Economic forecast shows IR laws will damage economy say Labor, unions

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Economic forecast shows IR laws will damage economy say Labor, unions

Labor and the ACTU have attacked the Federal Government for allowing the skills shortage to get out of hand while it runs its IR agenda, saying that a major economic forecast shows it will damage the economy.

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Labor and the ACTU have attacked the Federal Government for allowing the skills shortage to get out of hand while it runs its IR agenda, saying that a major economic forecast shows it will damage the economy.

Deputy Leader of the Opposition and Shadow Minister for Training, Jenny Macklin, said economic forecaster BIS Shrapnel believes the Australian economy will struggle to maintain growth of 3% a year because of the skills crisis.

She said the latest BIS Shrapnel Economic Outlook 'dramatically illustrates the damage being caused by the skills crisis' when it says: 'While the difference between 3% and 4% growth may sound minor, accumulated over a whole decade it amounts to a 10% difference in the size of the economy. This is roughly the size of the output of Australia's agriculture, mining and electricity sectors combined.'

'The skills crisis is a product of ten long years of economic complacency by the Howard Government and our future prosperity is now at risk,' she said.

Constrains growth

Macklin said BIS Shrapnel has warned that 'a chronic shortage of skilled labour is set to act as a permanent constraint on Australia's growth' and that 'Australia has entered a new era of constrained growth. Businesses are already grappling with the problems of tight capacity, infrastructure bottlenecks and an acute shortage of labour.'

She said the OECD Education at a Glance 2005 report shows Australia was the only developed country that has reduced public investment in universities and TAFEs since 1995.

Stephen Smith, Shadow Minister for Industrial Relations said the BIS Shrapnel Economic Outlook report into the Australian economy is 'a damning indictment of the Howard Government's industrial relations approach'.

'BIS Shrapnel have correctly identified that the Government's industrial relations changes have little to do with improving the productivity problems facing Australian business and our national economy,' he said. 'Nor do they do anything to address the skills shortages being felt across the economy.

WorkChoices won't help

Smith quoted BIS Shrapnel Senior Economist, Matthew Hassan as saying: 'The policy problem for the Australian Government is that, to improve growth, the economy needs measures that improve labour productivity and increase the pool of skilled labour…

'…the Federal Government's latest WorkChoices legislation will do little to improve either and is deflecting the debate away from how to grow the pie bigger, to how best to cut it up.'

Productivity

And: 'From the WorkChoices legislation, and the focus on individual contracts and AWAs, we tend to be sceptical about their productivity gains… The big gains in terms of productivity come from the move to enterprise agreements.'

'The Government's industrial relations legislation will not deliver higher productivity. What it will deliver is a shift in the employment relationship massively in favour of the employer, against the interests of the employee,' Smith said. 'This has nothing to do with lifting productivity and everything to do with cutting wages and slashing conditions. That may lift employer profit but that will not improve our workplace or national productivity. That can only be bad news for the Australian economy.'

ACTU says IR laws in tatters

The ACTU claimed the economic case for the Federal Government's new industrial relations laws is in 'tatters' following the BIS Shrapnel report.

'This report confirms what the ACTU and unions have been arguing all along and leaves the Federal Government's argument that the new IR laws will help the Australian economy in tatters,' said ACTU President Sharan Burrow. 'The Howard Government's IR laws are taking Australia down the wrong path. For some years now the ACTU has been calling for increased Government and business investment in skills training, education and economic and social infrastructure.

'These are the critical issues in the Australian economy that need to be addressed if we are to continue to improve our living standards and remain internationally competitive.'

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