Australian Economics

[tigersnake]

Tiger Snake
Man Of Action

thats the one. It was funny when I was 19, but I admit I would have preferred a free commodore, even a camira

 

[casper68]

Excellent article by Grace Collier of the Australian, late last year.

Enterprise bargaining with union sealed fate
GRACE COLLIER THE AUSTRALIAN DECEMBER 12, 2013 12:00AM
http://www.theaustralian.com.au/opinion/columnists/enterprise-bargaining-with-union-sealed-fate/story-fnkdypbm-1226781040913#

HOLDEN is going because it is easier to spend $600 million leaving Australia than it is to get out of its enterprise agreement with the union.

Returning workers to the award wage was the only hope. The taxpayer was subsidising each Holden worker to the tune of $50,000 a year, which is, by my calculation, still less than the amount the enterprise agreement adds to the cost of each employee.

PDF: Holden EBA 2011

Yes, to be clear, the employment cost of the Holden enterprise agreement is well more than $50,000 per employee a year. I defy anyone to say that enterprise bargaining with the union didn't sink Holden.

PDF: Toyota EBA Altona 2011

No one ever envisaged enterprise bargaining would produce a crisis of this proportion. Half of the Australian workforce has been bumping along for 20 years on the centralised wage-fixing model; yearly dollar amount increases have produced modest wage growth. The other half of the Australian workforce has been receiving percentage increases of about 4 per cent per annum, compounding, for 20 years.

We are on the cusp of a major crisis, enterprise bargaining wages are now just hitting the violent upswing point in the bell curve, stratospheric wage levels are ahead of us and many of our big companies are going to fall over.

Putting wages aside, productivity inhibitors in agreements cripple the ability of a company to respond to outside pressure. Unions, jaded by constant employer exaggeration about poor finances, are not facing reality. What we are seeing now with Holden and Toyota is only the beginning.

Now that Holden has announced its departure, we need to consider the Toyota situation, which will come to a head with a vote on its enterprise agreement tomorrow. In September 2011, thousands of Toyota workers went on a protracted strike to get a 12 per cent pay rise. The company caved in; a deal with a 13 per cent pay rise between then and March 2015 was given. Base rates for technical and trade workers are in the $65,000 to $97,000 range with generous allowances, loadings and penalties on top.

The Toyota enterprise agreement lists its "purpose" as "to achieve TMCA's success as a Global Company" yet no single business contract could guarantee its failure more. This document, as much as Holden's, reflects an extraordinary level of union control over daily workplace organisation.

When Toyota wants to hire someone, a union (employee) representative must sit in every single job interview as "an observer". Heaven knows what they exactly are looking out for. Perhaps they are scrutinising for union talent or maybe their presence is to convey that Toyota is a totally union-controlled company and union membership is compulsory. A table in the agreement sets out exactly how many union representatives the company has to have in every section of the workplace and 10 paid union training days a year is given to union reps.

Toyota is allowed to hire casuals only from "time to time" and not at all without union agreement, although agreement must not be "unreasonably withheld". Casuals can perform only the "agreed specified tasks" for the "agreed specified period" mandated by the union. "The maximum period for which a Casual Employee can work continuously on a full-time basis is one month" and any casual around for six months must be made a permanent employee.

Contract labour can be hired only after Toyota reaches "agreement with the relevant Union official and Employee (union) Representative". Contractors around for 12 months must be made permanent employees.

This means Toyota can never really have a hiring freeze but are continually bound to a destructive cycle of taking people on before eventually having to make them redundant. In any case, on a monthly basis, "details of all utilisation" of all "employment categories" must be "presented" to the union.

Over-staffing must be a big problem because the agreement mandates one team leader to look after "between 5-7 process workers". Supervisors, whose base rates range from $75,000 to $103,000, are forbidden from helping with workloads. Supervisors can "assist" workers only with their "verbal agreement" in certain circumstances, such as "assistance in performance of heavy/awkward lifting or stock relocation or in the performance of minor adjustments to equipment to overcome malfunctions" and "any manual task performed by a Supervisor" must not exceed "a very limited time period".

