Australia’s minimum wage prevents people from getting a job

Prime Minister Malcolm Turnbull called a double dissolution election because Parliament wouldn’t pass the Coalition’s anti-union corruption legislation. But industrial relations is peculiarly absent from this campaign.

Perhaps that’s to be expected. For a decade Australia’s industrial relations debate has missed the point. What do we want out of the Australian workplace system? Certainly, we want less union corruption. Certainly, we want to increase productivity. But surely, most of all, we want to get the unemployed into work. And it’s here that we need to focus not on union royal commissions or building construction regulators, but on Australia’s minimum wage.

In May, the Fair Work Commission’s annual review lifted the national minimum wage from $17.29 an hour to $17.70 an hour – an increase of 2.4 per cent. It is now illegal to be employed at an hourly rate of less than this. If you are unable to find work at this wage, you have two options: scratching out an unstable living doing contract and cash-in-hand work, or starting your own business.

Or you can go on the dole. The Newstart allowance for a single person with no children is $527.80 per fortnight. Assuming a 38-hour work week (as the Fair Work Commission does when determining the minimum wage), Newstart recipients are on the equivalent of $7 an hour. This is the minimum wage trap – if you can’t find work paying $17.70, you’re pushed into unemployment at $7 an hour. And, of course, once you start receiving Centrelink benefits, you’re treated as a welfare recipient, with all the social opprobrium and paternalistic control that implies. Is there any other way to describe this trap than “cruel” – cruel to exactly the people the minimum wage is designed to help?

It used to be well understood by economists that the minimum wage created unemployment. Looking at evidence from Western Australia in the early 2000s, Andrew Leigh, now Labor’s shadow assistant treasurer, found increases in the minimum wage resulted in a reduction in the demand for labour – that is, the number of jobs available for workers. Leigh found the demand dropped most for young workers. A wage floor disproportionately affects people with poor work histories or prison records, elderly people, or anyone employers see as a risky bet for employment.

In the past decade some economists have started to argue the minimum wage does not harm jobs. In their view, the employment market doesn’t look like a market where employers compete for workers; it looks more like the fabled company town with one employer that holds a monopoly over jobs. The Productivity Commission endorsed parts of this argument in its recent review into workplace relations law. But how plausible is this new theory? If any employment market is competitive, you’d think it was the market for low-skilled, low-wage jobs, where there are lots of employers and lots of employees. By contrast, the new theory seems to describe the market for high-skilled work better. People with expensively acquired niche skills have a much smaller pool of potential job opportunities.

The research underpinning this theory is a controversial work in progress. But, contrary to the Productivity Commission, it has not undercut the basic minimum wage problem. Even when the employment consequences of the minimum wage are accepted, you sometimes hear that small increases in the minimum wage have only small effects on the availability of work. But there are real people behind those numbers. We should care about them.

As one of the world’s foremost experts on the minimum wage, American economist David Neumark, wrote in December: “Let’s not pretend that a higher minimum wage doesn’t come with costs, and let’s not ignore that some of the low-skill workers the policy is intended to help will bear some of these costs.”

The Australian public debate ignores those costs. There are a few topics in Australian politics that are out of bounds – policies that by questioning them is to cast yourself as a dangerous extremist. Compulsory voting is one. The minimum wage is another. Its supporters imply that the minimum wage is a crucial part of our national heritage, never to be challenged or examined. Who is that silence supposed to help? Certainly not Australia’s unemployed, pushed out of the employment market by a minimum wage they are told is for their benefit.

The Tide Is Turning On Penalty Rates, But How Far Will Turnbull Go?

All the ducks are lining up for changes to penalty rates under the Turnbull Government.

First, there’s political momentum: the employment minister Michaelia Cash is open to changing to penalty rates. The Energy and Resources Minister Josh Frydenberg supports changes.

Warren Entsch, Dan Tehan, Russell Broadbent, Wyatt Roy, Sean Edwards, Craig Laundy, Alex Hawke, George Christensen, Dennis Jensen, Zed Seselja and Andrew Nikolic support changes.

Obviously aware of this drum beat, Malcolm Turnbull has signalled he is open to penalty rate reform.

