Andrew Leigh

E&OE TRANSCRIPT
RADIO INTERVIEW
ABC CANBERRA – DRIVE WITH ROSS SOLLY
THURSDAY, 4 APRIL 2024

SUBJECTS: Voting age, Non-compete clauses

ROSS SOLLY (HOST): Andrew Leigh, do you think there is a case for 16 year olds to be allowed to vote?

ANDREW LEIGH: Thanks Ross. The challenge is how it meshes with compulsory voting laws. Universal voting has always been something that the Labor Party has felt passionately about. And the proposals to have a portion of the electorate who are voluntary voters is something that Labor hasn’t supported.

SOLLY: People have floated the option of making it non compulsory for 16 and 17 year olds, and then if they are interested enough in politics, they can vote, and then once they turn 18, it becomes compulsory.

LEIGH: Well, there you're undermining the principle of universal voting, Ross. You've got a share of the electorate who are voluntary voters. That's concerned us, and that's the reason why Labor representatives on the past inquiries into this issue have said they don't believe that Australia ought to move to voluntary voting for 16 and 17 year olds.

SOLLY. So, let's talk about compulsory voting for 16 year olds. Do you feel they're mature enough?

LEIGH: I have got to be pretty careful here, Ross, because I worry my 17 year old is going to be listening to this right now and take personally whatever I say! Look, I think he's brilliant and highly engaged with politics. The question is whether you want to go so far as to compel every 16 and 17 year old to vote. Not many countries around the world take that view. 18 has traditionally been the cut off. But look, it's an important conversation and the Labor party has been engaged in it.

SOLLY: All right, let's talk about non compete clauses. You've delivered a speech today taking aim, particularly at franchise businesses, accusing them of cartel like behaviour. How is this system still allowed to operate in Australia, Dr Andrew Leigh, when in many other countries around the world this sort of behaviour is illegal?

LEIGH: Yes, that's right, Ross. So, if you take McDonald's or Domino's or Bakers Delight, they have clauses in their franchise agreements that say that franchisees aren't allowed to poach workers from other outlets. That's not something the worker has any say over. It's an arrangement between the franchisee and head office, but its effect is to dampen down the wages of fast food workers in these outlets. One of the reasons it's been able to continue is that our competition laws have an entire carve out for employment agreements, so there's not the same sort of oversight that you might see in other jurisdictions. And then you've got the so called non-compete clauses, which say for one in five workers, that they can't easily move to a competing firm. And those clauses are showing up not just in the contracts for executives, but also for early childhood workers, security guards and hairdressers.

SOLLY: So, are you suggesting, Dr Leigh, that we remove from all businesses? Are there some areas where you believe that non compete clauses are important?

LEIGH: We're beginning a consultation process on this, Ross, and I'd urge people to go to the Treasury website, where they can find not only the issues paper, but also a survey, and we're garnering people's experiences with non-compete clauses.

SOLLY: What's your feeling about it, though? Do you think, in some instances, let's say, for example, if a company has invested a lot of time and money into training an employee for doing a particular job, and at the end of that, the employee says, well, thank you very much, I really enjoyed the training. I feel like I'm ready to take on the workforce, but not with you. I'm going to go somewhere else. Is that a fair system for the employer?

LEIGH: No, you go to exactly my biggest concern there, Ross, which is how we protect the investment in training for employers. But it's also worth looking around the world. We see jurisdictions such as California, which contains Silicon Valley, where non compete clauses have been illegal since the 1870s. And that hasn't stopped California being one of the most productive places on the planet. And indeed, some people say one of the reasons you see so much innovation in California, is because non-compete clauses aren't enforceable. Some US states have moved towards banning non-competes, and they don't seem to have suffered any ill effects there. And countries such as Spain and Finland are also looking at reform. So, we're watching what's happening around the world and very keen to garner people's experience through this conversation.

SOLLY: Yeah, the other problem I see, and tell me if I'm misreading it here, but if an employee has access to sensitive information, Andrew Leigh, would you want somebody to be leaving your work, to go and work for your competitor with that sensitive information that they've managed to ascertain?

LEIGH: Well, theft is illegal, so we've already got laws that prevent employees from stealing from the employer, whether that's intellectual stealing or stealing of physical assets. One of the things about non-compete clauses is they tend to be put into boilerplate standard form employment agreements. And so you have a situation where employees don't really negotiate over their non compete clause. They simply sign the standard form agreement, which is why they're creeping into agreements for yoga instructors or disability workers. I gave the example today of a breakdancing teacher constrained by a non compete clause. I've heard about a young teenage key cutter who was sued by his former employer when he went to work for a competing key business. Not quite sure what trade secrets he was taking with him, but difficult to imagine there.

SOLLY: You've said today that some of these businesses, they use these non compete clauses to thwart competition, to make sure that, you know, competing industries can't actually get a toehold in the market.

LEIGH: That's right. And so, you know, we've been talking a lot about the employee side, Ross, but it's also worth thinking about this from the standpoint of a startup. Imagine you want to start up a business and therefore you need to hire workers. Well, if all the existing workers are locked up by non compete clauses, it's going to be very hard for you to put together a workforce to take on the competition. And that means we don't get as many startups, as much innovation and the productivity gains that come from that. Under the former government, we had the lousiest decade of productivity growth and of real wage growth that we've seen in ages. And one of the reasons for that may be that we don't get the job mobility and the start ups that come from a dynamic, fluid economy are the likes of which you see in a place like California.

SOLLY: How do you feel closer to home? A lot of public servants leave the public service with the information, with the contacts that they've made while working in the public service. They leave and then straight away join a consultancy firm and then come back and get re employed as an outside contractor with the public service. Do you feel like that should be subject to a non compete clause?

LEIGH: I'm not across everything that happens in those circumstances, Ross, but certainly you saw under the former government, the effect of the arbitrary public service staff cap. One of the things that was happening was that agencies were being forced to employ consultants and contractors, and those consultants and contractors sometimes simply hired public servants in order to do public service like work. It's not in the interest of the taxpayer, it's more expensive and less efficient. So, we don't want to see that kind of revolving door happening. And there's areas like defence, where you're worried about particular secrets. And we need to make sure that there is confidentiality, not because we're worried about a competitor to the Australian government, but because it's important to maintain the integrity of the system.

SOLLY: Dr Andrew Leigh, we have to leave it there. Thank you for your time this afternoon.

LEIGH: Thanks as always, Ross.