Thank you very much for that, Innes. That was a lovely welcome, and thank you also to the Australian Industry Group for hosting this conference.
Before I start, I should make particular mention of the previous lead speaker, Michele O’Neil. I was going to say really nice things, and she’s already ducked out the door. Which is probably a good thing because I had this horrible feeling that she was about to say terrible things before she saw me walk in. So, Michele recently announced her retirement as president of the ACTU after eight years. I should say, when I was first appointed to the role that I have now as Shadow Minister for Industrial Relations, she was one of the first people to whom I picked up the call, and I reached out to.
She is someone who has dedicated her career to serving the union movement. And while it might come as a surprise to some of you that are in the room today, coming from a serving Liberal politician, I want to thank her for that service, and I want to wish her all the best for the future. Now, Michele and I, a little bit like Innes, would disagree on plenty. But public service comes in many different forms, and a career spent representing the interests of working Australians deserves acknowledgement and admiration.
This is a very important time in Australia’s economic history, and we should reflect on the role that Michele’s successor is going to play in our future, because history has shown that it’s a role that is absolutely critical to driving prosperity, or alternatively, holding us back.
And that’s really what I want to focus on today in my time with you: the role that we all play in this room, on driving prosperity and the obstacles that we place, even sometimes with the best of intentions, in that pathway to prosperity.
Now, Angus Taylor and I have spoken about this together many, many times. He and I are both of the same vintage, although I am a little bit younger. We have compared notes on our lived experiences working through the recession that we had to have, the unshackling of the economy during the 1990s, introduction of GFC, the tech wreck, the mining boom of the early 2000s, the GFC, and our changing trade patterns and partners - all the things that he and I have both experienced in the private sector - and that gives us a very different lens to the political one that we put on today.
And having cut our teeth in business, not in politics, Angus and I, I think, can both comfortably acknowledge the good political decisions that have created great economic outcomes, even if they didn’t necessarily come from our own side.
And of course, we can also identify the exact opposite. The mistakes that have been made, the opportunities that have been lost, and those that have been costly to our nation’s progress and the prosperity of our citizens. And it’s not just today’s citizens, of course, that we’re talking about. It’s tomorrow’s, whose lives are shaped by decisions today.
My kids, Angus’s kids, your kids, their kids. They all depend on the very people in this room, the people who lead our businesses, who lead our unions, who lead our parliaments, and their ambitions for our country to shape policy, drive change, and make the really tough decisions today that fulfil the promise of a great nation.
So, what is that promise? The promise of a great nation that every person here - I’m looking around and kind of guess other sorts of vintages, but I think every person here has probably experienced it - because, for the better part of the last 50 years, Australians have had an understanding, deep-seated, that tomorrow will be better than today.
A quiet and unspoken confidence that next year will be better than last year, and they knew that in this peaceful nation, where resolutions are forged at the ballot box, not on the battlefield, that each generation knew instinctively that those who pulled the levers of power, even when they were advocating for their own interest or their own interest group, could often, most often, be relied on to put the national interest first.
Let me give you the very best example.
I love to talk about the renaissance of the Australian economy under John Howard and Peter Costello, as you would imagine. The age of Australian exceptionalism, as Paul Kelly put it. But I am not so politically bloody-minded that I would attribute all credit to that government.
The scene was set by those who came before.
In the 1980s, the liberalisation of the economy would have been far harder, perhaps even impossible, without four things: a government with a vision that was prepared to do hard things. Under an opposition, under John Howard at the time, who was prepared to back the government in things like floating the dollar or cutting tariffs, rather than simply opposing them for opposition’s sake, opposing them for sport.
You needed a business community that had ambition that was led by titans and trailblazers, names that are seared into our memories and our economic history. And we needed a union movement that was prepared to put the country first.
Bill Kelty, Michele O’Neill’s predecessor, was instrumental in this, and he will be remembered by policymakers as a union leader that put the country and the economy first, ahead of power, ahead of sectional interests within the union movement - country and economy first.
And Paul Keating reflected on this. He said that a lesser ACTU leader would have, and I’m quoting him here, “gone for the smother and hung on to the old system like a familiar old blanket”.
Sounds like Paul Keating, doesn’t it? But Paul Keating said the reforms, no matter how uncomfortable or how difficult, were necessary because the system asked Australians “to pay much more than they should have paid for their shoes, their shirts, the things of life, while promoting industrial sloth”.