If Toyota needs to dismiss someone, an outrageous procedure of at least three years and three months continuous disciplinary action is required before dismissal can occur. This defies belief.

The procedure can technically be shortened by a dismissal if the employee commits misconduct, but any dismissal can be reversed by special arbitration powers Toyota gave the Fair Work Commission to reinstate employees upon union request.

So, Holden versus Toyota: which union enterprise agreement is worse and will the Toyota agreement destroy the company?

Both agreements caused me to repeatedly question my own sanity before briefly wondering whether there should be a special industrial relations prison created for grossly incompetent management types.

Even though Toyota say they can bear the workforce costs as long as flexibility concessions are made, unless the union agreement is dissolved by the Fair Work Commission the company is doomed.

Poor article only giving managements side of the story. Why does it say 12% and 13% pay rises when it was really 4% or 4.5% per year .It isn't a union enterprise agreement it is
a business enterprise agreement.

 

[casper68]

http://www.theaustralian.com.au/opinion/columnists/grace-collier



Wednesday, 29 January




Big builders created EBA mess
WITHOUT the backing of the big builders, union officials would become instantly, totally irrelevant.

Grace Collier
95 comments




Saturday, 25 January




Building a rod for their back
WE need to deal with businesses forcing other businesses to price-fix labour costs.

Grace Collier


Saturday, 18 January




Workplace apartheid clips wings
EVEN if Qantas gets the level playing field it wants, its IR mess will keep it grounded.

Grace Collier


Saturday, 11 January




New anti-bullying system will be fairer
WITH no pot of gold, the Fair Work provisions are a vast improvement on the old compo rigmarole.

Grace Collier


Saturday, 4 January




AI Group has role in decline
MEMBERS are suffering because of the costly enterprise agreements they've been sold.

Opinion


Tuesday, 31 December




The blight that's excessive bargaining
OUR high minimum wage is not the destroyer of productivity most think it is.

Grace Collier
105 comments


Show tools



Saturday, 28 December




Counting on more from Tony
ENOUGH of this namby-pamby appeasement nonsense - here's to a stronger, wiser PM.

These are the recent headlines from articles by Phantom's favourite union basher.

 

[AngryAnt]

camira

I can see why they wanted to give them away :hihi

 

[casper68]

I can see why they wanted to give them away :hihi

Was an ugly car with poor reliability.

 

[bullus_hit]

Looks like Smokin Joe Hockey has made one of the dumbest decisions a treasurer could make, amidst all the bloodletting in the public sector, the 8.8 billion handout to the RBA is looking more absurd by the day. Even ignoring the fact that the Reserve neither requested the money or required the capital injection, they have now run at a 6 billion profit. Way to go dumbass, and you have the nerve to criticise Wayne Swan's handling of the economy.

 

[AngryAnt]

C'mon Phantom. Be man enough to come clean and admit you made the "free car every year for unskilled workers in the auto industry" claim up. Tick tock.

You claim to be a scholarly man, a man of history and economics. If you truly are a man of integrity you'll admit you were wrong.

 

[Giardiasis]

Not that Australia is the cause of the GFC, that's your misunderstanding of Economics.
It is that banking deregulation gives rise to bubbles and crashes. The GFC is not the first of its type. Modern economics have similar examples of banking deregulation causing bubbles and crashes since Amsterdam in the 17th century.
Australia merely follows examples from other countries. Keating's deregulations caused the crash in Australia of 1987. He merely followed what had been done in banking deregulation in England and the USA prior.

I’m not sure how that is a misunderstanding of economics? You provided examples of Australian policy in relation to my question of the causes of the GFC. Perhaps you should stick to topic or at least provide some sort of relevant segue.

Yes I understand your position that deregulation causes bubbles and crashes, yet I am still waiting to see your specific examples of such deregulation that caused the GFC.

