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E&OE TRANSCRIPT-TV INTERVIEW- SKY NEWS SUNDAY AGENDA

September 18, 2017

PETER VAN ONSELEN: Can I start by asking for your reaction to some of what Paul mentioned around these Super changes that the government is looking at, particularly in relation to industry super funds. Your thoughts?


BRENDAN O’CONNOR, SHADOW MINISTER FOR EMPLOYMENT AND WORKPLACE RELATIONS: As Paul said, this is a failed plan that has been reheated by the Government. The Government has an intention to undermine where possible the most successful Super schemes in the country. Industry Super has now been outperforming other Super schemes historically for many years, whether it be lower fees or higher returns. Yet strangely enough, the Government’s focus is on the governance of those better performing schemes.

So on the face of it, without seeing the legislation in any varied form, Labor would have concerns about the intentions of the Government.

If it is about good governance and it can demonstrate it is about looking after the superannuates, those members of the schemes, we will examine it and have an open mind. But if it’s about finding another way to attack unions in this country then of course we would have concerns. 

PAUL KELLY: The Government clearly believes there are some unjustified or illegitimate payments being made from super funds to trade unions and this is one of the motives in its proposed legislation to strengthen the powers of APRA, to strengthen the powers of the regulator to enquire into this process and take action against it. Does Labor reject completely the idea that there are any such illegitimate payments?

O’CONNOR: Well certainly I have no evidence to suggest there is a concern in relation to the relationship between the schemes and the unions and employer bodies that sit on those schemes. The Government does seem to forget when it talks about these schemes that employer bodies sit on these schemes in equal number and are involved in their governance. So it’s not a union scheme, it’s an industry scheme where workers and employers get represented, rather than a scheme run by banks.

So if the Government wants to assert there is something improper it will have to illustrate that. But endlessly, the only thing that seems to unite the Government, Paul, is its enmity towards organised labour and unions and therefore we are sceptical of the assertions made by the Government given its obsession and its intolerance and its hatred of unions in this country.

KELLY: I wanted to ask you about Senator Xenophon because clearly he is going to be a key player in terms of what happens with these bills, and he does seem to be irritating Labor more and more. It was Xenophon who made possible the passage of the media legislation this week, doing a deal with the Government. Earlier on he made possible the passage of the Government’s corporate tax cuts. To what extent is Labor concerned about the ability of Nick Xenophon to continue to do deals with the government at the expense of Labor’s position?

O’CONNOR: Well let’s remember the only basis upon which Nick Xenophon can have an ultimate say in the outcome of government legislation is that One Nation is a wholly signed up – it would appear now - part of the Government. Of course, it firstly relies upon One Nation votes. Malcolm Turnbull made sure that happened, inadvertently I might add by the double dissolution election. Nonetheless we have One Nation sitting in the Senate. Of course, it requires Senator Xenophon to work with One Nation and the Liberal Party to bring about changes.

Now my personal relationship with Nick is good. I raise issues with him as the Shadow Minister and I hope that he has an open mind and weighs up legislation on their merits. That’s the assumption I make every time I engage with him in my portfolio.  Yes I’m disappointed at times with cross benchers that don’t support Labor’s position but that shouldn’t dissuade the Opposition from continuing to put its case, and we will put our case in relation to these matters.

We were disappointed about the passage of the media laws. We think it will cause a greater concentration of media ownership and a greater political interference in the independent public broadcaster and for those reasons we have reservations about the legislation and we said so and criticised Senator Xenophon’s role in that. But that’s passed. We will continue to engage with the crossbench about other matters, that’s our job.

KELLY: Now we had new employment figures out this week, which does show again some degree of strength in the labour market. What’s your assessment about the outlook for unemployment at the moment and in to the future?

O’CONNOR: We welcomed the increase in jobs last month. Any increase to jobs in this country is good for job seekers and workers. There still is of course a very high underutilization rate in this country, Paul as you know. If you add the 725,00 unemployed to the 1.1 million underemployed you have 1.8million Australians looking for some work or looking for more work and there is a lot more work to be done there. If you look at the unemployment rate, it did steady, but it’s still higher than was the case when Tony Abbott was elected in 2013. There are more people unemployed than was the case back then as well, and yet there were some improved signs of job growth but not sufficient to say things are going entirely well.

Of course, wage growth of course is very low. One of the lowest wage growths in our history and that is causing I believe acute cost of living pressures on households and that’s manifest in consumer confidence and business confidence. So, we’re not out of the woods by any stretch and there is no answer, it would appear, that the Government has to redress the fall in real wages.

