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August 13, 2012

QANTAS STAFF PICTURE. BAGGAGE HANDLER QANTAS STAFF EMPLOYEE AVIATION FLYING LANDING TAKE OFF HOLIDAY TRAVEL AIRLINE COST CUTTING SAVINGS STOP AIRPORT TARMAC APRON NOISE SOUND CONTROL JET ENGINE SPECIALX 1234Both parties in the Qantas dispute have been ‘bloody-minded’. Photo: James Davies

FAIR Work Australia’s monumental rebuff to the Transport Workers Union in its dispute with Qantas strikes a blow to the credibility of claims the Fair Work Act is some kind of conspiracy against employers.

The commission (which is what Fair Work Australia is in all but name) had no choice last week but to support Qantas management because, in both its tactics and its demands, the union was being so bloody-minded.

That’s true even though, by grounding its planes worldwide and locking out all its staff last October, Qantas management could come up with no more creative solution to its bargaining problem than to be as bloody-minded as some of its unions.

This was not so much a win for ”managers’ right to manage” as the commission’s commonsense judgment that allthe industrial parties needed to face up to the harsh commercial realities threatening the survival of their business.

Here we had a union demanding 5 per cent annual pay rises at the same time it was fighting to prevent its employer from turning to cheaper sources of labour. That makes sense?

It will be a pity if the commission’s refusal last week to split the difference in the old way encourages other militant employers to seek to resolve disagreements with their workers the chaos-causing Qantas way. Even so, the commission’s refusal to go anywhere near splitting the difference provides powerful evidence it can be trusted to adjudicate issues sensibly in a system that hasn’t swung the balance too far the unions’ way.

Perhaps this explains why the national dailies – which, in their campaigning against the evils of Fair Work, seem to find another story about union atrocities for the front page most days – were not excited by the employers’ big win last week.

Read too much of their stuff and you come away thinking the union movement has risen from its death bed to pose the greatest threat to our continued prosperity. Remember, union membership is down to 18 per cent of the workforce (from 50 per cent in 1982) and 14 per cent of private-sector workers.

Another figure to keep in mind when you read about the union monster poised to eat the economy’s lunch: more than 80 per cent of enterprises don’t have a union presence.

Two labour lawyers, Dr Anthony Forsyth, of Monash University, and Professor Andrew Stewart, of Adelaide University, note in their submission to the Fair Work review that ”the concerns about union activities that so animate certain employers in the resources, manufacturing and construction sectors are very far removed from the issues confronting businesses in other parts of the economy”.

”For the small to medium enterprises that predominate in sectors such as retail and hospitality, both unions and, indeed, collective bargaining are largely absent. Their concerns are much more likely, in our experience, to revolve around the costs and ‘inflexibilities’ imposed by the award system, and the renewed exposure to unfair dismissal claims that the Fair Work Act has brought.”

So far, Fair Work has failed in its aim to greatly increase the extent of collective bargaining, with the proportion of employees covered by collective agreements increasing from 39.8 per cent of the workforce in 2008, to just 43.4 per cent in 2010.

Dr Forsyth and Professor Stewart argue many of these new agreements are effectively non-union instruments drafted by employers to replace the individual workplace agreements formerly available under Work Choices.

Genuine collective bargaining is likely to be confined mainly to large, unionised workplaces in the public sector and to some sections of the private sector.

Much of the bitter complaint about Fair Work comes from the miners. The labour lawyers say what some employers in the resources sector are seeking is a capacity to manage their businesses without the involvement of unions, and to undertake projects entirely free of any threat of industrial action.

‘These aspirations are simply not compatible with the principle of freedom of association … Indeed, to allow them to be fully realised would involve restrictions on the taking of industrial action, or on union rights of entry, that would go far beyond anything envisaged by the Howard government, even during the Work Choices period,” they say.

Talk of Fair Work having unnecessarily bolstered ”union power” should not only be kept in proportion but understood in the context of a broader ideological agenda that is profoundly antithetical to the principle of collectivism, they conclude.

Read more: http://www.theage.com.au/business/qantas-call-a-win-for-commonsense-20120812-242r5.html#ixzz23NHfJLIE

May 2, 2012 

The government can’t solve all of our problems and we need to accept primary responsibility for solving them ourselves. Ross Gittins explains.

    COMPLAINTS about the rising cost of living appear to have little basis in fact, a new study reveals.

It shows that incomes have more than kept up with prices, and in 2009-10 the average family was $224 a week better off than in 2003-04.

Woolworths Supermarket Mona ValePhoto Michele MossopWednesday 29th April 2009FIRST USE AFReggsGeneric Woolies Woolworths supermarket food shopping retail economy cost of living trolley trolleys wages SPECIAL 105421“There’s been this ‘rising cost of living’ story over the last decade when really Australian households are doing better than ever” … Ben Phillips, author of the latest study by the National Centre for Social and Economic Modelling. Photo: Michele Mossop

”I don’t want to say everyone is doing wonderfully well,” said Ben Phillips, the study’s author. ”But there’s been this ‘rising cost of living’ story over the last decade when, really, Australian households are doing better than ever.”

The study, by the National Centre for Social and Economic Modelling at the University of Canberra and AMP, says it is ”bigger lifestyles” rather than higher costs that are exerting pressures on many households.

”If there are pressures they are coming from keeping up with the Joneses and our higher expectations,” Mr Phillips said. ”We’re spending bigger, and on a wider range of goods and services, such as private schools, and we’re spending more on discretionary or luxury items, like restaurants.”

The study shows income and pension gains and a decade of low inflation have meant all family types are relatively better off, including working families with children, pensioners, high-income earners, and even families in the lowest income quartile.

