HR reacts to the federal budget, views from HR tech and workplace relations specialists

The Australian federal budget handed down last night (25 October 2022) by the Treasurer outlines its priorities as: “Laying the foundations for the better future that Australians deserve. It provides responsible cost-of-living relief; delivers on the Government’s economic plan to build a stronger, more resilient and more modern economy; and pays for what’s important.” But what do HR and workplace experts have to say about it?

The HR Leader reached out to experts in HR and workplace relations to see what their reactions were to this budget – the second Australia has seen this year. Observations focused on paid parental leave, money for the fair work ombudsman (FWO), questions around the unemployment rate used for ‘modelling’ and wage growth assumptions, and more.

Paid parental leave

Michael Byrnes is a partner at Swaab and a workplace relations and safety expert. Following the budget announcement, he told HR Leader:

“One significant aspect of the budget is the expansion of the paid parental leave scheme. By 2026, families will be able access up to 26 weeks of paid parental leave. Not only is this seen as an important initiative to improve gender equality, it is also a productivity measure, designed to improve workplace participation.

“There are two elements of the expanded paid parental leave scheme that should be specifically noted. First, there will be a ‘use it or lose it’ rule applying to a (yet to be determined) number of weeks of the entitlement reserved for each parent.”

Mr Byrnes went on to highlight that the new plan for parental leave might help balance the typical gender divide seen with the scheme.

“Historically, notwithstanding the efforts and intentions of policymakers, paid parental leave entitlements have been overwhelmingly accessed by women. This rule will act as a benevolent stick to encourage both parents to avail themselves of the benefit and seek to reverse this status quo. The number of weeks to which this rule will apply is to be determined by the Women’s Economic Equality Taskforce.”

Mr Byrnes added: “The second element is that employees will be able to take the leave in blocks of as a little as a day at a time. While this is a noble measure designed to encourage take up of the entitlement, it will likely pose workforce resource planning challenges for some employers.”

Fair work ombudsman

Paul O'Halloran is a workplace relations accredited specialist and Dentons partner. He shared with HR Leader:

“One of the sizeable allocations in Labor’s first budget includes $69.9 million in funding to the fair work ombudsman, over a four year period, to enable the FWO to absorb the regulatory role of the Australian Building and Construction Commission, which the government intends to abolish. Budget papers indicate this funding will allow the FWO to ‘more comprehensively regulate’ the Fair Work Act in the building and construction industries.”

Respect@Work

Mr O’Halloran also noted money being set aside for work resulting from the Respect@Work: Sexual Harassment National Inquiry Report.

He said: “An interesting and welcome budget allocation was $5.8 million over four years from 2022–23 to the Attorney-General’s portfolio to fund compliance activities associated with addressing unacceptable workplace behaviours, identified in the Respect@Work Report. This includes education on the new employer’s duty to take ‘reasonable and proportionate’ measures to eliminate sex discrimination, sexual harassment and victimisation in the workplace.”

Unemployment rate predictions

Founder and CEO for Enboarder, Brent Pearson, questioned the government’s prediction around the maximum unemployment rate.

He commented to the HR Leader: “Overall it seemed like an excellent budget from Chambers and the Labour Party, but there was one number that stood out to me: 4.5 per cent – that was the maximum unemployment rate that the government is modelling over the next few years even during their gloomy economic backdrop. I looked back 50 years in Australia and the USA and the unemployment rate has never stayed that low during downturns or recessions before.”

“While it was good to see the government talking about the skills shortages and investing in apprenticeship programs etc, I don't think it's going to be anywhere near enough. Employers need to be prepared for an incredibly tight labour market that is not going to soften much,” he cautioned.

Wage growth

The founder and CEO of Employment Hero, Ben Thompson, highlighted that Employment Hero’s SME Index disagreed with the Treasurer’s assumptions around wage growth.