Again, very Keatingesque. Can you imagine if I said the words “industrial sloth” today? People would lose their minds, but it’s a great phrase.
Bill Kelty’s push, though, to introduce the superannuation system is a great example. It was visionary certainty.
Is it perfect? Absolutely not. And I say that as somebody that is passionate about it. I used to work for AustralianSuper, a period of my professional life that I’m very proud of, and I was the Superannuation Minister, and we’ve made lots of terrific changes to push down the fees and make sure that the system worked for members, not just for the fund managers of the unions.
And I should actually say to you, for clarity’s sake, under a Coalition government, the superannuation guarantee is guaranteed. Let’s put a line under that one, shall we?
But Bill Kelty clearly understood that the fortunes of all Australians were pinned to a country that could be competitive, could be productive, and could be prosperous.
The reforms that were delivered then, and that followed through the late 1990s and early 2000s, they stand as a testament to what is achievable for a country’s standard of living: three decades of uninterrupted economic growth. I mean, that was exceptional. It was. Australia became a byword internationally for prosperity. Our standard of living rose and kept on rising until now.
In the past four years, we’ve seen the largest collapse of our living standards on record. Our real wages have gone backwards in four years. We are poorer today than we were four years ago, and we’ve seen productivity go backwards for the very first time in Australia’s history.
Now we can lament opportunities lost, and we can hark back to the glory days of reform. But Australian history is exactly that. You can’t float the dollar twice.
But change-makers in Australia today - politicians, union heavyweights, business leaders - all must confront our current economic torpor with honesty and with urgency. We have falling productivity, and it won’t be restored through hope, and it won’t be restored through luck. Unless we deal with that issue directly, we should expect to be poorer in the future.
Now I know that Jim Chalmers is not unaware of this problem. Prior to the 2022 election, he warned Australia couldn’t afford stalling productivity, and he said that Labor would get productivity moving. His agenda at that stage was around renewable energy, a better NBN, free TAFE, and a Future Made in Australia.
Well, we’re into the fifth year now of the Treasury overseeing that productivity agenda. Electricity bills have increased by 40 percent. Emissions have pretty much flatlined. After an initial increase in enrolments, enrolments in TAFE have now fallen 8.4% the last four years, and more worryingly than that, only one in three students are completing that taxpayer-funded course. And the nebulous Future Made in Australia program is being used to provide tax credits to mining companies to do what they were going to do anyway.
The cold truth of this, of productivity, is in the numbers. Our productivity under Labor is worse than it was during the global financial crisis, worse than in the recession we had to have. It’s worse even than during COVID, where business just halted.
Jim Chalmers’ record on productivity is absolutely woeful, and in these four years, it’s the largest and longest fall of productivity on record. And the Treasury and the RBA and every single reputable economist continues to downgrade our forecast of productivity even further. There is no policy solution that gives them confidence that things will get better, that next year will be better than the last.
So far from delivering on the promise of long-term economic reform, Labor’s policies are now preparing Australia for long-term economic decline. And that torpor, that malaise, goes beyond the economy. It infects society.
Australians don’t today believe that tomorrow will be better than today. They’re not looking forward to next year, and the next generation, more importantly, don’t feel that this is the Lucky Country anymore, where opportunities abound for the industrious and ambitious.
Well, I’m really not okay with that. I’m not comfortable with that.
I didn’t get into this job - and I had a couple of good ones before I got here - but I didn’t move into politics, get into this job to assist with my country’s decay or oversee some form of orderly decline.
And as business people, I know that you didn’t get into what you’re doing to oversee that either.
As a country with institutions and resources and capital that we should be proud of, it’s just not good enough, and it doesn’t have to be this way.
Now, I should be very clear: in taking on the role of industrial relations as well as productivity, I made a deliberate choice. And as the Deputy Leader, it is my prerogative to choose my portfolio. I chose these two very, very deliberately.
These portfolios often risk being treated as entirely separate conversations. Industrial relations is about awards and bargaining and unions and the Fair Work Commission and its sort of everyday hustle. Whereas productivity, on the other side, is apparently something for economists; it’s for Treasury officials and boffins and people who enjoy discussing multi-factor productivity before breakfast. But the thing is, in the real economy, they are absolutely inseparable. Absolutely inseparable.