Second: penalty rate reform is backed by analysis that looks both independent and authoritative. The Productivity Commission’s draft report into Australia’s Workplace Relations Framework, released in August, recommended that penalty rates for Sundays be reduced to the same rates as those on Saturday for hospitality and retail workers. The PC argues this would boost both employment and consumer choice on Sundays. (The PC’s final report will appear in November.)

Third: penalty rate reform might not be that challenging a contest. Bill Shorten is hardly up to the task of a debate on minor industrial relations changes. Yesterday he claimed penalty rates were the difference between parents sending their children to a public school or a private school.

Clearly, WorkChoices hyperbole infects both sides.

It’s been a decade since the Howard government announced WorkChoices in May 2005. The penalty rates debate is deeply symbolic. Being able to move, even in a small way, on penalty rates would be a major arrow in Malcolm Turnbull’s quiver. Industrial relations has always been the high ground of economic policy in this country.

In fact, reducing Sunday penalty rates would be a very minor reform. The Productivity Commission is usually parodied as a bunch of dry-as-dust economic rationalists. But their penalty rates recommendation is hardly revolutionary. They have rejected any change to penalty rates for long hours or night work. And workers not employed in the entertainment, retail and hospitality industries would keep their Sunday rates.

Indeed, their whole workplace relations report is cloyingly moderate.

Take, for instance, the PC’s conclusions on the minimum wage. Back in January the PC wanted to prove once and for all whether minimum wages cost employment. (I wrote about this ambition in The Drum at the time.) Yet the draft report concludes “it is not possible to pinpoint the impacts of minimum wages on employment”. And despite admitting that the minimum wage mainly favours middle income households and there are better anti-poverty devices than the minimum wage, it believes that the minimum wage is good policy.

More generally, the PC report holds firmly to the idea that there is unequal bargaining power between employers and employees thanks to labour market “frictions” – things like how hard it is to find new work. (Without those frictions employees would play firms off against each other for higher wages.)

The PC does nothing to challenge the popular belief that unregulated labour markets are unfair to workers. Quite the opposite: the PC implicitly agrees with the union movement that the world of employment is characterised by exploitation and inequality.

The PC should have challenged that belief.

Labour economists often say that labour is unlike any other commodity because many low wage labour markets are characterised by “monopsonistic competition”. This refers to situations where buyers have quasi-monopoly power and can effectively set wages in their favour.

But every commodity is unlike any other commodity. While the idea of monopsonistic competition is an interesting theory, it is hard to see how such competition would be sustained in the real world, where every market imperfection is an opportunity for entrepreneurial disruption.

To be fair to the PC, they’re reflecting a stream of economic scholarship published in the last two decades that seems to suggest labour markets function in this strange way.

But that scholarship is the centre of an extremely active debate. Nor is there any consensus on what the strange behaviour of this market might mean for labour market law.

After all, regulation can create monopsony effects. In this sense, labour market regulation is a self-fulfilling prophecy. When you make it harder to hire and fire workers, you might create the frictions that reduce workers’ bargaining power. That lesser bargaining power means we need to regulate hiring and firing even more. And round it goes.

Nobody expects the Turnbull Government to push radical labour market deregulation right now. We’re having a penalty rates debate precisely because it is such a small area of dispute.

After all, the PC only called for aligning Sunday penalty rates for entertainment, hospitality and retail workers with the Saturday rate.

Under Tony Abbott the Coalition government wasn’t even game to consider that. Abbott and his industrial relations minister Eric Abetz ran a mile when the PC released its draft report.

If Turnbull can’t bring in this small change, then the possibilities for more substantial labour market reform in the future are slim indeed.

Minimum Wages And The Path To Poverty

Do minimum wages cause unemployment?

The Productivity Commission intends to find out. In the words of its chief, Peter Harris, it wants to know “whether or not there is an impact from the minimum wage on employment – we will try and prove up that, or determine if it is a myth.”

This is quite ambitious.

The minimum wage is one of the most contentious issues in economics. This issue has been banged around since at least the 18th century. The broader question of whether imposing price floors reduces supply is centuries older again.

But it is obviously true that any sufficiently large minimum wage above the market price will lock workers out of the workforce.

Imagine we doubled the minimum wage from its current $16.87 an hour to $34. Employers would shrink their workforces and only hire people whose productivity could justify the new cost.

Still some doubts? Imagine tripling the minimum wage. Quadrupling it. Make it $168.70 an hour. Of course people would lose jobs.