Mr Thompson said: “Chalmers’ budget forecasts that real wages will not start to grow until 2024. Employment Hero’s SME Index suggests a different story on wage growth: that it has outpaced inflation, and not the other way around. Year-on-year median wages increased overall by 7.9 per cent in September 2022 and by 1.0 percent over the last month. With inflation set to peak at 7.75 per cent later this year, we’re concerned that when the interest rate increases bite, as they inevitably will, SMEs will struggle to maintain headcount.

“Inflation is predicted to go down to 3.5 per cent in 2023–24, which is when real wages should start growing again. Unemployment is set to hit 4.5 per cent in 2023–24, which is relatively low. I anticipate that business leaders may take a more cautious approach over the coming months as we see the impact of higher interest rates working their way through the economy. This is where funding is needed to support SMEs. Cash flow is the biggest issue for SMEs, and increasing the hourly rate is a much bigger challenge than flexibility in total remuneration and benefits offered to employees. The stagnant growth in the SME index forecast is understandable due to the economic volatility, which is why agile and real-time data is the way forward. This needs to be acknowledged and acted upon.

“Critical information is needed to tackle the challenges of developing new approaches that enhance employment opportunities and build business confidence among SMEs during periods of uncertainty,” he concluded.

Productivity and skills

Mr O’Halloran noted money being earmarked for a Productivity, Education and Training Fund. He said: “Unions and employer groups will receive $8.9 million in funding over three years from 2023–24 which will be used to establish a Productivity, Education and Training Fund to ‘improve safety, fairness and productivity in workplaces’. This commitment arose from the recent Jobs + Skills Summit.”

The Budget Overview stated: “Unions and employer representatives will also be supported to work together and with the Government to improve safety, fairness and productivity in the workplace.”

In his ‘Budget Speech 2022–23’, the Treasurer, The Honourable Dr Jim Chalmers MP mentioned the Jobs and Skills Summit: “Too much of our potential has been wasted, and the costs of that are clear – with falling real wages, flatlining productivity, widespread skills shortages, and too many Australians denied the opportunity of a better future.

“The Jobs and Skills Summit was all about bringing people together to help reverse these trends – finding consensus on the challenges, and common ground on the solutions.

“We agreed there that full employment, productivity growth and equal opportunities for women should be core objectives of government policy.

“And we know the key to this is quality investments in the capacity of the Australian economy and the capabilities of the Australian people.”

Andrew Brushfield, director at Robert Half stated: “The Federal Government's commitment to fund 20,000 extra university places for students from disadvantaged backgrounds, will help ensure the next generation of Australian workers from all sections of our population are equipped with essential skills for the evolving labour market, thereby contributing to addressing the current skill shortage. With evolving skills, especially in the technology and finance sectors, graduate candidates must have the relevant technical skills required to step straight into the job market and fill in-demand roles. The additional university places now available for domestic students can help boost the workforce in these specialist areas. The focus on skills in technology include DevOps, business intelligence and reporting services, cloud technology and scripting and automation, with the finance sector honing in on enterprise resource planning, predictive analysis and business intelligence tools.

“Taking action at the graduate level is one step to help address the current skills shortage. A comprehensive approach where the government works together with employer associations and education providers, including promoting skilled immigration and sector-wide investment in training, upskilling and reskilling are all key to provide an all-round, effective approach to tackling today’s skills shortage in Australia.”

Industrial relations

Mr Byrnes commented on the budget as it relates to industrial relations.

“Part of the budget related to various industrial relations reforms. After over a decade of relatively static industrial relations policy from both Labor and Coalition governments, there are a range of measures announced in the budget of which employers should actively keep track,” he said.

“These include limiting the use of fixed-term contracts for ongoing roles, significant changes to breathe life into what is seen by many [as] an increasingly complex and moribund enterprise bargaining process (including greater access to multi-employer bargaining and additional resources to the Fair Work Commission to assist employers and employees to make agreements) and enlargement of the small claims process to facilitate recovery of unpaid wages. These measures, particularly those in enterprise bargaining, are going to present both opportunities and challenges for businesses of all types and sizes. HR leaders are going to need to keep abreast of these reforms and consider the implications of them for their businesses.”