By ‘closing the loopholes’, Labor ultimately seeks to undermine self-employment, casual employment and competition, Libertarians must take note. 

November 17 2023 The scene is the 2023 HR Nicholls Society conference in North Sydney; the speaker is Ken Phillips; the topic: Federal Labor’s ‘Closing the Loopholes’ bill. 

Phillips is unassuming, plainly dressed, but he means business. In a conference otherwise dominated by partisan interests and the society’s own history, he cuts through with a powerful and practical message. Having dissected and analysed all 274 pages of the ‘Loophole’ bill and written his own submission (on behalf of Self-Employed Australia [SEA]), he has been in regular contact with the crossbench, who Labor currently relies on to pass legislation. 

Phillips was optimistic then, satisfied that the crossbench were heeding his call for caution and discernment over the prevailing narrative. But it was not to last; Senators David Pocock and Jackie Lambie combined to split, then pass, the first tranche of the bill, including concerning new provisions that escalate the power of union delegates. But the worst is yet to come.

Subject to an inquiry this year, the remainder of the bill seeks to undermine commercial contracts, create strict pre-conditions that define ‘casual’ employees, and effectively prevent workers from being their own boss. 

The loophole bill relies on the rhetoric of exploitation: pitting workers against employers and removing agency from consenting participants in the ‘gig economy’. 

90% of people working for digital gig platforms are also employed elsewhere.

The reality is quite different – I should know, having been a contract worker and a casual for much of my working life. These reforms in fact represent a direct attack on my livelihood. 

Keep it casual

As Phillips demonstrates in his analysis of wages by employee type, casual workers are financially better off on an hours-worked basis to the tune of about 6% (more if you consider the higher super contributions). What’s more, being a casual employee allows for the worker to ramp up or down their hours, take on a different employer and maintain flexibility much more readily – something I made use of as a student particularly.  

Businesses also require flexibility to operate effectively in the marketplace, as demand and staffing requirements fluctuate. The loopholes bill creates stringent regulations on how an employee can be considered casual. This will simply disincentivise businesses from hiring staff as employers will have fewer options to reduce their wage liability when business is slower. 

Fixed contracts

Contract and self-employed workers are also in the sights of Labor and the unions. The proposed legislation coins a new term – ‘employee like’ – to describe self-employed workers. This means self-employed workers will be subject to the industrial relations system, undermining the nature of commercial contracts between consenting parties. 

As a contract worker myself, I do not miss the IR system. My generous employers allow me paid leave entitlements anyway, and I can readily work for an employer based anywhere in the world, making my own choices with regards to super contributions.  

Pitting workers against employers and removing agency from consenting participants in the ‘gig economy’.

Getting a gig

A major objective of the loophole bill is supposedly to protect workers from exploitation in the ‘gig economy.’ The reality is quite different: well over 90% of people working for digital gig platforms are also employed elsewhere – they are ‘hustlers’, earning top-up income outside of regular employment.

There are concerns for market competition too. By eliminating self-employed workers from the marketplace, large operators in industries such as transport and construction will face less competition. How this market concentration will benefit workers and consumers, or is consistent with Labor’s message to voters, I cannot reconcile.  

An unlikely union

It is a good deal for those large operators though, and it’s an especially good deal for the unions, perhaps revealing the true motivations behind this bill. Trade union membership has dwindled for decades, and the availability of flexible or casual work has further undermined their influence. 

By forcing all workers into employment contracts subject to IR law, the unions can once again wield significant influence. Large employers can collude with these unions and suppress competition, diluting the influence of smaller or independent players in their respective industries. 

The big loser is of course the workers, who lose flexibility in their employment arrangements, are forced to work in industries dominated by a few large players, and are financially less well off if they are casual. 

It is truly a sad state of affairs that the party of workers would propose such a bill, but it is characteristic of Australian politics, long divorced from the interests of common workers.
Further reading: https://selfemployedaustralia.com.au/be-your-own-boss/

In her excellent book The Siberian Curse, British-American author Fiona Hill describes how the settlement of Siberia in the twentieth century and the mass movement of people and industry into this vast region by central planners lie at the root of many of Russia’s contemporary problems.

Central planning – whether geo-political, social, urban or economic – has caused many a disaster.

Examples abound around the world, but allow me to cite a local one.

Worst of all, it puts home ownership out of the reach of those on low and middle incomes. 

A number of years ago, I bought a block of land on a very busy main road in one of Australia’s capital cities.  I submitted plans to the local council to build 12 semi-detached home units on the land and, as the zoning allowed for such a development, I didn’t expect any problems. That was of course until I came up against the Council Town Planner who said he’d recommend the development be approved “subject to the provision of noise attenuation devices” across the front of the property (noise attenuation is a fancy name for sound-proofing).  I tried to point out that there were thousands of kilometres of main roads with many thousands of dwellings fronting these main roads and it all seemed to work quite well without ‘sound attenuation’. I also told him that the project was actually geared towards older people, many of whom prefer the noise of traffic and pedestrians chatting as they said it made them feel safer than in some quiet back street or cul-de-sac.  But he was having none of it. He wanted his noise attenuation devices.  