Labour markets are markets. They are governed by the impersonal, amoral forces of supply and demand.

Yet our Fair Work Commission thinks “modest minimum wage adjustments” have a “small, or zero, effect on employment”.

Small or zero? How small is small? How modest is modest? It is obviously true that as a minimum wage increase approaches zero its unemployment cost will approach zero as well.

In Fairfax papers on Saturday, the economics writer Peter Martin argued there was little evidence that the minimum wage costs jobs.

Martin cited the most famous paper on the minimum wage in the last few decades – a 1993 study by the economists David Card and Alan Krueger. Card and Krueger looked at a minimum wage increase in New Jersey in 1992 and found a) the minimum wage didn’t cause unemployment, b) it actually increased employment, and c) it increased it by a lot.

Card and Krueger’s paper has become one of the most influential papers in modern economics. But it’s not the only study done on minimum wages. There’s much evidence that points the other way.

For instance, this paper from 2014 found that American minimum wage increases during the late 2000s increased the unemployment-to-population ratio by 0.7 percentage points.

A 2012 study that looked at 33 different countries between 1971 and 2009 found raising minimum wages “reduce employment levels amongst young people and those at the margins of work”.

This 2011 paper finds that minimum wages cause employers to favour young workers from more privileged households than less privileged ones.

This study concludes that the minimum wage hurts job growth over time, a burden that falls most on young workers and low-wage industries.

And in a 2003 paper, Australian economist-turned-politician Andrew Leigh also found small but real unemployment costs of the minimum wage.

We could go on, but ideally Drum columns should not just be lists of journal articles.

It’s true that for all the studies that find the minimum wage causes unemployment in the short or medium term, there are some studies that disagree. This is not a surprise, for a few reasons.

First, much of the research has been done in the United States, which has famously low minimum wages. American minimum wages are probably very close to the wages that would prevail in the open market, so they can’t distort employment all that much.

Second, when looking at minimum wage increases, we’re talking about very small changes to prices in very complex systems. Disentangling what policy change causes what variation in employment – particularly over the course of years, when there can be lags and broader economic changes – is incredibly difficult. Measurement is hard. Determining cause and effect is even harder. Welcome to economics.

And third, the cost of minimum wage increases might not show up in reported employment or wage data, but still could be worn by employees nonetheless.

For instance, employers might reduce conditions to compensate. They might save on training. They might spend less on heating the workplace. They might reduce non-monetary benefits. These costs are hard to measure, but they’re very real. (This paper from the US-based National Centre for Policy Analysis details those non-monetary costs.)

Despite these challenges, surveying the broad evidence in their book Minimum Wages, the economists David Neumark and William L. Wascher conclude that minimum wages are a “relatively ineffective social policy for aiding the poor”:

They entail disemployment effects that are felt most heavily by low-skilled workers. They discourage human capital formation. They lead to price increases on products frequently consumed by low-income families. And, on balance, they seem to do little, if anything, to raise the incomes of poor and near-poor families, and more likely have adverse effects on these families.

Of course, it is possible to accept that minimum wages cause unemployment at some margin but still support them, under the belief that the social security net should catch people who are kicked out of the workforce as a result.

But as I argued in the The Drum last month, our actually-existing safety net is a hotchpotch of paternalism and bureaucratic restriction.

Imagine how bad it will be if the Abbott Government legislates its no-welfare-for-six-months policy. Young workers unable to find work at the minimum wage will also be ineligible for the dole. This is a recipe for destitution.

It’s true that minimum wages are popular. So were housing rent controls and trade protectionism.

One day, hopefully, the Australian public will realise that by preventing the most vulnerable Australians from getting a foothold in the labour market, the minimum wage is creating the very poverty trap it is supposed to alleviate.

Labor Party Reluctant To Ditch Union Ties In Victoria

On Friday, Labor’s planning spokesman, Brian Tee, insisted he would not resign his membership of the Construction, Forestry, Mining and Energy Union if he became planning minister.

This is rather incredible.

Federally, the Labor Party is slowly, emotionally, wrenching itself through reform to separate the party from the unions. It’s long overdue. The relationship hurts both sides.

Yet Daniel Andrews, the man who might be Victorian premier, is against this reform program. Not only that, but he wants to install a CFMEU member in the very portfolio where they could be most damaging – planning.

