The text below is of a speech I presented at a Melbourne University debate about the merits of labour market liberalisation:
The question put before us this evening is: which way should the industrial relations pendulum swing?
Over the last century, at least, Australia has endured countless styles of regulation, and re‑regulation.
What I mean by that is that the letter, and underlying objectives, of the IR system has tended to swing between more, or less, government regulation.
The pendulum has most assuredly not swung between government regulation of labour markets, on the one hand, and the self‑regulated system of an unhampered, or free, labour market, on the other.
The labour market has always been hampered by commonwealth and state governments, to some degree.
The extent of oscillation by the pendulum has been between of a more, or less, hampering effect upon the freedom to sell, and buy, labour services.
During the so‑called neo‑liberal era, typically classified as the period from 1983 to 2007, Australia has maintained very highly regulated arrangements.
From the Accord to Keating enterprise agreements, from WorkChoices to Fair Work Australia; none of these are consistent with labour market freedom, as I would conceive of it.
Following Lord Actonʼs dictum, more vigorously than most, that true, classical liberals subscribe to policy changes edging society closer to the ʻpolar star of liberty,ʼ I support the pendulum taking an all‑mighty swing, toward genuinely unhampered labour markets.
Let me be clear, on the record.
I mean, here, that coercive government should retract from its proclivity to regulate wages, and the terms and conditions of employment.
Governments do not have the knowledge to regulate labour market circumstances, paying due regard to the complex and idiosyncratic economic, and other, circumstances faced by many thousands of employers and employees.
Governments do not have the incentive to regulate labour market circumstances, in the terms I have described, in any effectual way, either.
Now, I am all in favour of liberalisation, and in an extensive way, but I am equally wise to the fact that Australia has travelled very far away from the liberal vision, of the unhampered labour market.
And the trade union movement, itself, has played an instrumental role in fashioning the highly illiberal Australian labour market, in existence today.
Unions have unquestionably played their role in erecting a very elaborate IR regulatory scaffolding, including a centralised arbitral body influencing wages and conditions everywhere, from Kununurra to Kettering.
Contrasting the spirit of their voluntaristic foundation, Australian trade unions, since the late nineteenth‑century shearerʼs strikes, have deliberately subverted the rule of law, and democratic processes, to hamper labour markets.
Through the willing aid of their subsidiary Australian Labor Party, the unions stack IR tribunals with their supporters, and resist reforms which would otherwise enhance economic competitiveness, and economic freedom.
The tooth‑and‑nail resistance of the AEU to meaningful school choice reforms, is just one clear example of that.
Now, the effects of a hampered labour market have been, in my view, truly devastating for many Australians, and in numerous cases have, in fact, been detrimental to the interests of the union movement itself.
The union czars would see, as one of their historical achievements, for example, as being the retention of a minimum wage system.
Minimum wages are supposedly the best friend of the worker, a gift of the union movement, and maintained by government, to underwrite decent living standards for all.
But, in reality, they are nothing but the best friend to unemployment.
The notion that increasing minimum wages exacerbate unemployment is not challenged conceptually, and it stands as an empirically dominant fact.
Given reasonable assumptions about labour demand elasticities, the 2.6 per cent national minimum wage increase, announced in June this year, would reduce employment by just over 87,000 people, alone.
People desperately needing further workplace experience, yet providing less than $16.37 per hour in effective economic value, are at risk of being thrown on the dole scrapheap.
Pricing the low‑skilled out of employment comes at great cost to:
· economic development, through the loss of human capital investment opportunities;
· the taxpayer, forced to prop up a mass governmental welfare state administered by public sector unions; and
· the union movement itself, in terms of potential losses in membership.
The complicity of unions in supporting job‑destroying regulations, and of governments in maintaining them, leads me to subscribe to the only economically sound, and socially just, position to be enunciated this evening:
swing the pendulum to reduce governmental involvement in labour markets
If employers and employees are to collaborate in economically harmonious and productive ways, there is no alternative but to progressively seek liberalisation of IR regulations, thus promoting social cooperation under the division of labour.
So, by all means, let the pendulum swing!