Working couples with children are $328 a week better off in real terms than in 2003, and single parents are better off – but only by $59 a week. The highest quintile of income earners are $576 a week better off.

The study, Prices These Days! The Cost of Living in Australia, says some necessities, including electricity, mortgages, medical services, fruit, bread and vegetables, have become more expensive but the price rises have been offset by dramatic falls in the cost of computers and audio/visual equipment. Items such as toys and household appliances have barely changed in price.

Petrol has increased by 208 per cent since 1984 but is still cheaper than in every country except the US, Canada and Mexico.

Both high- and low-income earners spend more than in the past on discretionary goods such as restaurants, holidays, prepared foods and alcohol and tobacco. Low-income earners devote more of their income to basics than richer people but still spend about one in three dollars on discretionary items.

”There has been no large increase in the relative expenditure devoted to basic necessities of life as might be commonly perceived,” the report says.

Sydney has the highest cost of living in Australia, because of housing prices, but incomes are also high. But the overall standard of living enjoyed by Sydneysiders after costs and incomes are taken into account puts them behind residents of Canberra, Darwin, Perth, Brisbane and Melbourne.

Read more: http://www.smh.com.au/national/battered-by-rising-prices-nonsense-youve-never-had-it-so-good-study-reveals-20120501-1xxa3.html#ixzz1tfNIjaYX

No more ignorant talk of a two-speed economy

The more economists examine it, the more they explode the seemingly self-evident truth that we’re living in a two-speed economy.

Why do people keep saying this? I think they’re saying that whoever’s benefiting from all the talk of a boom, it ain’t my state or my industry. In short: I see no evidence of any boom around me and I’m certainly not getting any benefit from it.

If there is a boom, they seem to be saying, it’s limited to the mining industry while the rest of the economy is struggling. Similarly, Western Australia and Queensland may be doing OK, but the other states and territories aren’t.

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There’s just one small problem with all this: the facts don’t back it up. Consider, for openers, the figures we got last week for ”state final demand” (an imperfect interim substitute for gross state product).

Growth in this measure over the year to December averaged 2.7 per cent across Australia, but varied from 4.3 per cent to 1.5 per cent. The three fastest growing areas were the Northern Territory, the ACT and Tasmania.

Western Australia came fourth on 3.1 per cent and Queensland came eighth and last on 1.5 per cent.

As Saul Eslake of the Grattan Institute has reminded us, it’s not arithmetically possible for all the states to be above average like the kids in Garrison Keillor’s Lake Wobegon. There’ll always be some above the average and some below it. There’ll always be a multitude of reasons why, at any moment, some states are doing relatively well and others relatively badly.

Eslake has had a good look at the figures and found that, in the past two decades, there’s never been a gap of less than 2 percentage points between the annual rates of growth in gross state product of the fastest and slowest growing states and territories.

But that gap is narrower in recent years than it used to be. Over the past five years it’s averaged 3.7 percentage points, which is 1.5 percentage points narrower than it averaged over the previous 15 years.

Eslake adds that there’s much less divergence in the performance of our states and territories than there is in comparable federations. Over the past four years our divergence has been half what it is for the American states and about a third of what it is for Canada’s provinces.

But now Kieran Davies and Felicity Emmett, of the Royal Bank of Scotland, have examined the two-speed economy proposition using labour market figures for almost 70 regions around the nation.

In particular, they test the contention that the resources boom and the high dollar that goes with it are making the economy too dependent on mining and hollowing out the rest of the economy, thus making us more vulnerable to external shocks.

They find that at the height of the first stage of the resources boom in 2008, when national unemployment fell just below 4 per cent, unemployment was low across the country. There was a gap of only about 6 percentage points between the lowest regional unemployment rate of 2 per cent and the highest of 8 per cent.

Then, at the time when the mild recession caused by the global financial crisis led to national unemployment peaking at close to 6 per cent, the gap between the lowest regional unemployment rate of 1 per cent and the highest regional rate of 20 per cent was a massive 19 percentage points.

But now, as unemployment has continued to fall back from that peak, the gap has narrowed sharply. At the start of this year it stood at 14 percentage points, with the lowest regional unemployment rate still at 1 per cent and the highest falling to 15 per cent.

And get this: many of the regions with the lowest unemployment rates are in the non-resource-rich states. The regions with rates between 1 per cent and 2 per cent are in NSW (the Hunter Valley excluding Newcastle, and some parts of Sydney) and the Northern Territory. WA doesn’t feature in the top 10, though rural WA comes in at No. 13.

In 2008, before the onset of the crisis, more than 90 per cent of the regions had unemployment of 6 per cent or less. Now, with the economy yet to return to that height, 70 per cent of regions are at 6 per cent or less. If that doesn’t prove the benefits of the resources boom are being spread right around the economy, nothing will.

It’s true the retailers are doing it tough at present (mainly for reasons that have little to do with the resources boom), but it’s just sloppy thinking to see this as more evidence of the two-speed economy.

Why is it not a two-speed economy? Because about three-quarters of us work in industries that are neither great direct beneficiaries of the resources boom, nor great victims of the high exchange rate it has brought about.

And also because we live in one national economy, not eight isolated economies. There is a high degree of trade between the states and territories. They are subject to the same exchange rate, interest rate and federal budgetary policy.

A fair bit of the cream from the resources boom goes to the federal government. And all the mining royalties gained by the WA and Queensland governments are shared with the other state and territory governments via the formula by which the proceeds from the goods and services tax are divided between them.

The rise in the dollar is actually one mechanism by which part of the earnings of the miners is redistributed to all other industries and all consumers, in the form of cheaper imports.

If you think you’ve got nothing to show for the resources boom, all you’re showing is your economic ignorance.

Ross Gittins is the economics editor.