Nowhere in the country is the relationship between the Labor Party and the union movement as clearly dysfunctional as in Victoria.

Much more than Steve Bracks or John Brumby, Andrews is a creature of the Labor-union nexus; a party man close to the union interests that financially back Labor.

Last week submissions to the Royal Commission into Trade Union Governance and Corruption alleged the Victorian CFMEU has committed criminal blackmail, breached Supreme Court injunctions and violated the Fair Work Act, Commonwealth Competition and Consumer Act and the Victorian Competition Policy Reform Act.

John Setka, the Victorian CFMEU boss, has a long history of criminal charges, including for assaulting police.

It’s all very salacious. Yet Andrews’ Socialist Left faction invited the CFMEU back into its power-sharing agreement. He relies on their support. Now the CFMEU gets a say in preselections and what the party’s polices will be.

The Coalition has been trying to put the CFMEU-Andrews connection at the front of voters’ minds. Oppositions are usually risk-averse. You can imagine how much Andrews would like to distance himself from union militancy. It’s revealing that he can’t.

Sure, the Labor-CFMEU friendship is fodder for that most off-putting sort of politics – the politics of talking points and condemnations and press releases. But it does raise serious issues.

So much state government policy has been taken over by Canberra. This gives what is left a disproportionate significance. When we vote for state politicians we’re really only voting on a few issues.

Spring Street can’t set the corporate tax rate. It has almost no control over industrial relations and a minor influence on the level of economic regulation. The quality of our health and education – the centre of Labor’s message this week – is heavily dependent on how much federal funding Victoria receives.

But Spring Street does decide how open the state is to new building projects. So giving militant CFMEU interests a lever over development could have long-lasting effects on the shape of Melbourne, and even the Victorian economy.

Earlier this week it was revealed that two Liberal candidates have been interviewed by the Victorian Ombudsman’s office relating to corrupt donations and planning decisions. Labor is understandably excited. It all sounds very New South Wales.

But Victoria has its own native problems. What will it mean for business when this old union state gets an old union government?

Coastal Shipping Reform: Industry Saviour or Regulatory Nightmare?

With Aaron Lane

Executive Summary: On July 1 2012, the Gillard Government passed the most extensive suite of changes to coastal trading since the Navigation Act 1912 in the form of the Coastal Trading (Revitalising Australian Shipping) Act 2012 and its associated Acts.

They come on top of the Fair Work Act 2009, which imposed Australian labour standards on foreignregistered ships operating with foreign crews in the Australian coastal shipping trade.

The combination of these changes have negative effects for the Australian economy and for Australian businesses and consumers.

  • These changes are intended to reduce the number of foreign vessels currently carrying coastal freight, and to make Australian ships more competitive. They do so by significantly increasing the regulatory burden on foreign-flagged ships.
  • Foreign-registered ships temporarily operating on the coastal trade must undertake at least five voyages in twelve months, and the loading dates, origin and destination, cargo types and volumes are specified at the start of that period.
  • Foreign-registered ships can only carry cargo if there are no Australian-flagged ships (or foreign-flagged ships transitioning to Australian flags) that can do so.
  • Foreign-flagged ships carrying foreign crews have to pay Australian award wages, which are far in excess of International Transport Workers’ Federation rates.

These changes are aimed at encouraging the use of vessels that employ solely Australian resident crews. In doing so, the changes have the effect of significantly reducing the flexibility in the coastal shipping trade, and squeezing foreign-flagged ships out of the market. As a result of the 2012 changes alone, the net present value of the coastal shipping industry’s net economic benefit to the Australian economy is between $76 million and $150 million less than it would be in the absence of these changes.

It is clear that the changes will increase transport costs. This could result in bulk commodities being sourced from cheaper overseas markets, thus negatively affecting Australian commodity producers.

Increased transport costs could also be passed downstream to consumers. This paper examines the broader economic effects that seem likely to arise as a result of these changes.

Finally, this paper asks what ought to be done about coastal shipping. It concludes that a marketdriven, open regulatory framework should instead govern Australian shipping, and it calls on the Abbott Government to implement changes as a matter of priority.

Available in PDF here.

A Nanny State On IR Policy Is The Liberal Choice

In politics, sometimes it’s best not to go into detail. This is the lesson Eric Abetz learned after he explained part of the Coalition’s industrial relations policy last Thursday.