Industrial relations determine how people work together, and productivity determines how much value that work creates. And ultimately, productivity determines how much more workers can sustainably earn.
And Bill Kelty knew this. He told the ACTU Congress in 2012, and I’m quoting him here. And he had a special way with words, so this might not come out in the Bill Kelty voice.
“I always had this view, however, a hard view, a tough view, that the real gains you make out of society come from productive capacity of the nation that can’t be secured from inflation. They can’t be secured by words… And you might try hard to get more than you can get, but it never works.”
Every rule that we make about the workplace and every hour it takes away from running a business eventually affects somebody’s decision to employ, to invest, to work another hour, to take on an apprentice, to introduce a new technology, or to expand a business. And that’s why we need to change the way that we’ve been talking about industrial relations.
For two decades now, we’ve had an extraordinary amount of industrial relations debate, an extraordinary amount of industrial relations change, and governments of both persuasions have altered the system. Courts have interpreted it, commissions have administered it, unions and employer groups have fought over it, and lawyers have done very well out of trying to explain it.
What we have not done clearly well enough is ask the two most important questions: Have all these changes made Australian workplaces more productive, and have all these changes made Australian workers better off?
The productivity connection has been missing from too much of Australia’s industrial relations debate, and at the end of the day, it seems that we’ve all become very good at arguing about the distribution of income, while almost wilfully ignoring how that income is created.
We debate who gets what, which bargaining mechanism applies, who can enter the workplace, which tribunal should hear a dispute, which new obligation should sit underneath the Fair Work Act, while the productive economy underneath all of this has been getting weaker.
Let me be explicit about the principles that I use when looking at our workplace relations system.
First, our workplace relations system should be fair, it should be simple, and it should be productive. These are not in competition with each other. In a well-designed system, they should reinforce each other.
Let me first discuss fairness, a nebulous concept for many. But for everyone involved in the system, it should be fair, and that includes workers, employers, and consumers, because they are all part of the workplace relations ecosystem.
Fairness means that employees should be planned correctly, they should be treated properly, and they should be rewarded for their work, absolutely. But it also means that businesses should have the certainty and confidence to invest, to employ, and to grow. And it means that consumers get value for money for the goods and services that they buy from those businesses.
When the system is fair, Australians have the opportunity to work. Businesses have the confidence to create more opportunities, and the economy has a chance to get ahead. When the system is unfair, though, everybody pays a price.
Second principle: simplicity. Now, simplicity matters because complexity itself has become a cost, and I can see a few heads nodding around the room.
Now, I speak to businesses, many of you, regularly, particularly small and family businesses, and they’re not asking government for a handout, but they are asking us to stop making their lives more difficult. They understand that rules are necessary. They want safe workplaces, and they want honest markets, and they want proper employment standards. But what they struggle with is a system where the rules have become so complicated that being genuinely committed to doing the right thing doesn’t necessarily mean you’ve achieved it.
Inadvertent error is now so common that even a government department charged with the responsibility for administering the Fair Work legislation accidentally underpaid its staff. Wow. The ABC, the Australian Broadcasting Corporation, has underpaid its staff. And clearly it doesn’t matter how clever the people in charge are, because universities have underpaid their staff.
Now these are institutions full of people who should know how the system works, but surely it can’t all be a grand conspiracy. Maybe it’s the system that is too complicated to comply with, and it’s small businesses that suffer the most, because for small business, a misstep can become a minefield.
For a large corporation, the system and its complexity can be handed to an HR person or a department. A mistake can be handled by lawyers. But for a small employer, they have to deal with the matter after dinner at the same kitchen table that they do the payroll, where they chase invoices, where they work out whether there’s enough cash to cover next week’s wages. That compliance time is not free.
If an employer needs an industrial relations specialist to work out which award classification applies, and a lawyer to tell them whether a management decision might create a general protections claim, and another adviser to explain how the latest legislative change interacts with the previous change, we shouldn’t be surprised when businesses become more cautious about employing another person.
And this is why deregulation is so important. It’s not about abolishing standards; it’s about better regulation, clearer obligations, consistent enforcement, and rules that protect people, certainly, but without punishing legitimate enterprise.
