The economic footprint of federal, state and local governments in Australia – which is 35% of GDP – is revealed in a report today by the Australia Institute’s Centre for Future Work, entitled Raising the bar: how government can use its economic leverage to lift labour standards throughout the economy.
National Secretary Tony Sheldon says this money should be spent on improving standards for working families and that employers should be penalised if they breach rules during government projects and in services. There should be a fair playing field for employers which are good corporate citizens and which respect the community, he adds.
The report reveals the destructive influence on the economy by governments which promote low wage growth through reduced wages and restricted labour rights on publicly-funded work – including using market pressures to drive down wages.
It singles out the Federal Government’s building code implemented through the Australian Building and Construction Commission which prevents unions from seeking to restrict the use of casual, part-time and labour hire work that undermines wages and job security.
“The reach of Government has now been revealed in monetary terms and it is massive. We should harness this power to benefit the entire community instead of rewarding employers which break the rules and game the system,” Sheldon said ahead of the report’s launch at TWU National Council in Adelaide.
“There is something wrong with our system when the ABCC is put in place to ensure companies are shut out of Federal Government contracts, not for stealing workers’ wages, but for allowing union stickers to be displayed, as happened with the construction firm Hutchinson last year. There is also something wrong when the Federal Government spends up to $80 million on flights with overseas airlines like Qatar and Etihad, companies backed by states which violate human rights and ignore labour standards. This money should instead be spent with Australian airlines Virgin and Qantas, boosting local jobs and fair standards,” Sheldon said.
“We should attach strict rules to this spending and hold employers to account which wilfully undermine labour standards and wages. The government must have the power to terminate contracts when, for example, wage theft or safety standards are breached during public projects. A ‘three strikes and you’re out’ clause would concentrate the minds of companies which persistently break the law, safe in the knowledge that there is no real come back,” he said.
Dr Jim Stanford, director of the Centre for Future work and author of the report said: “The report shows that governments can and should use their immense leverage to lift standards, restore wage growth and enhance the quality of work. This will have a positive knock-on effect on the broader economy.”
The TWU supports recommendations in the report, such as the calling for “pre-qualification” of bidder of contracts, whereby companies must document their ability to carry out the work and their adherence to labour standards. Companies which violate the standards would lose their “pre-qualification” status and be precluded from bidding on future projects.
In addition to recommendations proposed in the Centre for Future Work report, the TWU is also calling for several other measures to help ensure that government spending leads to higher labour standards, not lower:
- Increased fines for employers which breach labour standards during public projects
- Lead contractors to be held to account for any breaches found in a government supply chain
- The right for employees to bargain across a supply chain
- Companies on public projects to provide training and facilitate union inductions.
- Ensuring quality community services through longer-term contracts and the employment of permanent staff
- The setting up of a Procurement Board to monitor and enforce rules, which should sit in the Department of Premier and Cabinet or Department of the Prime Minister so that it has the authority it requires.