Abetz told the Australian that, under an Abbott government, the Fair Work Commission would not approve workplace agreements that raised real wages unless there had been “appropriate discussion and consideration of productivity” (paywall).

Why? So “lazy companies don’t just give wage increases because it’s the easiest thing to do.”

It is one of the founding assumptions of Australia’s system of industrial relations that workers are unable to negotiate with bosses in their own best interest.

Around this paternalistic assumption we have built a superstructure of industrial relations law, tribunals, and controlled wages unique in the developed world.

Now the Coalition seems to think some bosses are just as incapable of looking after their interests. And that a government regulator knows how to run a business better than the business itself.

If true, one wonders how the labour market functions at all.

The Coalition’s policy is patronising, illiberal, and fundamentally anti-market.

Now we know the true legacy of WorkChoices.

The fight over WorkChoices represents the moment the Coalition turned its mind from liberalising industrial relations to regulating it.

More on that in a moment. On Friday poor old Senator Abetz was accused by his colleagues of “freelancing” – that is, speaking only for himself – and advised to avoid interviews for the next few weeks.

But the Coalition’ official workplace policy document does, in fact, say “before an enterprise agreement is approved, the Fair Work Commission will have to be satisfied that the parties have at least discussed productivity as part of their negotiation process.”

If anything, Abetz softened the policy, suggesting Fair Work will only second-guess agreements if they give pay increases above inflation.

That’s how sensitive the Coalition is to the WorkChoices tag – even talking about its own policy is off-message.

Industrial relations has a special place in the Australian political compact. It is Labor’s raison d’etre; the world’s oldest party was born as the political wing of the union movement. Obviously they have a deep interest in wages policy.

In the Liberal Party there have always been free traders and protectionists, conservatives and liberals, fans of both big government and small. But one thing has bound the party together since conception – an antipathy to union power and prominence.

So Labor supporters recount our political history as a contest between employees (labour) and employers (capital). For Liberal supporters our history is a contest between sectional interests (union thugs) and the mainstream (Forgotten People).

Yet eight decades of the Australian Settlement concealed a few subtleties in the Liberal view.

For all that time, being opposed to union power and supporting greater market control over wage price setting was, effectively, synonymous.

When, during the Hawke, Keating, and Howard eras, labour law was slowly liberalised, this equivalence was superficially reinforced. As labour markets became freer, unions declined.

But then Kevin Rudd repealed WorkChoices. Rudd’s move was the first time since the reform era began that a liberalisation – in any sector of the economy – had been reversed. In 2007 Australia hit the market reform wall. This was very disorientating.

(I’ve described WorkChoices here as “liberalisation” because that’s what all sides of politics imagine John Howard’s policy was. In fact it was a complex regulatory takeover of workplace relations by the federal government. Still, perception is what matters.)

Now the Liberal Party has to figure out what its industrial relations priority is: to pursue a free market in labour, or to battle the unions.

Put another way, is Australia’s industrial relations dilemma that it is too highly regulated? Or is the dilemma that unions are too prominent?

After the 2007 defeat, there are many on the Liberal side who say the latter; many who imagine they are fighting a guerrilla war against the union movement. There are hints of this attitude in the Australian article. Abetz says the Coalition’s policy was developed “in response to unions ‘bragging’ that they had secured productivity-free pay increases.”

The Coalition’s solution to such hubris? Increase workplace regulation. If the government has to nanny lazy companies to reduce union power, then so be it.

Never mind that both sides of a mutually beneficial exchange should be “bragging” about the great deal they got.

It’s worth pointing out that unions would exist in a free society. They would have no privileged position in the law, and no coercive power, but, as Friedrich Hayek once wrote, everybody “ought to have the right to join a trade union.”

The dust from WorkChoices has settled. Now that Coalition is preparing to form government again, what does it really want for industrial relations? Labour market freedom, or just defeat of the union movement?

Protectionism, Symbolism And Gillard’s Jobs Plan

Timing is everything. On Sunday, Prime Minister Julia Gillard announced her “plan for Australian jobs” at the Boeing factory in Melbourne: $1 billion “to make sure that we are a manufacturing nation”.

The next day, the nation’s largest manufacturing union assembled for its national conference on the Gold Coast. Australian Workers’ Union (AWU) chief Paul Howes announced he backed her leadership “110 per cent”.

