Transcript of Question & Answer Session A Wage-price Spiral: What are the Chances?

I can’t recall Michele’s comments in May, but I would refer you to her remarks to the House of Reps Economics Committee about a month ago. She was asked whether she was concerned about a wage price spiral, and she responded, no, she wasn’t. I think there’s an issue around how tight the labour market is, and reasonable minds can differ about that, but I don’t think she was talking earlier about a wage price spiral.

I agree that there’s always a contest about the distribution of productivity benefits, and that how that plays out depends on what the labour market looks like at the time, the industrial capacity of those who are arguing it. I also agree that flexibility has been a tension in the debate for a while now, and often it comes down to whose flexibility are we talking about? Does the employer want flexibility around rostering when you start and finish? Or is it the employee wanting flexibility around their other commitments, their work-life balance, et cetera? And we’ve seen that play out in the working from home, particularly in the public sector.

And look, in times of a softening labour market and concerns about employment, you tend to find collective bargaining focuses more on retaining conditions of employment, job security provisions, retrenchment, and those sorts of issues. I think how the productivity debate plays out in the future will be one to watch, including how productivity benefits are distributed through the economy. The Fair Work Commission, I think in two or three annual wage reviews ago, the expert panel indicated that they expected minimum award wages to grow by inflation and productivity over time. So they would intend to distribute the productivity benefits to workers over the medium term. When you do that and how will be the debate.

But I agree that artificial intelligence, if that leads to a sharp increase in productivity, the distribution of it will no doubt … no surprise that the MUA is front-footing that argument. But they also did the same thing on containerisation when that came in and essentially negotiated an outcome which increased their terms and conditions in their award, in exchange for the facilitation of containerisation, knowing that it would reduce the number of people employed on the wharves. So they’ve always had quite a strategic, medium-longer term view of how things play out. Rather than resisting, they’ve looked at, well, how do we distribute the benefits of the productivity gain?

Thank you very much for responding to the questions from the panel. But now is your turn. So if you do have some questions on the floor, please raise your hand, and a microphone will come to you. I have a question from the online audience. This one is around the public service. So the question is, what do you see the role and expectations of AI in public service to increase productivity and in the bargaining process?

I think, as Katie referred to, the public sector bargaining framework is very detailed. They also have a framework for the governance and adoption of AI. It is similarly detailed. Personally, I think there is a role for the public sector to lead on AI governance and adoption, to then be done in a more controlled, managed way, and can be done in a way that you would hope would improve the connection between the citizen and the state, and to get that to function more effectively. We’ll see how it plays out. But I would say they would have a role, and I imagine it will play out in bargaining.

(Panel discussion)