Business and Community

As someone who is leftist in their thinking, I have always felt reasonably on-side with calls for Australian businesses to run their operations in a legal and ethical manner. Employees have legal rights and cannot be forced to do things that are illegal, or to work in conditions that are unsafe.

But at the same time I also recognise that the laws that Australia sets up and imposes upon businesses can and do cost these businesses money. Even basic laws like having fire extinguishers in the office or approved safety harnesses for builders are things which cost business money.

One of the great things about living in a place like Australia is that we have very humane workplace laws that (supposedly) protect workers from being exploited or endangered while on the job. Laws have evolved over time as disasters and accidents have taken their toll.

But while these laws are good and just, we need to remember that it is ultimately the business itself that pays the financial cost for ensuring that it complies with the law. This means that the end product itself that they are producing (whether goods or services) has to factor in that cost. And if the total costs for running a business exceed its revenue, then the business has no reason to operate.

Add to this, then, the increasing amount of globalisation that is occurring. Businesses in Australia cannot compete with many businesses in poorer countries like China or Vietnam because a) the labour price is low, and b) these businesses do not have to comply with strict government safety rules. "Sweatshops" that cannot exist in Australia are outperforming Australian businesses simply because costs are low.

The result? Australian workers who are out of work and Australian entrepreneurs who are unable to run a business properly - all because we allow goods to enter Australia that are manufactured in conditions that would be illegal here.

Which means, ironically, that the laws our nation has set up to protect workers and to ensure they are paid a decent wage have ended up putting Aussie workers out of work and encouraging overseas "sweatshops". Sad, but true.

Of course, many people have noticed this and responded. Those on the left have decided to go down the "moral" track and highlight the immorality of buying certain imported goods (like Nike running shoes). Their solution seems to be a form of protectionism that is informed by anti-globalisation. What this would do, essentially, is to put up trade barriers and prevent goods made in sweatshops (or similar conditions) from entering Australia. This, however, would not solve anything since the workers who spend their time in these sweatshops would then become unemployed, making their poor life even poorer.

Those on the right have responded by arguing for lower minimum wages, reducing award rates and getting rid of collective bargaining. The Industrial Relations changes that the Howard government has brought in were intended to make conditions easier for businesses to hire and fire employees. Business groups that are concerned about their profitability (ie all of them) will try to dissuade government from passing certain types of legislation that would impact them - such as anything to do with environmental protection or safety. This solution, however, will make life difficult for workers. Lower job security and harsher working conditions are not what Australian workers want.

So we seem to be at an impasse. Is it possible to have economic and social conditions that both favour business and individual workers? Is there some way of ensuring workers are protected and paid well without discouraging business?

Yes there is. It's not painless, but it is possible.

Essentially my argument is that if the community wants something then the community should pay for it. If the community wants businesses to operate safely then the community should be willing to provide funds for it. If the community wants decent pay rates for workers then the community should be willing to cough up the dollars for it. Businesses should only have to pay market rates for anything and should not be penalised in any specific way for having to comply with the law. Businesses are there to make profit, full stop. The community, on the other hand, should bear the responsibility for ensuring that its members are happy and healthy. You can't have it both ways. If the community expects businesses to pay for community demands, then both community and business lose out (the opposite is true too btw).

How would this work out in practice? Easy. Who is "the community?". Government. The government should pay for workplace safety with money raised from tax revenue. Examples: Fire extinguishers should be in every workplace, but let the government supply them; Builders should be kept safe with safety harnesses on construction sites, but let the government supply them; Workers should be paid a decent wage... but if businesses can't afford it then the government should provide the difference.

Is there any company in Australia that manufactures TV sets? I don't think there is any these days. Why? It's because they are made cheaper in China. Yet if Australian businesses could keep costs down by having an external source look after its safety compliance and minimum wage requirements, then it may be possible for an Australian TV manufacturer to be created.

Or take the building industry. When a construction company is building a skyscraper it needs to have trained safety personnel and ensure that its workers do things safely. Yet the cost of doing this can be quite high. If the funds for safety training and compliance were paid for externally, then the company would be able to concentrate upon building and making money.

One problem with this solution of mine is, of course, the question "Where do you get the money?" The answer is tax revenue... and if tax revenue isn't enough then raise taxes. These taxes should be from as broad as base as possible, and spent as broadly as possible. Subsidies for specific industries or businesses is just not on. Subsidies are fine in my book, but they need to be broadly applied otherwise we run into the issue of "old socialism" from the 1960s and 1970s (where governments supported specific industries and promoted inefficiency).

There'd be many people out there who would see my solution as anathema... but we need to remember that countries like Sweden have exceptionally high tax rates but also exceptionally high living standards to go along with them. And since my suggestion has tax revenue going directly to help business, any complaint about "high taxes hurt business" should be easy to answer.

© 2007 Neil McKenzie Cameron, http://one-salient-oversight.blogspot.com/

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