It means recognising the difference between deliberate wrongdoing and an honest mistake, assuming the best intentions rather than the worst motives every single time, and it’s about designing a system that ordinary employers and employees can actually understand.
Now, the third principle is productivity. For all the reasons that I have mentioned, the system should encourage cooperation, innovation, and productivity. But too often, policy has been designed around the interests of the institutions that participate in industrial relations, rather than the people that actually participate in the work.
And I want to be clear about this because, in a politically contested space, I do not want to be selectively quoted. Thank heavens for Chatham House rules.
I fundamentally believe that there is an important role for unions to play in a healthy industrial relations system. History has shown us that.
Workers should be able to organise. They should have and should expect effective representation, and they should have someone prepared to advocate for them when they’re treated unfairly. But surely the test of a union movement should be whether the workers it represents, at the end of the day, are better off.
Just as the test of an employer group, like the Ai Group, should be whether it helps create strong businesses, the test of a union must ultimately be whether it helps create stronger outcomes for its members, for unions, for workers. Industrial power is not an end in itself.
And over the last few years, Australian workers have needed advocates for strong real wages, higher productivity, more investment, and better opportunities.
But that’s not what’s been delivered.
Families have needed pay packets that keep pace with their bills. Businesses and employers have needed workplaces that can adapt and grow in a rapidly changing environment.
Yet too much political energy has been directed towards expanding the influence of the union movement itself.
Let me give you a very recent example.
The Building a Cooperative Workplaces legislation was supposedly about helping the Fair Work Commission deal with its backlog of unfair dismissal claims. Something that I agree with.
But buried deep in that bill was Part Nine, which would allow the Commonwealth, through procurement and contracts and grants, to preference businesses whose workers are covered by union-backed enterprise agreements.
The Commonwealth can preference businesses that have union-backed enterprise agreements.
Now, the Coalition opposed this because Commonwealth work should be awarded on the basis of value, capability, and performance, not on whether a business has adopted a workplace model that’s preferred by the Labor government of the day and the union movement.
Industrial relations should improve workplaces. It shouldn’t give governments a mechanism to pick winners.
The one size fits all approach of preferences, union-friendly tenderers, reduces competition. It reduces productivity. And as we’ve seen in Queensland and my home state of Victoria, it can also create fertile ground for corruption.
Nowhere is that failure to put workers’ interests first more obvious than in the construction industry.
I heard Michele O’Neil talking about the CFMEU and particularly about John Setka, and I admire the stance that she took. I do believe it can go further, and I’ll speak about that in a moment.
Now, as a Victorian, I have watched with particular concern the allegations surrounding the CFMEU and major construction projects: allegations of intimidation and criminal infiltration, corrupt conduct on taxpayer-funded projects, and serious questions about what governments knew and when they knew it.
The people most betrayed by that conduct are not politicians and they’re not commentators. They are taxpayers, and that includes the ordinary construction workers who joined a union believing that it would represent their interests.
A union movement that is genuinely focused on workers should be the first to insist that criminality, coercion, and corruption have no place in the workplace.
It should be impossible for someone removed for serious misconduct to simply wait it out on the sidelines for an arbitrary period of time to then move sideways into another position in either the same registered organisation or a different registered organisation.
Now that’s why the Coalition has introduced legislation to remove the existing five-year limit, the five-year cap on disqualifications by the CFMEU administrator, where the seriousness of the conduct warrants a much longer or even indefinite exclusion from the union movement.
Now, I’ve just come from the Senate chamber this morning, where this legislation is being debated. I just cannot imagine a world where any party, any elected representative, could vote against this legislation, and that includes Labor.
Michele O’Neil said, “Getting rid of John Setka from the union movement spoke to”, she just said this a moment ago, “who we are and what we stand for.”
Well, if Labor vote against this bill that would allow John Setka to walk back into the CFMEU after just five years, I don’t think that they know who they are, and I don’t think they know what they stand for.
To vote against this legislation would be to say that that kind of behaviour, that those kinds of people are okay to wield influence in our workplaces.
So let’s see if Labor has the courage - the courage of the titans of their party past - who have faced this trouble before and have stamped it out with real action rather than simply performative administration.
But there’s a broad principle here that I think has been lost.
When I spoke before about the importance of fairness, I mentioned the three parts of the industrial relations ecosystem: employers, workers, and also consumers. The industrial relations system should work for all of them: employers, employees, consumers.