Economic theory and history tells us that without monetary policy and government intervention, the bubbles and crashes, and the effects thereof, would be a lot worse.
An example such as Roosevelt's New Deal, based on Keynesian economic theory, serves as a precedent which others have followed almost a century later.
When the GFC occured, banking regulators around the world immediately moved to tighten regulation after the horse had bolted.

Wrong economic theory tells you that, but Austrian economic theory and history tells us the exact opposite. Interventionalism IS the cause of extreme bubbles and crashes, with the monetary expansion from central banking and fractional reserve banking the main culprit. This has been demonstrated throughout history, as evidenced by the Roman Empire’s gold coin debasement practices, the effect of John Law’s policies in France, the Great Depression, and the GFC to name a few.

Roosevelt’s New Deal did nothing to fix the problems caused by the actions of the Fed, in fact, it prolonged them, and made them more severe.

It is interesting here that you ask how the banking system works, yet further on you ask of the relevance Smith, Keynes & Galbraith to theories of comparative advantage, monetary policy and economics.
This misunderstanding on your part raises concerns about your knowledge of any economics.

Giardasis are you a junior high school student?
Your economic knowledge does not reflect that of an adult nor someone of economic knowledge.

What are your economic qualifications?
What professional training supports your misunderstandings?

I never asked how the banking system works, I suggested your knowledge of it is lacking. Just because Adam Smith wrote about comparative advantage doesn’t mean that you can know what Australia’s comparative advantages are to the point of calling for a robotics industry to be subsidised by the government. In fact if you had read Adam Smith properly, you would have also read about the negative effect of government subsidies.

It is interesting that you are starting to dabble in ad hominem. I would back my economic knowledge against yours, thank-you. I suggest your education is not something to boast about, it is full of statism nonsense from economic illiterates such as Keynes.

My knowledge of economics comes from reading the writings of Austrian economists and those of the Austrian school such as Ludwig von Mises, Murray Rothbard, George Riesman, Chris Leithner, Mike Shedlock and Pater Tenebrarum.

Again, your clear lack of understanding on Adam Smith's laws of comparative advantage. It was written near 500 years ago, and applies equally well now as it did then. Australia should invest in industries where it can have an advantage, eg, through innovation, and not investing public money into industries where we are a follower.
With Keynes, you have your theory of monetary policy, and how economies can be stimulated or deflated with government spending and monetary policy.
For you to question this point raises alarm bells about any understanding you may have of economics, if any.

I understand Adam Smith’s argument quite well, however I don’t understand how knowledge of it is sufficient in order to be able to make an assessment such as yours pertaining to the use of government revenue to subsidise Honda to build robots. I don’t believe Adam Smith ever discussed such specifics, nor advocated government subsidisation of industry (in fact he said the opposite). Indeed investment should be directed to where Australia has a competitive advantage (the government should play no part in this process).

However having said this, it is important to consider Mises’ distinitction regarding nation states:
"If we wish to gain insight into the essence of nationality, we must proceed not from the nation but from the individual. We must ask ourselves what the national aspect of the individual person is and what determines his belonging to a particular nation. We then recognize immediately that this national aspect can be neither where he lives nor his attachment to a state."

Given you suggest Adam Smith wrote “An inquiry into the nature and causes of the wealth of nations” near 500 years ago, this raises alarm bells about your knowledge of economics and history.

Any amateur historian would have a clear understanding of China's impoverishment over centuries of imperial dynasties, and how it began to crawl out of its impoverishment with communist reform, and how it is making great strides under its regulated state capitalism.

This raises alarm bells about your knowledge of history.
Anyone with a reasonable education knows of China's long haul from centuries of impoverishment and the great strides being made now.

Sorry, just to be clear, when you say communist reform, are you referring to the great leap forward and/or the cultural revolution, or to the anti-socialist policies aimed at opening up China’s markets started by Deng Xiaoping? If the former, than my already poor opinion of your economic knowledge just went rock bottom, or if the latter, than perhaps you can acknowledge the positive effects that getting the government out of the economy can have.

