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Read all the latest news from Brendan O'Connor MP


March 07, 2019

PATRICIA KARVELAS: Brendan O’Connor is the Shadow Minister for Employment and Workplace Relations and he joins me now. Brendan O’Connor, welcome.


KARVELAS: Opposition Leader Bill Shorten says the minimum wage needs to be a living wage, can you quantify what that is?

O’CONNOR: Well we need to ensure the Fair Work Commission has the right tools to make that decision. We are aware currently that there are people that are below the poverty line that are being paid full time wages and that was referred to directly by the Fair Work Commission decision last year. That’s not acceptable in this country, a wealthy country, that we see wages flat lining and that we see people really struggling to make ends meet. That’s why you get that common cry that everything is going up except wages.

KARVELAS: OK, so what would Labor do to raise it? You heard the critique of the Greens they say Labor talks big but they have no specific plan and the Greens say they will push for a national minimum wage to be raised to $21 an hour. Do you support them?

O’CONNOR: Well we’ll talk to the employers and unions about this. The Greens can say what they like, they’re not going to be governing after the next election, but we will talk to them too. The truth is, it’s been Labor that has been prosecuting the argument to respond to stagnant wages for five years. We made a decision to reverse a Fair Work decision to cut penalty rates and unfortunately that has not been supported by the government. We’ve looked to announce policy around ‘Same Work, Same Pay’ for labour hire workers, because that’s certainly an area where people are being exploited. So we do have a series of policies and you’re right, Bill Shorten this week has also made clear we want to renovate the award system and make sure people are paid a living wage. That’s a combination of income with government payments. The combination of family tax benefits as well as wages. But currently people are working full time, below the poverty line and that’s unacceptable – that’s something you might expect to see in America, but not in Australia.

KARVELAS: If you’re just tuning in my guest is Brendan O’Connor Shadow Minister for Employment. You say you want the independent arbiter to make the decision and it will be phased in. What time frame will you give them to work up to delivering this payment, which is a pretty radically different idea, this idea of a living wage?

O’CONNOR: Firstly, it’s important that they are constrained by the factors that they must take into account when they make a decision and that is why I think whilst the Commission has identified the problem with people being below the poverty line and not being paid sufficiently to get out of that situation, the problem is we’re not giving them the right parameters. Whilst we need to be mindful of any unforeseen adverse consequences that might flow from a decision on wage rises, I think nobody argues there isn’t a problem with wage stagnation. One of the ways to rectify that is to ensure that when the Fair Work Commission is making an annual decision, they take in to account those issues that go to whether in fact people have got a wage that they can pay the bills and live a decent life.

KARVELAS: But you can’t provide a time frame for when this will be implemented?

O’CONNOR: We’re looking to deal with this as a matter of urgency. So you will hear more from us before the election, so that’s not that far away. The National Accounts came out yesterday as you know, Patricia, and average compensation per employee was growing at 1.7 per cent over the year and profits were growing at 11 per cent. It’s clear the gap between profits and wages is widening and there has been no government response. This is one way that we can deal with it and that’s something we need to flesh out as we will. But our focus is we need to lift people out of poverty particularly when they are working full time – it’s just not acceptable. We can do that in a combination of ways – as I say attend to the restoration of penalty rates, deal with precarious work by clarifying the definition between casual and permanent, deal with sham contracting – there’s a whole series of things that need to be done. Fundamental too, we need to look at bargaining and we need to look at the role of the Commission in ensuring that we do not have people on wages below the poverty line.

Finally if I can just make the point, median incomes in 1983 or that is, I should say, the minimum wage in 1983 was 70 per cent of median wages. Today it’s 55 per cent. So you see the fall in the proportion of the minimum wage to median wages.

KARVELAS: I want to return to this living wage because you say it’s going to be a matter of urgency and of course you will make more announcements before the election – ok that’s a standard process to outline more meat on the bones, but will you in relation to that announcement provide a time frame for when the full living wage that Bill Shorten has outlined, will be implemented?

O’CONNOR: Well that’s something that we have to consider and we have to consider that to ensure that we protect the economy as we move forward. I mean we haven’t –

KARVELAS: So you accept there is a significant risk because the Business Council of Australia says it could hurt small businesses which means less people in jobs, so higher unemployment if you push up these wages.

O’CONNOR: Look, I think there’s never been a time that I haven’t heard employers, employer bodies in particular, complain about any wage increase, frankly. So I have to take with a pinch of salt some stakeholders who will find any reason to argue for a wage increase. However it’s true to say after 25 years of real wage growth, we’re now seeing stagnant wages. That’s having an adverse impact on our economy. So whilst I think it’s fair to argue that we need to look how employment might be affected, it’s also fair to say stagnant wages is affecting the economy, which is also affecting business and consumer confidence. So it’s not just taking the arguments of employer bodies, but also listening to others -

KARVELAS: How will you test whether – if you are going to implement a living wage – whether the impact might be higher unemployment? Because that might be a transactional cost that the voters are just not satisfied with and not prepared to take?