This is as good a way to measure public policy success as any.

Gillard’s jobs plan (formally titled the Industry and Innovation Statement) is an obvious sop to the protectionist wing of the union movement.

You can read the plan yourself here. But it’s actually pretty uninspiring; a grab-bag of miscellaneous policies trying to form a cohesive whole.

Some of the policies are new. The 10 “Industry Innovation Precincts” are an attempt to cluster industries à la Silicon Valley. We’re throwing $238 million at this little idea.

Industry Innovation Precincts are no more likely to be successful than a similar Howard and Kennett joint venture: the Commonwealth Technology Port, sited in the Melbourne Docklands.
ComTechPort failed to attract digital entrepreneurs and was instead colonised by government departments. Now it’s been rebranded as an “inner urban community”. Let’s see what the Gillard precincts look like in a decade’s time.

Others policies in the jobs plan have already been announced. Legislation for the Anti-Dumping Authority is already squirrelling through parliament.

All up, the jobs plan is not really a new “$1 billion” package. It’s a $791 million one.

But the plan’s big ticket items are the worst of both worlds: they’re both administratively complex and completely unable to achieve their purported goals.

In other words, Julia Gillard’s jobs plan is protectionism as symbolism. It’s a “victory” that the old industrial unions can bring back to their members.

All large projects with a capital expenditure cost above $500 million will be required to submit Australian Industry Participation plans that detail how they intend to involve local firms in their project. Australian Industry Participation plans started back in the early 2000s but only applied to government-funded projects. The Gillard Government is extending them to independent private projects.

In practice, Australian Industry Participation plans end up being pointless red tape. Only the most reckless project manager would deliberately exclude cheaper local suppliers. The plans are mainly there to make local firms feel like they’re in with a chance.

Really large projects ($2 billion and above) that are receiving concessions to import goods tariff-free will have to “embed Australian Industry Opportunity officers within their procurement teams”. It’s not clear exactly what that means. It sounds like embedded public servants.

Now, embedding public servants in private enterprise sounds a bit creepy.

But plus a few increases to existing programs (the Government’s venture capital fund gets an extra $350 million) that’s all there is to the Government’s “jobs plan”. It’s a couple of tokenistic, bureaucratic measures presented as a great win for Aussie jobs and Labor values and the Asian Century.

The fact that union bosses have taken this thin gruel back to their members with such enthusiasm is revealing. They are as much in on the game as the politicians.

No doubt there are many in the AWU’s rank-and-file who want the Government to protect manufacturing and blue-collar jobs by major government intervention – protectionism and planning and government investment. If so, then they’ve been completely sold down the river by their union representatives.

Gillard’s Labor Party faces the same dilemma as many other labour parties around the world. The ALP has become entirely technocratic, as Tim Soutphommasane lamented in the Age recently. Managerialism has replaced ideology. Quite rightly, they’ve learned that open markets and free trade deliver higher living standards for the whole country. But this is hard on their old base. The winds of international competition have been tough on manufacturing unions.

So the protectionism we do get is tokenistic – little regulatory rules and futile programs. Nobody seriously believes these policies will have a substantial effect on the viability of manufacturing in Australia. If the Government really believed that the secret to national economic success was clustering firms geographically or forcing big projects to buy local, these policies would be 10 times as large.

In the case of anti-dumping law (which prohibits foreign manufacturers from selling products in Australia below their “normal” price) the Productivity Commission has explicitly said it exists for psychological reasons rather than economic ones.

We can see the same dynamic in the United States. The political scientist Dan Drezner noted the mercantilist theme running through Barack Obama’s recent State of the Union speech. Obama needs to signal to blue-collar manufacturing workers that he wants to protect them but at the same time the administration can’t abandon the free trade necessary for its long-term economic growth.

There was a great worry at the start of the global financial crisis that the world might take a turn towards protectionism. Politicians often respond to economic downturns by attacking trade.

But rather than demonstrating a lack of faith in free trade, symbolic protectionism does the opposite. Protectionism and state economic planning hasn’t just lost the intellectual debate. It’s completely lost the political one as well.

WorkChoices Demon Used To Fire Up The Labor Base

Nothing scares the pigeons more than WorkChoices.

