The less-is-more IR policy

The fact that most Australians - and some ex-prime ministers - disagree with the Federal Government’s IR changes doesn’t make the changes wrong.

The WorkChoices reforms have been contentious because they bring to light unexplored policy inconsistencies and misunderstandings about the glue that holds society together - trust. If John Howard wants an idealistic attitude on IR, he needs to implement a grander vision by extending the same principle to matters outside economics.

Paul Keating has slammed the reforms as ideological. This is despite the fact they are based on a philosophy enacted by him in the 1980s: less is always more.

Take away controls and rigid structures and we will all benefit from the resulting freedom. Removing restrictions on how employers and employees deal with each other is a classic example of this poetic principle. Flexibility is the source of win-win.

There’s a psychological hitch with this theory, however. We are uneasy with a policy trajectory that leaves us with nothing tangible to hang on to. Industrial awards and regulations seem real, while their gradual demise presents an unknown void free of third party intervention. Taken to its rational conclusion, the reform agenda leaves us with “nothing”.

This is where leadership is required.

People are certainly nervous about losing their wages and conditions. What Labor and Paul Keating cannot accept is that this fear also clouds the truth about how Australia gained its prosperity in the first place. Workers only have something substantial at risk because Hawke, Keating and others had the conviction to emphasise the futility of protecting what you value by fencing it in.

This highlights a quaint irony with free market economics. The more it delivers, the more is at stake and so the more likely the beneficiaries are inclined to discount the mystical less-is-more formula and selfishly defend something short of the economic nirvana they crave. Of course this never works long-term, as it violates what has been proved successful along the way.

Community disquiet over IR actually stems from the dread of absolute freedom - the void of uncertainty. People want guarantees. Rather than see change as an opportunity, they automatically harp on about what could be lost. Though understandable, a leader with vision never allows such emotion to dent the truth about what fundamentally works - flexibility - and what does not - control.

While many are overlooking this practical principle, they rightly sense something is still missing. There is no plan to fill the hole left by removing cosy-yet-inefficient structures - be that centralised wage-fixing, public monopolies or tariffs.

Rather than criticising the principle he bravely actioned 20 years ago, Paul Keating should be pointing out that success in taking the final step requires us to replace our former comforts with the only means possible of managing commercial and social interfaces in a complex world: trust.

Unqualified trust - or social capital as economists call it - wasn’t as important when Australia was less sophisticated and had more modest goals. Our blend of market and socialist ideals was still delivering reasonable results.