VAN ONSELEN: I wrote over the weekend in The Australian, Brendan O’Connor, about some of the challenges of artificial intelligence, robotics and even offshoring to ongoing job security for Australians, particularly in the years ahead as things like AI continue to develop. Does this worry you when you look at your responsibilities in the employment space, about these situations in the future, or do you see it as a like for like comparison to the industrial revolution, where new jobs developed anyway and therefore it was just simply changing circumstances where it was all about up skilling and recalibrating.

O’CONNOR: Well I think the change in the labour market is more rapid than in almost any other example we have had in recent history. Technological change, the disruption that’s occurring is very rapid, indeed and it’s not likely to slow at any time.

I think people can be overwhelmed by this issue and sometimes throw their hands up in the air. I think what is most important for governments is to look at exactly what is happening now. Yes we should be anticipating what is happening in a decade’s time, but we need to work here and now to deal with what is going on in the labour market. So for example, with the sharing economy and the platform economy that is growing as a proportion of the global economy, we need to need to work out ways to get the benefits of technological change, without allowing the disruption to diminish peoples opportunities at work. We should not allow technology to be an alibi to undermine decent employment conditions. So we need to apply the values we’ve always held to the new circumstances.

That’s why I started to outline in my speech to the Sydney Institute the need to create a set of laws for the 21st century looking at the sharing economy, looking at the gig economy, with a view to ensuring that people have quality jobs. That’s not going to be easy, but I think governments need to invest more of their efforts and resources in the future of work and you will hear more about that from the federal Opposition well before the next election. Ed Husic, Chris Bowen and I have been looking at this issue along with other and you’ll hear more from us about that.

VAN ONSELEN: When you think about the issue for challenges for jobs security, one of the issues that is being thrown up is the issue of high rates of immigration. It’s always been something that most economists have advocated. You’ve got this Dick Smith campaign, I don’t like a lot of what is wrapped in to that but I wonder whether it is time to have a serious debate about immigration?

O’CONNOR: Despite the fact we seem to have had historically a very partisan, hostile debate in the past decade in relation to asylum seekers and that’s a real disappointment,  I think it’s fair to say in other areas of immigration there has been relative bipartisan position by the major parties.

VAN ONSELEN: That’s in a sense my point thought Brendan O’Connor, should that bee looked at, not in an inappropriate way, but having a nice debate about whether or not we have reached a point where going against the conventional wisdom on immigration is at least worth debating?

O’CONNOR: Well firstly I think it was right 25 years ago to reverse the proportion of skilled migrants vis-à-vis family migrants so that now approximately two thirds of our permanent immigration intake per anum coming in under the skilled migration program – that’s good for our economy and society. In fact we do, Peter, fluctuate our immigration intake based on economic growth. Paradoxically, some might think, it was under Howard years that we had the highest permanent immigration intake in recent memory because we were presiding over a mining boom, the economy was growing rapidly for part of the time during Howard’s reign. The permanent immigration intake does fluctuate based on the economic growth of the country.

You know we have an ageing population, it’s an issue confronting many developed nations. We therefore need to ensure we have sufficient immigration so that we don’t end up with a ratio of dependents to workers being so great as to make it very difficult for us to sustain our standard of living.

So immigration will always have to form part of our story. It has always been part of Australia’s modern story. Immigration helped build this country. I can’t see that changing entirely.

I think one of the questions and debates that will happen is where do people settle? How do we prevent unnecessary societal disquiet through problems that go to congestion and transport and if those things are being conflated with immigration then perhaps policy thinkers have to be considering those matters in order to prevent a hostile and unfair debate about the role of immigration in this country. I certainly don’t want to see people being traduced as they have been at times in the passed for being migrants, given that migration is one of the best stories we have.

VAN ONSELEN: It’s interesting though isn’t it. Don’t get me wrong from a domestic perspective it’s very obvious what those benefits from skilled immigration are, I just wonder philosophically though how you feel about taking skilled migrants from underdeveloped and developing nations that need those skills themselves. It’s almost a form of nationalism, which flies in the face of good ethics.

O’CONNOR: Look, I’ve had a role in a number of these areas as Minister. While I am a strong supporter of immigration I’ve made very clear you can’t have an overuse or misuse of temporary work visas in areas of high unemployment. We have very high youth unemployment, almost 13 per cent which is well beyond double the national employment rate. You can’t therefore have a situation where young people cannot get work and yet we are using some temporary immigration streams which compound that problem. That will lead to justifiable outcry about a loss of opportunity for younger Australians. That’s just one cohort, I could talk about others.