O’CONNOR: It can be also argued that stagnant wages has affected aggregate demand in the economy, which has in fact led to under-utilisation of employment. We have the highest rate of under-utilisation of employment for a very long time. Underemployment is over one million workers looking for more work but not being able to find it. So it’s not just a question of wages, it’s a question of the lack of confidence in the economy, the household debt increasing, household consumption falling - that’s causing problems in terms of the aggregate demand in our economy.

KARVELAS: So you think it might be – workers deserve high wages even if some are forced in to unemployment as a result?

O’CONNOR: I think that’s a spurious argument. If you look around the world, in fact in Britain where they lifted the minimum wage, the impact on employment was negligible and the increase was quite significant. We will look at the evidence, listen to the arguments, but we are concerned there is not sufficient reward. We’ve seen productivity and profits outstrip wages. Wages are flat lining.

That correlation that we once believed we had between, for example, profits and wage growth is not appearing and there’s no evidence that it’s going to emerge and we need to do something. It’s not just Labor saying that, the Reserve Bank Governor and others have identified this as a problem – an economic and social problem.

KARVELAS: On migrant workers, the government will introduce criminal sanctions for bosses who deliberately rip off migrant workers. Will you support the legislation?

O’CONNOR: Well, let’s have a look at it. I mean, they announced migrant taskforce before the last election in 2016, and in the shadow of this election, they’re suggesting they might do something here. I mean, you know an election is near when the Liberal’s are talking about responding to problems for workers. They have had plenty of time to do things in the last five years and have failed to do so.

So, clearly, with egregious forms of conduct, Labor has already said we would have to deal with those issues and the most extreme forms of employer behaviour, akin to modern slavery and the like, should attract and mostly do attract criminal sanctions. We also need to make sure we increase the penalties, civil penalties for systemic underpayment because we think that’s one of the reasons why we have seen egregious examples, like 7-Eleven, and that we don’t believe has been sufficiently dealt with by the current government.

KARVELAS: If you’re just tuning in, Brendan O’Connor is my guest. He’s the Shadow Minister for Employment and Workplace Relations. The ACTU has announced that it is having, you know, up to 250,000 workers on the streets across the country during an election campaign but employers say that this is unlawful action, that they will be breaking the law to walk off the job to protest during an election campaign. What’s your view on this? Should workers be walking off the job for an ACTU protest?

O’CONNOR: I think they can make that decision themselves but I certainly do believe in protests in a democracy. I don’t believe people don’t have any rights to make their views known about something as serious as precarious employment and wages. I think if wage growth was actually happening, if there was sufficient wage growth and there was a government that was tackling precarious employment, for example, you would see little need for this conduct.

Clearly, there are many workers frustrated by the fact that everything is going up in this country except their wages and it therefore doesn’t surprise me that, that may eventuate. Those decisions should be made by workers themselves and I’m sure they –

KARVELAS: - But they will face fines, won’t they?

O’CONNOR: I’m sorry?

KARVELAS: They will face fines?

O’CONNOR: Well I don’t think, look, most employers don’t ever seek to fine their workforce even when they’re involved in any form of industrial action. It’s a very rare thing for that to happen but there is a government agency that has been established that will seek to fine certain workers or compel the employer to give over the names so that they can have them fined. But that's only in the building industry because we've got a draconian, undemocratic, partisan, politically charged body that is only going after one set of workers but no one else in the country. So for whatever proportion that might be in the building and construction industry they might have to face that agency but I would doubt, for example, the last occasion when there were people taking action or having a protest I don't think there was any evidence that employers sought to fine their workers. It's not something employers tend to do.

KARVELAS: Alright. Just finally and briefly, the energy sector now has proposed a coal fired power station in New South Wales, the Hunter Valley. The Greens are taking a hard line against this. Do you support a new coal fired power station?

O'CONNOR: Well it would have to obviously stack up environmentally. We've made it very clear, as you know Patricia, we wouldn't be seeking to invest any taxpayer money in such a project. But coal can be a part of the energy mix, but it has to fulfil environmental requirements and has to stand on its own feet.

The problem is the government hasn't got an energy policy. I think they've had 11, they've gone past 11 now and they abandoned the National Energy Guarantee, which we were willing to work with them on. But you've got a government divided. It's quite shameful the Nationals want Bill Shorten to fix their problem, you know -

KARVELAS: But Labor doesn't have a - just parking the political point. You don't have a view though on a new coal fired station in the Hunter Valley?
O'CONNOR: I just went through - look I don't know the details and you're not talking to the relevant Shadow Minister, other than to say that there will be no taxpayer investment in any coal fired plant.

KARVELAS: But if it can stack up on its own you're not opposed to it?

O'CONNOR: If it can stack up and fulfil the environmental concerns then of course if it is lawful then it can actually go ahead. But the government is very divided and the idea that the Nationals are seeking Labor to support them even when their own government doesn't have one position is quite remarkable frankly, but underlines how badly this government is going at the moment.

KARVELAS: Brendan O'Connor thanks for your time.

O'CONNOR: Thanks very much Patricia.