It is extraordinarily generous of the Liberal Party to keep giving the Government issues with which to beat it. Last week Joe Hockey decided to open his mouth, and promptly fell into it, nicely distracting from the modicum of pressure Christopher Pyne had managed to bring to bear on Julia Gillard.

But just in case the Government might run out of attack points in Parliament this week, Malcolm Turnbull has decided to exhume the rotting corpse of Workchoices to see how badly it smelt. One suspects he’ll discover that eighteen months in the ground hasn’t improved its stench.

It’s not entirely clear what Turnbull’s position on individual contracts is. It appears to be that he wants to have a review about levels of workplace “flexibility” before deciding. Why he wants a review isn’t clear. Either you support the right of people to negotiate individual contracts with their employers or you don’t. The Liberals should support that right, subject to appropriate safeguards (so should the ALP, but that’s another, union-dominated story). Instead, Turnbull wants the flexibility to dither. What is he thinking? Anything other than a rolled-gold commitment never to return to Workchoices will be used by the Government to mercilessly attack him.

The Government will delight in pointing out that the “flexibility” that Turnbull thinks is so important is a euphemism for lower wages and poorer conditions. No employer ever needed more flexibility to pay their employees better.

It’s a doubly tricky position because the Coalition never mastered its line on Workchoices the first time around. On the eve of the 2007 election, Joe Hockey was using wage rises created by low unemployment and a skills crisis to argue that Workchoices led to higher wages, when the entire intent and economic purpose of Workchoices had been to better enable employers to cut them.

Good luck going to the next election telling voters they’re getting paid too much and need a little “flexibility” in their working lives, especially if they think employers are more likely to use it than they would have been at the top of a boom.

Turnbull saying he won’t rule out individual contracts until he’s had a review is the worst possible position to be in. Or, actually, the second-worst. The even worse position is to want a review that can never show what you want it to show. That’s what will happen to Turnbull’s review of labour productivity.

As a rule of thumb, labour productivity declines as you enter a recession and improves as you recover. Cutting back on hours and otherwise hoarding labour during the downturn – and the labour force data shows there’s been a great deal of that – means lower productivity per worker, until employers start closing or sacking workers outright. But come the recovery, they put their existing staff to work more first before hiring more labour.

There’s more work for existing workers to do; part-timers move to full-time; people start doing overtime. Output per employee increases, and capital equipment gets used more. It’s one of the reasons it took so long for us to escape high unemployment during the early nineties recession and gave us a low-inflation recovery.

This time next year, assuming the recovery takes hold, we’ll therefore have seen a sizeable increase in labour productivity. Turnbull’s “review” thus will have to consider whether it would’ve grown even more if individual contracts were available – notwithstanding that hundreds of thousands of workers will be on AWAs for another three or four years anyway.

It’ll be hard enough getting labour economists to agree on that let alone sell it to voters as a compelling reason for IR changes.

Perhaps Turnbull thinks business will donate more to the Liberals if they back another round of IR reform. Given the dominance of Labor, the dismay in business ranks at the Liberals’ opposition to the second stimulus package, and the particular alienation of the normally generous commercial property sector, it’s not a bad idea to give employer groups a reason to come back home and bring their chequebooks with them. Except, it will be counterbalanced by additional support for the Government from trade unions infuriated that the Coalition wants to return to Workchoices.

Inexplicable stuff, simply inexplicable. Industrial relations was off the agenda, apart from the carry-on over the abolition of the Stasi – sorry, the Australian Building and Construction Commission – which is primarily of interest to the CFMEU. Workchoices hadn’t even been mentioned by the Government in its attacks on the Coalition for months. But Turnbull has got his broad shoulders underneath it and pushed it back into view.

For the umpteenth time, there has only been one successful Opposition leader in the last decade, and that’s Kevin Rudd. It therefore may be in Malcolm Turnbull’s interests, however galling, to study what he did right, which can be summarised as: close down problem areas; avoid at all costs fights you don’t want or can’t win; offer a clear and saleable product in the areas where you want to differentiate yourself, and stick to a small number of key messages all the time.

Turnbull is instead using Rudd as a reverse playbook, and the polls show it.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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