You have to make sure when you set the policies that they are not going to deprive local people of opportunities. I’ve always believed that labour market testing has to be applied to temporary work visas so that people come in where there is a skill shortage. I also believe you have to invest in areas of shortage so that, yes, locals get opportunities at work in the labour market.

I’m not one that believes without qualification that immigration should occur whether it is permanent or temporary, but I do think immigration should always be part of our story – it always has been, but we have to calibrate it in order to, one provide local opportunities first, and two prevent people attacking the notion on xenophobic grounds. 

[commercial break]

VAN ONSELEN: Welcome back. You’re watching Sunday Agenda. A reminder we’ve got Senator Daid Leyonjhelm coming up shortly in the program but at the moment we’re talking to the Shadow Employment and Workplace Relations spokesperson for the Labor Party Brendan O’Connor. Mr O’Connor I want to ask you about the resignation I guess what you’d would call under pressure the head of the ABCC. You’ve been making the point that this reflects on the Minister Michaelia Cash. Why do you say that?

O’CONNOR: Well for two and a half years we now know the regulator was providing advice that was not correct. The law had changed on 1 January 2014 and yet the head of the regulator appointed by Senator Abetz and reappointed by Senator Cash deliberately and willfully refused to give the advice to the building industry to reflect the changes in the law. They were admissions that have been made by Mr Hadgkiss and the fact that that matter was brought to the attention of the Minister, she says in October last year, and yet nothing was done until last week is quite remarkable.

Further, the fact that the matter was already publicly aired in July last year when Mr Hadgkiss took down that offending material, unlawful material, it beggars belief that the Minister didn’t know between July and October that there were legal proceedings on foot, I think from August last year up until October. But even, leave aside the disbelief I have for the Minister not understanding that was going on until October last year, let’s remember we had a double dissolution election in July last year based on two pieces of legislation – one was to create a new regulator, the ABCC. The ABCC was created in December last year and Mr Hadgkiss was appointed as regulator of the ABCC even though legal proceedings of a serious nature were on foot about his conduct and the questions I have for the Minister is whether the Minister told the Prime Minister and Cabinet that those legal proceedings were on foot before he was appointed as head of the ABCC, if not, why not, and why was he then appointed and these are serious questions that go to the ministerial responsibility I will say of Minister Cash and those answers I think, we need to know the answers to those questions because they’re in the public interest.

KELLY: Brendan O’Connor, in recent speeches both yourself and Bill Shorten have made it clear that Labor will go to the next election proposing pretty significant changes to the Fair Work Act. Now I appreciate that this is not sorted out yet but what are the principles that will guide this, to what extent are you looking at changes in the law that increase union bargaining power, and how concerned are you in what seems to be a pretty significant decline in enterprise bargaining? To what extent are you going to address that?

O’CONNOR: I am concerned Paul that enterprise bargaining is not working in the way it was originally intended, or not working in the way it once did and we will engage not just with unions, we’ll sit down with employers and employer bodies and unions to talk about how we’ll improve that. I mean collective bargaining has always been the centre of Labor party policy for the last 25 years. We argue it’s been one of the reasons why we’ve had such good economic growth in the last quarter of a century and, indeed, wage growth in real terms was relatively good and that’s partly the result of the system working.

However in recent times there’s been gaming of that system, there’s been termination of enterprise agreements, there’s been a refusal to enter into agreements, there’s been other ways in which some employers have been able to avoid their obligations by using labour hire in a way they never once did or casualising their workforce or setting up sham contracting arrangements and we need to make sure that those things don’t happen improperly. So we are concerned that collective bargaining, enterprise bargaining at the enterprise level is not working sufficiently and we need to do better and we believe that one of the reasons we’re seeing wages fall in real terms is because of that failure and we’ve announced some policies Paul, as you know, and we’ll continue to announce some policies and election commitments before the next election so people are very clear as to our plans in relation to workplace relations.

KELLY: One thing I want to know, from what both yourself and Bill Shorten have said, it seems to be we’ve got too much inequality in Australia and one solution is trade union power. Is that correct?

