CONNOR: Thanks, David.
*** Minister referring to DSP recipients over the Age Pension age, not all DSP recipients. ***