14 October 2011
KGB: Dick Warburton
Business Spectator
DW: Yes, I believe so. We’ll continue to say that it’s a tax that we shouldn’t have at this stage, or that it should at least be deferred until we know what’s going on more clearly overseas, but between now and July 1, 2012, it’s not settled. Even though the parliament has settled it, it’s not settled because who knows what’s going to happen in the next one month, three months, six months with either a change of leader or a change of government. Who knows what’s going to happen? You know how uncertain it is there.
AK: And what’s the next most important issue on your list of issues? I mean, Bob asked about a few of them, but what’s the one that you want to bring forward?
DW: Alan, I’m not sure of the top priority of all. I know the top priority with each of the companies because I’ve spoken to every one of the CEOs. As soon as this came to pass, I called them up and each of them to a certain degree has a high priority on a certain one of those. I will be getting together with them very soon and sitting down with them and saying, "OK we can’t attack all of these at the same time, you just can’t do it. Which are the ones that you as a group want to put most emphasis on?" I would think that IR reform would probably be high up the list, but I haven’t had that discussion with all those CEOs yet.
RG: If I just take you into IR reform for a moment, The Australian earlier this week ran a piece saying that BlueScope had signed an industrial relations deal which gave enormous management rights and control to the union movement. If that’s right, would you think that there are enormous internal changes required in BlueScope management to get them back on track?
DW: Well, that was the article, but since then BlueScope have come out saying that’s absolute nonsense and that is not the case. In fact, I think they’ve put a paper out. If they haven’t, they will soon be doing so saying that is completely incorrect information.
RG: Would you agree that any company that did that needs a change of management?
DW: Well, you’d have to wonder about them. And when I spoke to the IR person at BlueScope just for my own understanding of what the situation was, I think they were well on top of it and they were quite, if you like, quite outraged about the problem with that. In fact, even Heather Ridout and the ACCI came out and said it was nonsense as well.
RG: OK. But if it was proved there were a significant number of companies that had done these sorts of deals, would you say that major reform of management would be required?
DW: Yeah, Bob, I would think so. Look, going back to the time that I was heavily involved in this sort of manufacturing council, one of the big issues was having management as much in control as having the unions and the employees and the public. We put a lot of emphasis on the need for management to be able to handle these types of things, and if management isn’t handling it properly, well perhaps there should be a change in management. But I’ll repeat, that is not what
I believe is happening in BlueScope.
RG: What are the key things you’d like, or the manufacturers would like changed in the industrial relations?
DW: The biggest issue is flexibility; the flexibility to be able to run and manage, not their own businesses, but to do it more in conjunction with unions rather than have unions come in and tell management what to do a la what we’re seeing with Qantas at the moment.
RG: And your members are finding that’s a real problem that unions are coming in and saying we want this and we want that?
DW: Yes, they are. And what I’ll say is that the changes that the Labor government made to Fair Work Australia or Work Choices, whichever side you want to look at it, haven’t really bitten hard until now, but they’re going to be a very great detriment to the flexibility going forward. And so, these companies will be seeking changes to increase that flexibility in the workforce.
RG: That will be very vigorously opposed by the unions of course.
DW: Well, isn’t it ever, Bob?
AK: Do you think the Qantas dispute at the moment is a part of this; that it actually was made possible or it occurred because of the changes to the IR laws?
DW: As I read it, and I’m not absolutely deeply involved in it, I don’t think it was because of that. I think there are some long-standing issues and mainly related to management’s decisions, obviously, to seek offshore and outsourcing some of their tasks. I think it’s more related to that than the laws we’ve had so far. But look, that’s a bit of an outsider’s view, Alan.
RG: But you’re saying they in fact are using the current laws to in fact inflict their will on management. But they’re not just doing it at Qantas. They’re doing it right across the board.
DW: That’s what I believe, yes.
RG: And do you believe this will also affect their productivity?
DW: Well, it does. It’s got to affect productivity. But of course productivity encompasses a number of things. Productivity encompasses infrastructure, skills training, management employee relationships, a whole lot of things that need to be addressed. Bob, you’d recall back in the Manufacturing Council days when we stressed very much best practice in manufacturing and that meant much better management-union-worker relationships. And we reverted to the antagonism and that’s a bad sign.
RG: Dick, there’s a survey done by the Telstra people saying that Australian companies -- not just manufacturers by the way, but a whole raft of them and the public service for that matter -- in the most part don’t measure productivity. It’s not incorporated in their CEO targets. The companies say things about productivity, but as they don’t measure it, they can’t actually determine just where they are, and this is a major weakness in Australian companies. There are some who do. Orica is a company that does it and if you talk to the Orica people, they find it very difficult to find anyone else who does it. So there are a few, but overall this is a big weakness.
DW: Bob, I find it remarkable that companies aren’t doing that. I would have thought it’s one of the key criteria of better management. If you’re not measuring your productivity, I don’t know the figures you’ve mentioned, but I’d be disappointed and surprised if that wasn’t a key performance indicator.
RG: Well Dick, I think it’s a big problem, but it’s not specifically manufacturing, I must emphasise. They’ve done this survey for the last three years showing this and talking about it and we write about it in Business Spectator. I’ve spoken to the Orica people and they agree. They can’t find people, or they can find very few people, that do the sorts of things that they do. And very much the success of Orica has been in part due to their measurement of productivity. It’s just improved their management systems so much. And it’s a big weakness in Australia -- and I believe it’s the reason why we’ve been having lower productivity for a long time.
DW: An interesting comment you make there, Bob, and certainly I’ll take that up with each of these companies because, I repeat again, I don’t see how you can be getting better productivity without having this as a key performance indicator. The companies that I’ve been involved with over the years have always had that as a key performance indicator.
AK: We’ll have to leave it there, Dick. DW: OK. Thanks very much indeed. RG: Thank you very much.
AK: Yes. Thank you.