And that means protecting legitimate union rights and enforcing the law correctly, protecting workplaces from unlawful disruption, from violence, from corruption, coercion, and it also means recognising that the very best workplace outcomes are usually achieved in the workplace. Again, something Michele O’Neil just said out loud moments ago. Usually achieved in the workplace between people that each have a stake in its success.
Now Bill Kelty knew this. Paul Keating knew this.
Enterprise bargaining was supposed to be about exactly that: an employer and employee know far more about the operation of their workplace than somebody sitting in Canberra.
And an agreement should give them the flexibility to find arrangements that allow the business to perform better and workers to share in that success.
We need more conversations about how workplaces can be better for everyone, how it can introduce new technology, AI included, improve skills, organise work more effectively, and reward employees for helping that enterprise grow. Instead, we have increasingly dragged bargaining away from the enterprise and towards more centralised arrangements.
Should anyone honestly think that it was in the direct interest of employees, let alone the economy, to deliberately coordinate the expiry of up to 10,000 transport workers at the same time? You don’t have to guess. The Transport Workers’ Union said out loud, told the Australian public, that the timing of this has been entirely deliberate and totally contrived to essentially shake down a critical industry.
So, rather than look at how the workers of these companies can develop arrangements with the companies directly, the union would rather hold the economy to ransom for its centralised position.
Now, that a union leader is confident to say that in public, that he will hold the economy to ransom, is such a far cry from the national interest of a Bill Kelty. Would that he were here to remind them of that higher calling, that greater cause. Indeed, these words of Bill Kelty’s, I think, are a cautionary tale. He said, and again, I’m not going to do an impression, but you can hear his voice coming through:
“If you end up with high inflation, if you end up with inflationary gains, you can be militant as we were year after year, more disputes, National Union of Workers, storemen and packers in the history of this country in the 1970s. And when we totted up, what we got at the end of the decade of fighting, we’d made but marginal gain. It has to come from the productive capacity of the nation... It’s not an easy lesson, and the people would prefer it towards the other. But that’s what we have to achieve.”
Bill Kelty said that.
Now the new leadership of the ACTU has a choice between the Kelty tradition or the Keating tradition, and I know which legacy I would choose to emulate, because only one helped build the prosperity of all Australians over the last 30 years.
And there is another warning sign that we should not ignore, and that’s the growing backlog of the unfair dismissal claims and general protections claims that are now currently before the Fair Work Commission.
Now, this backlog must be addressed because justice delayed is justice denied. But the sheer volume of claims should be setting off alarm bells.
Just yesterday, there was an article in the Financial Review stating that unfair dismissal claims involving the gig economy - and workers in the gig economy - have jumped from virtually none to 500 in the first year of the latest reforms in the sector. None to 500.
These laws, which are effectively unfair dismissal jurisdiction for Uber drivers, were specifically cited by the Fair Work Commission President, and I believe that you have heard from him already.
If our workplace relations system is working better, well, then why are there so many workers and businesses ending up in dispute?
Where genuine disputes arise, the process must be fair. It must be simple. It must be productive, and it should be timely too. And we should take seriously concerns by business, particularly small businesses, and by the Fair Work President about that growing volume of claims. We need workplace rights that protect employees when they exercise legitimate rights, but we also need to give employers the confidence to manage genuine performance, conduct, and operational issues.
Because a system that makes managers afraid to manage is not fair to anyone, least of all good employees who depend on poor performance to be dealt with.
We have to reconnect industrial relations with the real economy.
Now, the next decade cannot simply give another decade of adding rules to an already complicated system and wondering why productivity hasn’t improved.
The Coalition understands this. We understand that productivity matters, and we have a plan to get it moving again.
We’ll lower taxes. We’ll deliver cheaper energy, more reliable energy, and we are committed to slashing red tape.
We’ll stop Labor’s assault on aspiration. We’ll axe every one of Labor’s toxic taxes.
The effects of these taxes have been so chilling on our economy, even in a short space of time.
But this is what happens when you make major tax changes without properly consulting the people who actually have to live with them.
Labor’s latest tax changes have already produced widow’s tax. They’ve produced so many other unintended consequences. Today, of course, I think, as you’re commenting on what’s now being done in birth tax, we’re adding a newborn child to a family trust could trigger the loss of tax exemption and a much higher tax bill.