Anyone with a reasonable opinion can see it is policy more aligned to Capitalism than Socialism that has lead China to a more prosperous nation. I would note however that given the state’s influence on the economy, China is very much in big trouble and is certain to lead to poor economic outcomes in the future.

Thank you.
I understand that there are those with greater qualifications than myself, with Masters and Doctorates in Economics, etc.

I’d suggest those people would be even less qualified through virtue of their “qualifications”. However, as antman pointed out, this is risking arguing by authority, which any debater would know is a fallacy.

 

[Giardiasis]

Adam Smith on subsidies:

The bounty to the white-herring fishery is a tonnage bounty; and is proportioned to the burden of the ship, not to her diligence or success in the fishery; and it has, I am afraid, been too common for vessels to fit out for the sole purpose of catching, not the fish, but the bounty.

The Wealth Of Nations, Book IV, Chapter V, p. 520, para 32.

 

[pahoffm]

I’m not sure how that is a misunderstanding of economics? You provided examples of Australian policy in relation to my question of the causes of the GFC. Perhaps you should stick to topic or at least provide some sort of relevant segway.

Yes I understand your position that deregulation causes bubbles and crashes, yet I am still waiting to see your specific examples of such deregulation that caused the GFC.

Wrong economic theory tells you that, but Austrian economic theory and history tells us the exact opposite. Interventionalism IS the cause of extreme bubbles and crashes, with the monetary expansion from central banking and fractional reserve banking the main culprit. This has been demonstrated throughout history, as evidenced by the Roman Empire’s gold coin debasement practices, the effect of John Law’s policies in France, the Great Depression, and the GFC to name a few.

Roosevelt’s New Deal did nothing to fix the problems caused by the actions of the Fed, in fact, it prolonged them, and made them more severe.
I never asked how the banking system works, I suggested your knowledge of it is lacking. Just because Adam Smith wrote about comparative advantage doesn’t mean that you can know what Australia’s comparative advantages are to the point of calling for a robotics industry to be subsidised by the government. In fact if you had read Adam Smith properly, you would have also read about the negative effect of government subsidies.

It is interesting that you are starting to dabble in ad hominem. I would back my economic knowledge against yours, thank-you. I suggest your education is not something to boast about, it is full of statism nonsense from economic illiterates such as Keynes.

My knowledge of economics comes from reading the writings of Austrian economists and those of the Austrian school such as Ludwig von Mises, Murray Rothbard, George Riesman, Chris Leithner, Mike Shedlock and Pater Tenebrarum.
I understand Adam Smith’s argument quite well, however I don’t understand how knowledge of it is sufficient in order to be able to make an assessment such as yours pertaining to the use of government revenue to subsidise Honda to build robots. I don’t believe Adam Smith ever discussed such specifics, nor advocated government subsidisation of industry (in fact he said the opposite). Indeed investment should be directed to where Australia has a competitive advantage (the government should play no part in this process).

However having said this, it is important to consider Mises’ distinitction regarding nation states:
"If we wish to gain insight into the essence of nationality, we must proceed not from the nation but from the individual. We must ask ourselves what the national aspect of the individual person is and what determines his belonging to a particular nation. We then recognize immediately that this national aspect can be neither where he lives nor his attachment to a state."
Given you suggest Adam Smith wrote “An inquiry into the nature and causes of the wealth of nations” near 500 years ago, this raises alarm bells about your knowledge of economics and history.

Sorry, just to be clear, when you say communist reform, are you referring to the great leap forward and/or the cultural revolution, or to the anti-socialist policies aimed at opening up China’s markets started by Deng Xiaoping? If the former, than my already poor opinion of your economic knowledge just went rock bottom, or if the latter, than perhaps you can acknowledge the positive effects that getting the government out of the economy can have.

Anyone with a reasonable opinion can see it is policy more aligned to Capitalism than Socialism that has lead China to a more prosperous nation. I would note however that given the state’s influence on the economy, China is very much in big trouble and is certain to lead to poor economic outcomes in the future.
I’d suggest those people would be even less qualified through virtue of their “qualifications”. However, as antman pointed out, this is risking arguing by authority, which any debater would know is a fallacy.