Naturally, I tried the commercial argument that people who didn’t like noise wouldn’t buy into the project and that the market would sort it out.  But for reasons known only to town planners but obscure to common sense, he rejected all my pleas, and I had an acoustic engineer design a front fence to assist with noise attenuation.  But no sooner had I finished the job than the Royal Society for the Deaf bought all the units – every single one of them.  I showed the planner the contract and he couldn’t even see the funny side of it. 

Ludwig von Mises, one of the most notable economists and social philosophers of the 20^th century, observed:

‘The planner is a potential dictator who wants to deprive all other people of the power to plan and act according to their own plans.  Planners aim at one thing only:  the exclusive absolute pre-eminence of their own plans.’

National, State and Local government planners now infiltrate our lives at every turn. 

Take the Reserve Bank of Australia (RBA), for example, the nation’s main economic planner.

The RBA has over 1,500 staff and as well as its headquarters in Sydney, has offices in London, New York and Beijing. 

The RBA basically has one main task – to control inflation. As we know, inflation is caused by too much money chasing too few goods and services. When governments contribute to this by running deficits, the RBA is there to put up interest rates and make the government feel the pain of their spending. In recent years, however, the RBA did not do this. In fact, in spite of record deficit-spending, former RBA Governor Philip Lowe said in 2021 the bank would be keeping interest rates low until at least 2024! 

Central planning – whether geo-political, social, urban or economic – has caused many a disaster.

Since then it has raised interest rates 14 times in an attempt to bring inflation under control, in effect shifting the inflation burden to consumers – particularly low-income consumers – through price rises. 

One can also trace the current housing affordability crisis back to the RBA when it similarly refused to admit it made a mistake with its submission to the 2003 Productivity Commission Inquiry into First Home Ownership. The Bank’s focus on demand stimulators (capital gains tax, negative gearing, low interest rates, etc. – all Federal matters) and not supply factors had a huge influence in shaping the Productivity Commission’s findings. 

As we now know, the RBA overlooked the real source of the affordability problem – the unwillingness by State governments to release more land for new housing and urban planners’ obsession with urban densification, an idea that has failed all over the world. Whether it’s traffic congestion, air pollution, the destruction of bio-diversity or the unsustainable pressure on electricity, water, sewage, or stormwater infrastructure, urban densification has been a disaster. Worst of all, it puts home ownership out of the reach of those on low and middle incomes. 

As von Mises observed, the step between planner and dictator is not as big as some might think. When their plans are rejected, planners become indignant, and instead of adjusting their plans to suit the people who have rejected their ideas, they seek ways to enforce their will on the people. The inner authoritarian is revealed.

The Numbers Grow Ever More Staggering Every Year.

Around early November of every year, the ABS publishes statistics on the number of public sector employees in Australia.  The numbers grow ever more staggering every year.

The ABS says there were 2,430,400 public sector employees in Australia as at 30 June 2023.  That is across Commonwealth, State, Territory, and Local Government.  By way of context, this is:

• more than the entire population of Perth;
• a centimetre away from the entire population of Brisbane;
• five times the entire population of the ACT; and
• four times the entire population of Tasmania.

How bad would the shortages be if the public sector did not hoover up all the skills and resources which are in short supply.

The salary costs for all these employees for the 12 months to 30 June 2023 was a humble $215 billion.  Again by way of context, Australia could pay for the multi-year AUKUS nuclear submarine program with one and one third years of Australian public sector employee salaries.

In November 2022, the ABS said there were 2,160,000 public sector employees at June 2022.  Twelve months later, in November 2023, the ABS said there were 2,348,400 at the very same date.  That is, the ABS somehow found an extra 188,000 extra public sector employees hiding behind the lounge cushions.  Just a small 9% variation.

The ABS says there were 2,430,400 public sector employees in Australia as at 30 June 2023

This is not a suggestion that there should be no public sector employees.  But 2.4 million?  Is it any wonder that Australia is experiencing economic pain and inflation with ever more resources being transferred from production to the public sector.  Plus all the reported skills shortages … in engineering, ICT, legal, accounting, and trades … how bad would the shortages be if the public sector did not hoover up all the skills and resources which are in short supply.

These numbers are staggering but are sadly par for the course in Australia, where our political leaders seem to believe that any problem can be solved by taking money and property by means of legal force from taxpayers to give to people who pay no price when their schemes and solutions don’t work.