Anyway, that’s the theory. Just a hint of industrial relations reform (no matter how vague) by anybody remotely associated with the Coalition (no matter how obscure) brings out the WorkChoices demon. Ministers pound out tweets. Hawker Britton squawks. WorkChoices is back!

It’s like a verbal tic – it’s what you say when you’re not sure what to say. WorkChoices is for Labor Party strategy what “umms” and “errs” are for impromptu speeches.

One day in February 2010 the ACTU said it would campaign against Kevin Rudd’s industrial changes – they did not believe Fair Work was fair enough for workers. The next day Julia Gillard put out a press release: “Abbott must come clean on WorkChoices”.

“Australians can’t trust Tony Abbott on WorkChoices”, the ALP told Australia citizens during the 2010 election. The next day Abbott promised that WorkChoices is dead, buried, and cremated. Undeterred, two days later Simon Crean sent out a press release: WorkChoices “has been dug up, dusted off, and is ready to be rolled out should the Coalition be elected.” Labor’s divining rod finds WorkChoices everywhere.

So no wonder the Labor Party went into convulsions when this week the Australian Financial Review reported that John Howard wants revive the industrial relations debate. It’s the perfect storm. The guy they defeated, calling for the policy they campaigned to destroy. Wayne Swan rushed out a press conference. Abbott-to-bring-back-WorkChoices was again the message of the day.

But Howard wasn’t even talking about WorkChoices. The former prime minister wanted Abbott to adopt the Peter Reith model, which predated WorkChoices by nearly a decade. As he said, “There is no reason why this country should not go back to the workplace system we had between 1996 and 2005 where you had individual contracts.” This line was widely cited in articles which nonetheless claimed Howard was calling for the return his post-2005 policy.

At most – at most – Howard suggested the Fair Work Act’s loose unfair dismissal provisions be tightened. His words: “you have got to do something about unfair dismissals.”

This is a reasonable view, even if you don’t agree with it. Under WorkChoices, one exception to an unfair dismissal finding was if an employee was made redundant for ‘genuine operational reasons’. That exception has been replaced by a vaguer ‘genuine redundancy’ standard, which (for instance) only allows dismissals if workers cannot be given another job elsewhere. This new standard turns industrial judges into human resource managers. Questioning the new standard isn’t revolutionary. Howard’s view is modest; almost shy.

Anyway, Howard’s views are moot. He’s no longer prime minister. There is no reason to believe Abbott is thinking about touching this hot potato. Dead, buried, and cremated, remember? Given his campaign against the carbon tax, there’s nothing a first term Abbott government will be more sensitive to than charges that the Coalition has broken an election promise, or didn’t tell the voters about its plans. The firmest guarantee an Abbott government will do what it says is how brutally they’ve attacked Labor for doing the opposite.

WorkChoices is an apparition. When it is mentioned, it rarely has anything to do with the specifics of what the 2005 reforms actually were. Four years after it was abolished, WorkChoices is now less a policy than a freelance stand-in for anything that might fire up the Labor base. That is, anything that might bring back the old magic of the 2007 election campaign. In those happy days, Labor campaigned as if WorkChoices was the culmination of a century of Tory attacks on the Australian settlement.

But for the right, WorkChoices is an emblem as well: emblematic of an aging government willing to trample Australia’s institutions to get what it wanted. The right wasn’t much more sympathetic to Howard’s last industrial relations reform than the left.

WorkChoices took industrial relations forever out of state hands, eliminating any principle of federalism in workplace policy. And it was an extraordinarily complicated piece of law. It increased, rather than decreased, government involvement over labour markets.

It is mostly forgotten that the great workplace bogeyman, the HR Nicholls Society – the fortress of managers’ rights, the unions’ bête noire – was opposed to WorkChoices. In 2006 ACTU boss Greg Combet described WorkChoices as “Kremlin-like”. The president of the HR Nicholls Society, Ray Evans, agreed. “It’s rather like going back to the old Soviet system of command and control, where every economic decision has to go to some central authority and get ticked off.” He went on: “I don’t believe the Howard Government is that keen on freedom.”

This makes recent claims that the rebirth of the HR Nicholls Society is a harbinger of WorkChoices comically ludicrous.

But then, what does it matter? The point of talking about WorkChoices isn’t to warn Australian workers. It is to find anything that might restore Labor’s support. WorkChoices is a scare campaign, sure. It’s also very tired and probably futile.