Now think about that. You know, a family has a child, and suddenly the tax treatment of a family business can change entirely. It’s crazy, and that’s why tax reform needs proper consultation before governments legislate, not after the unintended consequences have been exposed.
Australians need a tax system that is simple, predictable, and encourages investment and competition, not one that keeps creating new tax landmines. So we will end Labor’s terrible taxes, their inflation tax also, with our Tax Back Guarantee, indexing the tax brackets.
So from 2028–29, we’ve committed to indexing the bottom two tax brackets to inflation, and that will protect around 85% of taxpayers from the bracket creep that has infected us so badly over the last few years. What that means in practice is, for the average wage earner, about $250 in relief in the first year, but that will continually grow, as inflation continues, to more than $1,000 a year by year four.
From 2031–32, we will then index the top two thresholds as well, and that will protect all taxpayers from bracket creep, and that will be immediate relief of between $1,300 and $2,000 for those in the top two tax thresholds.
We’ve also said we’ll back small business with a permanent $50,000 instant asset write-off, and, as we said, make that permanent and increase it for those companies with turnover below $10 million.
And when it comes to energy, we’ll be technology agnostic. We’ll back whatever can deliver affordable, reliable power: gas, hydro, coal, nuclear, batteries, renewables - all in the right places.
We’ll continue to reduce emissions quickly and responsibly as technology allows, because that’s what a prosperous economy can do. But we won’t make Australian families and businesses pay more to do it.
And as I said, we’ve slashed red tape. Lots of people say this, but not many people have an idea of how to do it. It is something that we are taking very seriously. Australia’s legislative rulebook has become far too long, far too complicated, far too costly.
The Coalition has already committed to rewriting and simplifying five Acts, including the Corporations Act, the Tax Act, Competition Act, the National Building and Construction Code, and the Environmental Protection and Biodiversity Conservation Act.
I want to just talk to you quickly about the construction code. This is an important one, and it’s a great example. Because in the old days, not that long ago, it used to fit in the glove box of a tradie’s ute. In the glove box, that’s what it was for. It was about building strong houses that didn’t fall over. Under Labor, though, it’s ballooned now from 200 pages to 2,000 pages. You now need a flatbed ute to carry the bloody thing around. We want to get it back down to 200 pages because every unnecessary page is red tape. It adds cost, it adds complexity, and it adds delays, and ultimately, it’s Australians who foot the bill.
Regulators need to be part of the solution. They shouldn’t be part of the problem.
A Coalition government will require regulators to consider the broader economic impact of their decisions, including competition, investment, productivity, and wages. Regulators should be facilitating growth. They shouldn’t be standing in its way.
And as a former Reserve Bank governor, Philip Lowe, put it, we need Australia to be a great place for businesses to invest, to expand, and to hire people.
I don’t see why we shouldn’t have a vision to be the best place in the world to start a new business. Yet we’ve spent so many of recent years making it more expensive to invest, more difficult to grow and to expand, more complicated to hire more people.
That has to change. Bill Kelty knew this.
It starts with a productive industrial relations system, a productive system that should give businesses the confidence to employ and workers the confidence that their effort, that their skills, and that their cooperation will be rewarded.
It should be fair, should be simple, it should be productive. Protecting legitimate workplace rights, but allowing businesses to do what they do best - to manage, to invest, to innovate, and to grow.
And it should recognise that successful employers and successful employees are not opposing interests in a productive workplace. Each depends on the other, and this must be central to the next phase of industrial relations reform.
We need to put the national interest ahead of institutional interests and create the conditions for businesses to grow, for Australians to work, and for workers to become genuinely better off.
It’s great having your nominal wages go up, but if your real wages don’t follow, well, what is the point?
This is the work that Bill Kelty understood and John Howard understood, and Bill Kelty had the courage to take on vested interests, to challenge his own side, and to pursue reforms that put productivity and national interest ahead of politics.
That’s the kind of courage that Australia needs again.
And because the next election is on its way, only 18 months away, it will be an election that is fought on courage - courage to take on those vested interests, to tackle the hard problems that governments have avoided for way too long, and the courage to make decisions necessary to lift productivity and to improve living standards.
You can rest assured that the Coalition under Angus Taylor and I have that courage.
Thank you.