Mr SAWFORD(7.33 p.m.) —A couple of weeks ago Channel 9 and News Limited, in conjunction with the CES, ran a Jobs for Australia campaign. They should be commended for that, as should the employers of Australia that offered the 20,000 jobs. However, the stark reality is that these 20,000 jobs, even if they all eventuated, would do nothing of a fundamental nature to change the chronic and endemic unemployment that stagnates the economies of Australia and the developed world.

Corporations and business will not deliver full employment. Why would they? They do not have the long-term responsibility for stability and families that governments can have. Governments need to lead. Governments need to set the policy environment in order to seek the cooperation of corporations, business and labour unions. Yet governments around the world, including the Howard government, are moving away from the commitments and social contracts they have had with ordinary workers post-World War II.

In an article in Foreign Affairs volume 75 No. 3, Ethan Kapstein, Director of Studies at the Council on Foreign Relations in the United States, made a number of points about globalisation and its impact on employment:

The global economy is leaving millions of disaffected workers in its train . . .

Just when working people most need the nation-state as a buffer from the world economy it is abandoning them . . .

For generations students were taught that increasing trade and investment, coupled with technological change, would drive national productivity and create wealth. Yet over the past decade despite a continuing booming international trade and finance, productivity has faltered and inequality in the United States and unemployment in Europe has worsened . . .

In globalisation's previous incarnation governments had done little to protect working people from its malign effects, and their mistakes exacted a price in revolutions and war.

Kapstein argues that governments are trying to break their postwar deal with workers while maintaining their commitment to an open economy. Governments cannot have it both ways and, instead, the policy focus should be on negotiating a package that helps workers adjust to ongoing changes. Kapstein says:

If the concern is incoming inequality, policies should be adopted to close the income gap. If the concern is unemployment more jobs should be created. In developing positive solutions however, it is important to recognise that declining rates of economic growth caused largely by a drop off in productivity are hurting all workers.

Governments from the mid-1980s until now have adopted policies deemed sustainable or credible by financial markets. These policies have privileged stability over employment, according to Kapstein. Restrictive economic policies, reduced deficits, reduced spending, reduced taxes and—the most exalted deity—low inflation have favoured financial interests at the expense of workers. Politicians and public officials who adopt these restrictive measures are labelled `responsible' by editorialists, and the markets reward their behaviour sustaining the ideology.

Kapstein says that governments essentially have four choices to assist their unskilled and semi-skilled work force. The first choice is protectionism, which is a remedy worse than the disease. The second is education and training, and that is perhaps the only policy intervention that meets with universal approval. Democratic societies should be financed. It makes for good politics and good economics. But, in the near term, it cannot provide the solution to the structural problems of employment and inequality.

The third approach is to increase the number of jobs through public works programs and employment subsidies to the private sector. Public job creation is relatively efficient and socially productive—since it provides younger workers with needed job experience—and it can be done fairly quickly. The fourth policy choice is tax reform, and perhaps eliminating income taxes altogether for a large number of the working poor while making them sharply more progressive up the income ladder.

One of the main arguments against an expansionary strategy is that it is inflationary. Certainly, inflation is unwelcome, but so is unemployment, which in this country is more like 13 to 15 per cent and much higher than the admitted rate of almost nine per cent. Kapstein acknowledges that restrictive policies may have been necessary when first conceived in the 1980s to bring stability to financial markets, but they have failed too many people for too long.

The challenge to all governments is clear: restore growth and opportunity. Unfortunately, in this country of Australia that we all represent, realisation of the message that Ethan Kapstein brings—who was also one of the proponents of globalisation in a former life—totally escapes the Howard government.