Very good!

Debate in a direct and polite manner.

I applaud you!

 

[tigertim]

I went to a talk by a former economist with the Duetsche bank and the RBA who claimed real economists don't call it a GFC they call it the "North America & Europe financial crisis"!

 

[bullus_hit]

I went to a talk by a former economist with the Duetsche bank and the RBA who claimed real economists don't call it a GFC they call it the "North America & Europe financial crisis"!

I can recall Wayne Swan being awarded treasurer of year by The Economist magazine, are these guys 'real' economists?

 

[pahoffm]

Adam Smith on subsidies:

The bounty to the white-herring fishery is a tonnage bounty; and is proportioned to the burden of the ship, not to her diligence or success in the fishery; and it has, I am afraid, been too common for vessels to fit out for the sole purpose of catching, not the fish, but the bounty.

The Wealth Of Nations, Book IV, Chapter V, p. 520, para 32.

Yes, good quote.

I agree, government subsidies should not support an established industry.

But, if government can support the development of industries that can have a comparative advantage ........ to me, that's a different point.

 

[tigertim]

I can recall Wayne Swan being awarded treasurer of year by The Economist magazine, are these guys 'real' economists?

Dunno, but I don't see the connection.

 

[bullus_hit]

Dunno, but I don't see the connection.

I was assuming you were jumping aboard the good ship Abbott & playing down Swan's role during the GFC (or whatever the real economists call it). For what it's worth, Australia was one of the few established countries to maintain their AAA credit rating, and they did so without uneccessary austerity measures.

 

[casper68]

Very good!

Debate in a direct and polite manner.

I applaud you!

You want debate in a polite manner but it is ok to lie about car workers getting free cars.That there is an outright lie.If you have any manners at all you should apologise.

 

[tigertim]

I was assuming you were jumping aboard the good ship Abbott & playing down Swan's role during the GFC (or whatever the real economists call it). For what it's worth, Australia was one of the few established countries to maintain their AAA credit rating, and they did so without uneccessary austerity measures.

No bully, I wasn't making comment on Swan or Abbott just, as I wrote, that I heard that "real" economists dont call it a GFC. You may realise not all posts have to come back to Abbott bagging....

 

[bullus_hit]

No bully, I wasn't making comment on Swan or Abbott just, as I wrote, that I heard that "real" economists dont call it a GFC. You may realise not all posts have to come back to Abbott bagging....

Fair enough, it all just seems like hair splitting anyway. I'm not sure there would have been too many coming out unscathed if the banking system collapsed. China are up to their eye balls in US government bonds, and Australia catches a cold whenever the US sneezes. That to me is global enough.

 

[pahoffm]

You want debate in a polite manner but it is ok to lie about car workers getting free cars.That there is an outright lie.If you have any manners at all you should apologise.

Yes, I must apologise.

I ran into my contact for this and was told that I hadn't listened properly.
The unskilled workers get $32 an hour.
I should have heard that it is the union reps that get the new cars.
I was also told not to tell anyone about it.

Again, I apologise on both counts.

 

[tigersnake]

Yes, I must apologise.

I ran into my contact for this and was told that I hadn't listened properly.
The unskilled workers get $32 an hour.
I should have heard that it is the union reps that get the new cars.
I was also told not to tell anyone about it.

Again, I apologise on both counts.

either we're having a reasonable debate or we aren't. If I want to hear unsubstantiated assertions I can catch a cab or read Andrew Bolt. Apology is accepted, but you're still exposing your bias, that $32 would either be unskilled with some allowances, or semi-skilled. Also, I'll bet money the union reps getting new cars is not cut and dried. It would be discount cars, or wrong. And union rep might be being wrongly used as a synonym for leading hand/ production manager etc. This has shred-of-truth heresay written all over it Phantom I'm afraid. I overestimated you