O’CONNOR: Look, I don’t say it that way, you say it that way Paul. I’ve said that unions play a very important role in any civil society. In fact an absence of unions is an absence of democracy without a doubt. If you want to turn to the countries that don’t tolerate unions, then you’re talking about dictatorships, so we believe that unions have a very significant role to redress the market power imbalance, if you like, in the labour market. It’s always been thus, in fact Labor believes it’s axiomatic.

I mean how you go about doing that of course needs to be properly considered and that’s why we are looking at the deficiencies in the labour market. We want to see economic growth, we want to see the fair distribution of wealth. We are the party of growth but we are also the party of equity, we want that reflected in the industrial relations laws of this country. To be pro-worker, you have to be pro-employer, we want viable and vibrant businesses so it’s not about taking sides against business, it’s making sure that workers who build this country, along with business, get their fair share and if that happens, not only do we have a fairer and more equal society, it will be a more productive one. We’re on the side of the contentions of the IMF and the World Bank and the OECD who say growing inequality leads to lower sustainable economic growth. It’s less likely to have sustainable long periods of economic growth in societies which are less equal, so it’s not just a social requirement, it’s an economic imperative that we get the balance right.

KELLY: We can all agree that inequality’s a problem, there’s no question at all about that but we did have some statistics from the ABS this week indicating that in recent times the income of those at the bottom have grown faster than the incomes of those at the top and suggesting that income inequality peaked about 10 years ago. Do these figures suggest that while inequality is actually a problem, Labor has actually exaggerated the extent of the problem?

O’CONNOR: When we’re talking about inequality, we don’t just talk about incomes as you know Paul, we look at the vast gap between the bottom 10 per cent and the top 10 per cent, you have to look at the assets of those cohorts. There’s no doubt that because of the discretionary income of higher paid individuals, they have been able to invest in assets that have returned a very high capital yield over the last 20 or 30 years, and as a result the gap continues to grow. If you have discretionary income you can invest in areas, as we know, we’ve seen so often, you manage to minimise your taxation through those investments so it’s more complicated than just looking at the relative wages of the lowest and highest income earners. It’s also looking at other things too, and it’s not just individual wage earners of course, it’s looking at businesses and looking at the way in which corporate bodies are also treated. For example, we don’t ascribe to the view that you give $65 billion worth of tax cuts predominantly to big business and at the same time impose taxes on every worker in this country between $21,000 and $87,000 a year, that’s currently in this year’s Budget. We don’t agree that we should be imposing, or supporting a decision, to cut penalty rates for the lowest paid workers at a time when wage growth is at its lowest in 20 years, so it’s a combination of decisions made by Government that concern us, it’s not just what’s happening now, it’s what’s happening over the next 4 years. For example, the penalty rates decision will continue those cuts for workers in retail and hospitality for the next 3 years. So, there are decisions, if implemented, as a result of the Government’s Budget, will make things worse, not better.

We do not think that is fair, but nor do we think that is economically sound. As I have said many times, and you have heard me say this – Bill says this, as do others in Labor – Trickle Down Economics is a theory that has had its day. It has never led to the sort of benefits that it was supposed to lead to, and in fact all its led to in the United States and other countries is massive economic inequality, the trickle down did not occur.

KELLY: Does Labor agree with the central thesis advanced by the French Economist Thomas Piketty on inequality – that this will only intensify, because returns on investment, returns on capital now and in the future will be significantly greater than returns from labour and returns from ordinary income – hence the problem will only get worse. Does Labor accept and sign on to that central proposition?

O’CONNOR: Look, I am not an avid student of Thomas Piketty, though I have read parts of his thesis. I have to say that my attention was drawn earlier than that to Joseph Stiglitz, who wrote “The Price of Inequality” eight years ago now, who was chief economist of the World Bank, who has really shown what has happened in the United States insofar income and inequality is concerned over the last 25 years.

It’s a sorry tale. It’s a sorry tale for a great country that has led to the impoverishment of millions of workers and the hollowing out of the middle class. I do not want to see Australia go down that path.

For that reason, the policies we put in place – whether they are tax reforms to make sure that they are fairer, whether they be Industrial Relations laws to make sure they are able to provide economic growth and ensure there is a fair dividend for workers – they need to be implemented in this country to ensure that we can maintain and improve our standard of living so people can get a fair share of the cake.

At the moment, our concern is that it is not happening. And at the same time, the cake is not growing sufficiently. So it’s not just about the share of the cake, it’s about the recipe for improved, sustainable economic growth. We do not believe the Government’s policies are right.

We believe that investment in education and skills and ensuring a fair dividend for workers is important – not only for the social compact that we have with our citizenry, but also for the economic benefits that I believe will occur as a result.

