Potential and limitations of northern Australia as a future food bowl

For this section the Institute invites comments from two differing policy viewpoints. In this November edition of farm institute insights, The Hon Bill Shorten MP and Senator the Hon Eric Abetz discuss whether Australia’s wage levels and industrial relations laws are contributing to a loss of competitiveness for the Australian food processing sector, and what measures (if any) should be implemented to increase the sector's competitiveness.


The Hon Bill Shorten MP

Minister for Education and Workplace Relations

Labor believes in fair and balanced workplace relations laws that protect key entitlements for Australian workers, that provide flexibility for business and help Australians balance their work and family life.

The Fair Work Act brought fairness to our workplace laws after Work Choices. It better protects key conditions like the minimum wage, reasonable hours of work, public holidays and parental leave through the National Employment Standards. Over 7 million Australian workers are now protected from unfair dismissal.

The Fair Work Act has delivered for working Australians and the Australian economy. More than 960,000 jobs have been created since Labor came to office in November 2007, while 28 million people have been added to unemployment queues around the world.

Industrial disputes are also down under the Fair Work Act, with rates on average around one-third the rate (4.9 quarterly average of days lost) we saw under the Howard Government (13.5).

Most importantly, labour productivity growth under the Fair Work Act (1.89% per year, seasonally adjusted) is almost triple the rate that experienced under the former Coalition Government’s disastrous Work Choices (0.69% per year, seasonally adjusted).

Since the commencement of the Fair Work Act, we’ve seen much higher levels of productivity growth in manufacturing (including food processing), which has grown at a healthy 2.1% per year, compared to just 0.4% per year in the five years prior to the Fair Work Act.

Manufacturing wages growth has also moderated. Under the Fair Work Act, manufacturing wages have grown at 3.3% per year, compared to 3.9% in the previous five years. At the food product manufacturing level, the average wage increase under current enterprise agreements is 3.7%, which is slightly below the 3.8% for all industries.

Food processors are taking advantage of collective bargaining under the Fair Work Act with more than half of all employees in food product manufacturing on federal enterprise agreements. Businesses are also using their enterprise agreements to introduce productivity improvements, with over 51% containing some formal commitment to pursue efficiency gains.

While conditions remain patchy in parts of the economy, Australia nonetheless has an impressive combination of solid growth, low unemployment, low interest rates, contained inflation and very low debt.

As a government, we know workplace relations are important for productivity. Last year’s independent Fair Work Act Review gave all stakeholders – employers, employees, unions and employer organisations – a chance to have their say about whether Australia’s workplace relations legislation is achieving its aims, including to promote productivity and economic growth for Australia’s future economic prosperity.

The Fair Work Act Review confirmed that the Act does not impact negatively on productivity. The Review Panel noted that improving productivity and improving equity and fairness are not competing goals.

Productivity should not be a discussion which only happens in bargaining for an enterprise agreement: it is a goal embedded and lived every day in the workplace culture; it is a part of every single management decision, every decision affecting workers and everyday business.

We know Australia has an ongoing need to boost productivity and remain competitive in the ‘Asian Century’. That’s why the Australian Government is investing in a new independent Centre for Workplace Leadership. The Centre will work directly with businesses, especially small and medium enterprises, to practically assist workplaces across Australia to improve leadership at all levels and so to become more productive, more profitable, more innovative and provide better places to work.

The Australian Government is also fostering increased competitiveness and innovation, targeted specifically at the food processing sector. The Food Industry Innovation Precinct is part of the Australian Government’s $504.5 million Innovation Industry Precincts initiative. It will create valuable connections across the food industry value chain and help firms build the critical mass, business capability and export readiness needed to take advantage of industry growth opportunities, especially in Asia.

The Australian Government is determined to drive our productivity performance to ensure all Australians can contribute and prosper in our society.

Bill Shorten is the Minister for Education and Workplace Relations. Prior to this appointment, he was Minister for Employment and Workplace Relations and Financial Services and Superannuation in the Labor Government.

Minister Shorten first entered Parliament in 2007, when he was elected as the Federal Member of Maribyrnong. Before his promotion to the Ministry in 2010, Bill was the Parliamentary Secretary for Disabilities, Children’s Services and Victorian Bushfire Reconstruction. Prior to that Bill worked at the Australian Workers Union, holding key leadership positions including the National Secretary from 2001 to 2007.



