Interview – Leon Delaney, 2CC Drive
LEON DELANEY, HOST: The Federal Member for Fenner and Assistant Minister for Competition, Charities, Treasury and Employment, Dr. Andrew Leigh. Good afternoon.
ASSISTANT MINISTER FOR COMPETITION, CHARITIES, TREASURY AND EMPLOYMENT ANDREW LEIGH: Good afternoon, Leon. Great to be with you and your listeners.
DELANEY: Where do I begin today? There is so much going on. Let’s start with competition. You’ve appointed, you’ve given Craig Emerson even more work to do.
LEIGH: He’s a busy man. So much for retiring. We’ve got him back in the competition space where he’s made so many significant strides during his time in the parliament and now we’ve appointed him to the National Competition Council alongside two other talented appointees. The goal with this is to make sure that we have states and territories working together on the kinds of competition reforms that will really turbocharge living standards. Competition isn’t just a matter for the national government. It’s also really important that the states and territories are on board and Sally McMahon, Katrina Groshinski and Craig Emerson, I think will do a great job in keeping that National Competition Council in the fore as it was in the 1990s, Leon. Some of your listeners may recall that those national competition policy reforms which delivered big household income gains at the end of that decade.
DELANEY: So, what does the Competition Council actually do that other bodies, like the Competition Commission, don’t?
LEIGH: So, the Australian Competition and Consumer Commission is more of the watchdog. It’s out there looking for misbehaviour. The National Competition Council is coordinating policy. When you got an area like competition, which does fall between the Commonwealth and the states and territories, then you need a body doing the coordination. Traditionally, that’s been the National Competition Council, but it hasn’t been as active in the last couple of decades as it was during the 1990s and I think Australians have been the poorer for that.
DELANEY: Okay. And today, I don’t know if you prepared to comment on this, but your colleague, Catherine King, the Minister for Infrastructure and Transport, joined with our local members I think – no, it was just her, because that was something else I was thinking of. Catherine King announced a reform of Sydney Airport slots to boost efficiency, competition and consumer outcomes. Now, I’m asking you about this because we’ve spoken before about the difficulties with Qantas in particular and cancellations of flights between Canberra and Sydney. And one of the reasons that’s given in relation to that is abuse of slot allocation at Sydney Airport. So, can we hope for that to be rectified now?
LEIGH: This slot review is really important, and it’s entirely led by Catherine. But the process includes penalties that address anti-competitive behaviours, stronger enforcement tools for the Government to watch airlines more closely and take effective legal action. It’ll benefit new entrant airlines and crack down on slot misuse. The aim, Leon, is to create a more level playing field in the slot allocation process.
DELANEY: Yeah. Because Qantas has apparently been accused of hoarding slots. And I suppose that accusation may have been made to other airlines as well. What measures are there to prevent that from happening?
LEIGH: In the first instance, we’ve got more transparency. So, airlines have to provide regular information about how they use slots. They’ll have to provide reasons for cancellations or major delays, and we’ll regularly publish that information. That brings the demand management system at Sydney Airport in line with international standards. What’s important about this process is we’re not talking about more movements out of Sydney Airport, we’re talking about acting on the misuse of slots.
DELANEY: Okay. And hopefully we’ll end up getting better service out of Canberra as a result of that. Fingers crossed. Very good. Now, as well, today you’ve got more data in relation to that favourite old topic of yours, non-compete clauses in employment agreements. Now, this one apparently has come from a survey conducted by the Australian Bureau of Statistics, but it does broadly fall into the line with previous research that we’ve spoken about. What has been found by the ABS.
LEIGH: So, first of all, let’s remind ourselves what a non-compete clause is. It’s a clause in your employment agreement that hampers you from moving to a better paying job. Sometimes they’ll say that you can’t move within six months to an employer within 50 kilometres. That means that people aren’t able to get the big wage gains that come from shifting jobs. The biggest wage gains over a career, Leon, as you and your listeners will know, typically come when someone moves from one employer to another. And if you’re a startup company, you need staff. One of the ways you get staff is by attracting people in other companies to come and work for yours. So, we’re worried that non-compete clauses might hamper startups and dampen wage growth and this new research today says that one in five Australian businesses use non-compete clauses. Most of those are using them for most of their employees.
DELANEY: We’ve spoken about this topic a number of times and the point that I keep coming back to is that there might well be a place for non-compete clauses at the upper levels of businesses where people typically might be engaged on a fixed term contract, like a five year contract, for example. And then if, for whatever reason, either party wants to conclude that contract earlier than scheduled, then part of the separation agreement would be not to engage in any competitive employment for the remaining period of time that would have otherwise been covered by that contract. That’s a very, very different thing from a typical everyday employee who comes to the office basically to collect his weekly wage and all of a sudden finds himself out on the footpath one day. But his previous employment agreement told him he can’t go and work for a competitor for six months. Now, if I’ve just lost my job, I’m going to take a job anywhere I can find it and damn the consequences.
LEIGH: That’s right, Leon, and you have not only executives being covered by non-compete clauses, but now hairdressers, early childhood workers, security guards, and yoga instructors. So, this does suggest that non-competes have become just a standard term that employers throw into the employment agreement. It doesn’t do the employers any harm, but it can dampen down the wages of the workers and of course, make it more difficult for startup firms. Even at the top end, there are other ways of protecting confidential information than preventing your employees from moving. Silicon Valley, one of the most innovative places on the planet, has banned non-competes for decades. They’re illegal under California law, and it hasn’t stopped Silicon Valley from having a whole range of startups. So, we’re doing a deep dive into this. The Competition Taskforce in Treasury will be producing an issues paper and looking at the options for the government on reform of non-compete clauses.
DELANEY: Okay, so when do we expect to see some sort of policy position on this to come out of that process?
LEIGH: It’ll be in the coming months. We’re aware that this is an issue that is of concern to many Australians. I’ve spoken to a lot of people who’ve got non-compete clauses that are binding them. We need to work through in a careful and methodical way; engage with employers, engage with employees, engage with the startup community, make sure that everyone’s had the chance to have their say, because it would be an important policy reform. As with other policy issues, we need to be methodical to get it right.
DELANEY: And finally, we’ve seen wages figures today showing that wages growth has hit 4.2 per cent over the year to December. Now that, on the face of it, seems like good news, and technically that’s just slightly above the current level of inflation, but I’m told it’s hiding the sad reality that it’s not likely to last. What do you think?
LEIGH: Well, I think this is one of the best pieces of economic news we’ve had come out this year. We’ve had three consecutive quarters of the real wage growth. First time in six years we’ve had that outcome. In nominal terms we’ve got wages going up at the fastest pace since 2009 and you’ve got tax cuts coming. So, under Labor, people are earning more and from the 1 July, they’ll be able to keep more of what they earn. That seems pretty good for Canberrans to me.
DELANEY: Well done. Thanks very much for chatting today.
LEIGH: Thanks, Leon.