Labor thrashes the Liberal Party on wages and deregulated labour markets

Gerard Jackson
BrookesNews.Com
Monday 27 November 2006

Last October there was a fiery exchange in parliament between the Liberals and the Opposition over wages and the use of imported labour. The Liberals bragged about how they had reduced unemployment while Labor accused them of using foreign workers to drive down wage rates. As expected none of the participants revealed the slightest knowledge of how labour markets work. Senator Bernard (Liberal Party), for example, self-righteously declared that “[a]t 4.8 per cent unemployment, everyone in this country who wants a job can get a job”.

No they can’t. What matters is not the unemployment level but the ratio of unemployed to the number of vacancies. If the good senator, or a member of his staff, had done some genuine research they would have learnt that though the unemployment rate was officially 4.9 per cent the ratio of unemployed to vacancies in the private sector was 3.8 for August. Furthermore, part-time workers accounted for 28.7 per cent of employed workforce. Such a high rate strongly suggests that a great many people have been driven into suboptimal employment.

Senator Siewert (Green Party) complained to Liberal Party Senator Abetz about the “the number of Australian workers who are paid below the federal minimum wage”. Abetz found himself unable to respond. When Labor Senator Annette Hurley accused the Government of deliberately trying to drive down wages not a single Liberal Senator was able to rebut her. And so it went on. It is truly depressing to be confronted by a Liberal Party that while ignorant of economics nevertheless preaches the benefits of deregulated labour markets. Unfortunately this ignorance is to be found at every level of the party. For instance, if an interested member of the public were to ask 101 Exhibition Street, the offices of the Victorian State Liberal Party, why a deregulated labour market is good for the country he would be fobbed off with a load of rubbish.

Julian Sheezel, state director of the Liberal Party of Victoria, is an excellent example of the economic illiteracy that plagues the party. When asked why the country needs to deregulate labour markets he fatuously replied that deregulation is “essential to economic growth” and will “raise productivity”. He obviously did not realise — and still doesn’t — that he was making economic growth a function of wage rates. It is no wonder that Liberal politicians cannot put up a genuine economic argument for free labour markets. What else can we expect when Sheezel is making asinine comments about economic theory while treating ordinary members of the party with complete contempt. (Sheezel is one of reasons that the State Liberal Party got another bloody nose in the recent state election).

The last point is an important one. I cannot tell you the number of emails I have had from angry members of the Liberal Party complaining about the patronising the way the party’s politicians and officials treated them when they raised the subject of economic policy. I know these people are neither lying nor exaggerating because I too have had the same experience. It can be a truly jaw-dropping listening to someone like Sheezel mouth off about economics. Yet for some weird reason many Liberal politicians seem to believe that they are qualified to discuss economic policies despite the fact that they could not tell the difference between an isoquant and an icicle.

The result was a parliamentary debacle as these very same Liberal Party politicians found themselves trying to refute Labor’s ridiculous accusations by parroting statistics that they obviously did not understand.

Gerard Jackson is Brookes’ economics editor