Senator the Hon Eric Abetz

Leader of the Opposition in the Senate, Shadow Minister for Employment and Workplace Relations, and Liberal Senator for Tasmania

We know that the total volume of output of the Australian food industry has declined by 4.5% and the numbers employed in the industry declined by 7000 persons. We also know that approximately 335 businesses in the food processing industry have either closed or moved offshore.

It is a truism that we live in a global village; we live in an international economy. Australia as a nation relies on exports and on imports. To remain solvent, we need to ensure that exports exceed imports. For that to happen, we need to be globally competitive.

We all know that Australia rode on the sheep’s back – noting the past tense! But today many Australians are still heavily dependent on our agricultural and horticultural exports as a part of wealth creation in our nation. This needs to be not only maintained but enriched. Farmers are price takers and subject to a varying exchange rate and economic climate.

Farmers take huge risks and live in a cyclical environment that can be full of uncertainty. It is therefore vital that when the economic sun does shine, that government doesn’t put up too many sunshades. The Coalition understands the issues facing the Australian agricultural and horticultural sectors. We have farmers and horticulturalists in our midst and represent vast swathes of regional Australia.

Many farms are small businesses and human resources specialists or experts are not readily accessible let alone affordable. That’s why our plan will ensure that the Fair Work Ombudsman provides targeted and clear help. This will include a number of initiatives and help small business improve their understanding of the Fair Work laws so they have confidence to grow and employ.

We will also encourage greater accessibility of information and will provide potential immunity from Fair Work Ombudsman pecuniary penalty prosecutions for a small business employer if it pays or applies the wrong employment conditions, provided the error was not deliberate and the employer had previously sought Fair Work Ombudsman advice and help on the same issue.

Our policy will also ensure that the Fair Work Ombudsman has dedicated resources to assist small businesses in employing new workers. We will also create a dedicated small business line at the Fair Work Ombudsman and develop a mobile app to help owners and managers with calculating wages and allowances as well as other entitlements.

For bigger farming enterprises and the food processing sector, our plan will ensure that negotiations for enterprise agreements are harmonious, sensible and productive. Enterprise bargaining is an important part of the Fair Work laws however Labor’s provisions have resulted in some outcomes that simply fail the commonsense test.

To solve these problems, a Coalition Government will ensure that protected industrial action can only happen if the Fair Work Commission is satisfied that there have been genuine and meaningful talks between workers and business at the workplace; and that the claims made by both parties are sensible and realistic. When it is asked to approve an enterprise agreement, the Fair Work Commission will need to be satisfied that the parties have considered and discussed ways to improve productivity.

We believe that Labor’s ‘strike first, talk later’ approach is wrong. Labor promised this wouldn’t happen – another broken promise. Protected industrial action in support of a claim for an enterprise agreement should always be considered a last resort option when talks break down – not the first step in bargaining as Labor has allowed.

I know and understand the very real concerns that have been put forward by the agricultural sector about the inflexibility of modern awards and that many industries have been pigeon-holed into rigid provisions that actually act as a job destroyer. Provisions that do not take account of seasonal and climate variations in the vast continent of our country might fit the mould of some workplace relations orthodoxy but it does not reflect the Australian reality.

Our individual flexibility arrangements amendments have the real potential to provide the flexibility from which both workers and enterprises can benefit.

The Fair Work Commission will commence its four-yearly review of Modern Awards shortly and it’s important that the Commission hears about any concerns with the operation of current awards and that the Commission take a commonsense approach. With red tape, ever increasing taxes including the Carbon Tax and higher energy costs, it is vital that extra obstacles are not put in the way of Australian manufacturing. The decline we have witnessed can’t go on.

In short, a Coalition Government has a plan to create jobs, encourage investment and provide for a strong economy allowing the agricultural sector to grow as well as getting rid of some of those ‘sunshades’.

Joining the Liberal Party in 1976, Eric Abetz became the State President in 1989, a position that he held until his appointment to the Senate in 1994. He was re-elected in 1998, 2004 and 2010.

In Federal Parliament Eric’s roles have included: Parliamentary Secretary to the Minister for Defence; Special Minister of State; Minister for Fisheries, Forestry and Conservation; Manager of Government Business in the Senate; and Shadow Minister for Innovation, Industry, Science and Research.

Back to August 2013 Insights contents page.

Images: Dairy Australia, Murray Goulburn, USDA