Labor’s ‘right to disconnect’ is a disconnect from reality

Labor’s ‘right to disconnect’ is a disconnect from reality

It isn’t clear whether it is Jimbo-ambition-nomics or Albo-veto-nomics that is determining the government’s economic agenda.

When the Albanese government’s “right to disconnect” laws come into force for small businesses on Tuesday, they will do more than simply redefine the workday. They are a symbol of a government whose economic policy is entirely disconnected from reality.

Where an employer and employee could find a way to flexibly work together to improve participation, the government’s solution is to put itself in the middle and replace human connection with red tape.

In practice, this means workers missing out on shifts while cafés bleed for staff, tradies needing subbies and retailers chasing deliveries.

That hasn’t stopped the Minister for Employment and Workplace Relations, Amanda Rishworth, doing victory laps over her predecessor’s industrial relations agenda.

Celebrating the first anniversary of the government’s laws expanding the rights of union entry into workplaces, she’s crowed that “despite the Henny Penny predictions ... the Australian labour market is performing strongly”.

In the world of artificial intelligence, such a comment would be described as a “hallucination”, where false information is projected with confidence.

Recent analysis by the Australian Industry Group found that only one in five jobs has been created in the private market sector over the past year.

Whereas nearly half were created in the non-market sector stimulated by public spending, just under two in five were created in the public sector, and that was nearly triple the share of total jobs created from the previous year.

As AIG research succinctly headlined, “labour market resilience has become dependent on government spending”.

In Keynesian economics, expansive fiscal policy should be broadly reserved for recessions; clearly, the government is pretending we aren’t in a per-capita one.

Australia’s employment market currently resembles the suspended animation under Wile E. Coyote after chasing Road Runner off the cliff in Looney Tunes and Merrie Melodies.

Without government expenditure, it is a long way to the bottom of the canyon, which is why the treasurer does not want to talk about reining in spending.

The problem is that you can’t keep borrowing from the future forever. Eventually, bond markets bounce and chirp “beep, beep”.

The minister is also popping champagne corks, claiming “real wages are growing” and “the number of small businesses continues to grow”.

Again, AIG research found wage growth was led by jobs more directly connected to public sector expenditure, whereas individual agreements have flatlined.

Analysis of Reserve Bank data shows that, once adjusted for inflation, real wages haven’t grown for nearly 15 years.

This was reinforced by the RBA’s latest monetary policy statement which connected a projected slowdown in wages to Australia’s productivity crisis.

After slashing forecasts by nearly a third, the RBA outlined that “slower productivity growth implies that the rate of wages growth that can be achieved over the long run without generating inflationary pressure is lower”.

It is a simple economic truth that centralised wage fixing with low productivity will inevitably lead to higher inflation, higher interest rates and higher unemployment.

Which is why it remains an oddity that industrial relations was an absent topic from the government’s roundtable last week.

It is also why small businesses are complaining about consumer demand, and is best reflected in the highest level of business insolvencies in Australian history.

You could say that the government’s approach “has a habit of gravitating to the headline macroeconomic indicators” when “the true meaning and merit of those concepts lies in their impact on people”.

The problem is that those are uncomfortable quotes from the prime minister in his recent essay for the University of Sydney’s Journal of Australian Political Economy.

His essay justifies existing government expenditure and lays the groundwork for expanding it further. It just does nothing to explain how it should be paid for.

The prime minister’s worldview is endemic within the psyche of the government. As one journalist observed, it took until after nine new Labor MPs gave their first speeches to the House of Representatives before anyone spoke about the economy.

The 10th speech was by Liberal MP Ben Small.

It isn’t clear whether it is Jimbo-ambition-nomics or Albo-veto-nomics that is determining the government’s economic agenda.

Whichever wins out, Australian private-sector employers need simplification in employment laws, so it is easier to hire and pay Australians. Yet, the government continues to prioritise those with closest proximity to power.

Leading up to the election, the retail industry applied to increase the award base rate of pay for employees by 35 per cent.

The trade-off was that retailers wouldn’t be compelled to pay specialist human resources, industrial relations, tax and legal advisers to comply with award complexity.

But because legal minefields enable unions to tax their take through the system, the government’s solution was to stop simplification, suppress wages and boast that workers won.

It was a win: for union muscle. Meanwhile, employees, employers and the Australian economy got their “right to disconnect” from the dream of a better future.

Published in the Australian Financial Review, 26 August 2025