So I guess I am more of a Stiglitz fan than I am a Piketty fan, but I guess they both have identified the growing inequality in recent decades.

As I say, it’s not just those economists – but the IMF, the World Bank, the OECD have also observed similar problems.

VAN ONSELEN: Brendan O’Connor, before we run out of time, I wanted to ask you about energy prices. In a sense, I wanted to start with the premise – what’s all the fuss about here? Both sides of politics say that power prices are a problem, and they are going up – but there is a household income survey that has been released that compares as a percentage of household income  - what we are spending money on today vs. what we spent money on back in 1984, 33 years ago.

In 1984, energy costs for a household – and I am talking about electricity and gas – were 2.9 per cent of household income. Today, energy costs for a household is 2.9 per cent of household income. It is entirely unchanged from 33 years ago.

Now, other things have gone up dramatically – education costs, health costs, the amount of money we spend on things like telephones and internet, which obviously didn’t exist back then. But electricity process – which everyone seems to be falling over themselves to tell us that are rising at a rate that is unsustainable – are exactly what they were as a percentage of household income back in 1984. Why are all you lot in Canberra so freaked out by this?

O’CONNOR: Well, I have not seen that survey. It’s interesting, isn’t it? I’ll have to have a look at it. There is no doubt that the lived experience of Australians is that the price of energy is too high and growing very rapidly. No doubt -

VAN OLSEN: But the data says otherwise.

O’CONNOR: Well, I have to say that certainly over the last decade, prices have been going up, for a variety of reasons, as we know. We do have to get a bi-partisan position, firstly for investors so they can invest in the energy market. We need the Prime Minister to show some leadership here and create a Clean Energy Target -

VAN OLSEN: Have I made that Cardinal Sin of inserting facts into this debate? Energy prices are what they were as a percentage of household income in 1984.

O’CONNOR: I heard what you said. I am just saying what we know to be the case over the last decade. Just by paying bills we know that there has been an increase in real terms of energy, whether that was different 30 years ago, I don’t know. I am happy to examine that.

But the fact is that in the last decade at least there has been significant hikes in energy costs  – for households, for business – and there is a real concern about the future of the energy market, and I believe the Prime Minister does need to find some way, instead of bulling companies like AGL, not cower to his backbench, listen to his Chief Scientist and talk to Labor to see if we can get a bipartisan position on energy, and everything associated with energy – like the costs of Households and business.

At the moment, there’s a spectacle going on. Some idiotic behaviour by the Prime Minister I have to say. Bullying AGL and playing stunts with companies, while at the same time cowering to his backbench – it really is an awful spectacle to see the Prime Minister acting in such a way when he knows – he is intelligent enough to know – that you have to create certainty for investors.

The Opposition has said to the Prime Minister that we want to work with them to create certainty in this sector, but it seems that the Prime Minister has no intention to reconcile differences between the major parties and instead wants to engage in these stunts like we saw last week. It’s a shame.

KELLY: There a lot to ask you on about energy, but before you go I have got to ask you about the CFMEU. The Union had a court finding against it, where they had to pay out $2.4 million. Minister Cash said that under the laws proposed by Labor, there would be no such penalty. Is that correct, or not? And if it is correct, what is your justification for it?

O’CONNOR: Well, I am not sure whether the penalty would be the same amount. Of course there should be penalties for unlawful behaviour. The fact is Paul that we do not accept unlawful behaviour from anybody. If people engage in unlawful behaviour then they have to suffer the consequences of breaking the law.

But right now, it is a little rich of the Minister to start lecturing on the rule of law when she presided over an effectively vigilante agency-

KELLY: I understand your point about the inconsistency-

O’CONNOR: deliberately and wilfully for 2 and a half years, and Paul we have never even been given answers from the Minister as to whether she informed the Cabinet and the Prime Minister about that regulator deliberately breaking the law before they appointed Mr Hadgkiss as director of the ABCC.

KELLY: Now you are right to say that the Minister has not given you answers to your questions, but we have dealt with that issue earlier on in the interview. I want to come back to the CFMEU because I think that you have conceded the point that under Labor there would not be a penalty of that quantity?

O’CONNOR: The penalty may have been different. Correct.

KELLY: Thank you.

VAN ONSELEN: Minister – well, soon be minister according to the polls – Brendan O’Connor we appreciate your time on Sunday Agenda.

O’CONNOR: Thank you.

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