Calls for industrial relations overhaul as speculation mounts over Budget cuts and gains

Business chiefs are urging the Federal Government to use next week’s Budget to overhaul Labor’s industrial relations system, while there are indications ahead of the Budget that the childcare rebate will stay but superannuation tax benefits might be cut.

Qantas chief executive Alan Joyce and ANZ chief executive Mike Smith called on the government to use the Budget to restore business confidence and to encourage more labour flexibility.

Joyce told The Australian “business leaders want the government to provide greater certainty”.

“Australian businesses want to see increased flexibility in the labour market, which will help drive productivity and innovation,” said Joyce.

“Governments and business must work together to find a renewed passion for productivity reform.”

The comments come as a report commissioned by the NSW Business Chamber finds that Labor’s Fair Work Act is “more of a hindrance than a help” in boosting the nation’s productivity.

The report, Productivity and Fair Work, was created after interviews with 70 business leaders from small, medium and large sized enterprises about their experiences of the Fair Work system.

 The report calls for the elimination of a “norm of adversarial workplace relations” and the abolishment of rules which “over-regulate” for worst cases to the detriment and cost of the majority of employers and employees.

The NSW Business Chamber told SmartCompany it was unlikely its concerns about FWA would be dealt with in the Budget.

“The primary reason for that is because FWA, who is hearing all this, has not made any findings yet and we believe they are not due until the end of May,” says Stephen Cartwright, chief executive of the NSW Business Chamber.

“It has an ongoing negative impact for SMEs and will consider to do so until such time as there is much greater levels of flexibility put into the act.”

Meanwhile, speculation is mounting the government may use the Budget to scrap or delay its proposal to allow older superannuation fund members with low balances to contribute up to $50,000 a year to super tax free – double the rate for everyone else.

The plan was meant to be implemented in July but the government is yet to publish details as to how the scheme for those over 50 will apply.

The Australian Institute of Superannuation Trustees told Smart Company any such changes would be a misstep by the government.

“We would be disappointed if reports are true that the higher $50,000 concessional cap limit for those over 50 with less than $500,000 in super is shelved because it is deemed too difficult to administer,” says Fiona Reynolds, chief executive of the AIST.

“If the Australian Tax Office is able to deal with the administration of the new rules affecting those with earnings above $300,000, we see no reason why it can’t also deal with this policy.

“We need to remember that our super system is divided into super guarantee ‘haves’ and ‘have nots’.

“For most people currently in their fifties, their average annual super guarantee rate is below 4%.”

Despite the need for the government to make big cuts in the Budget, at this stage it looks like the child care rebate, which is not means tested, will be spared.

Prime Minister Julia Gillard hinted that the government would not target childcare, saying the government thought childcare was “a very high priority, otherwise we wouldn’t be investing more money than the nation has at any other time in our nation’s history”.

The rebate covers 50% of out-of-pocket expenses for approved childcare set at a capped amount.