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Fault-lines in society: tackling unemployment, the underlying factor, 4 May 1999, Australia Unlimited 1999



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The Hon Simon Crean MP

 

Deputy Leader of the Opposition and Shadow Treasurer

 

 

AUSTRALIA UNLIMITED 1999

 

FAULT-LINES IN SOCIETY: TACKLING UNEMPLOYMENT, THE UNDERLYING FACTOR

 

4 MAY 1999

 

Thank you for the opportunity to address this forum today.

Th is session is considering the fault-lines in society, and the most important of these is unemployment. 

With the economy growing at more than 4 per cent and unemployment at 7½ per cent, there is a real risk that the heat will go out of the unemployment debate - that the old lie that economic growth alone will solve our jobs dilemma will take a hold on public consciousness.

We are already seeing it in the approach taken by the Howard/Costello government. While unemployment remains on the lips of the government when it speaks of the challenges facing this country, there is no passion.

For the government, unemployment is no longer a terrible social problem we must direct all our energies towards solving. It has become a weapon to force through other political agendas.  Thus we hear that:

  • Jobs will be lost if we don t support the government s approach to the waterfront;
  • People will be sacked if we don t support unfair dismissal laws;
  • Kids will lose their jobs if we don t support the government pre-empting their own inquiry on youth wages;
  • There will be no new jobs if we don t pass the GST.

In other words, cutting unemployment is less the overriding policy goal than a political weapon. 

It doesn’t have to be that way. Whilst the fault-line is unemployment, the fa ult is not that of the unemployed.

The problem is the failure to create sufficient jobs and the failure to give the long-term unemployed a chance at the available jobs.

Failure to tackle this aspect means we will have a permanent pool of unemployed.

More than an issue of policy

This isn’t just about policies. It is also about how we approach the task of governing. 

Labor swept to power in 1983 on a platform of consensus. 

After eight years of negative, confrontationist and ultimately ineffective government, people wanted something more.

Labor was able to govern for 13 years and introduce far reaching reforms, to manage the big social and economic transitions, because we had learned to bring the people with us. 

We were as comfortable on the shopfloor as we were in the boardroom.

So while we know we must have new policies for the new millennium, we also recognise there is much in the Labor content and style of ‘83 to ‘96 that we want to take into the next government.

It is a style of consensus and reform - bringing people with you but not flinching at every opinion poll.

The way to address the unemployment fault-line is through consensus and a commitment to reform. 

No Labor Prime Minister will go on national television and hold up a map dividing Australia into brown and white.

No Labor Prime Minister will have such delusions of grandeur as to write their own Constitutional preamble, ignoring completely the enormous and genuine agreement and goodwill of a Constitutional Convention.

No Labor Prime Minister will see a new tax as their crowning achievement in public life.

No Labor Prime Minister will allow an entire workforce to be sacked simply because they are members of a union.

The unemployment fault-line

Government must take the bold step of ensuring that employment policy gets back to the top of the political agenda - not as a political weapon but as the policy priority.

We must recommit to a new national consensus to beat unemployment.  But consensus means different things to different people.

You can’t simply paper over the cracks, the fault-lines, or pretend they aren’t there. 

Labor’s approach - Labor’s style - is fundamentally different. 

We start by identifying the common goal.  Then, rather than ignoring the main barriers to that goal we build a consensus that seeks to remove them.

The goal with unemployment must be a jobless rate of 5 per cent or lower. No one can seriously disagree with that.

Taking a long term perspective is important because the jobs in the future will be different to the job s of today, as will be the skill requirements.

Accordingly we must identify where the new jobs are going to come from so we can design the best policies to encourage them and to equip people with the skills they need to take up the jobs.  I am suggesting that we develop a jobs roadmap to the year 2010, akin to the Workforce 2005 report released in 1995.

Finally, we design the policies to achieve the goal. 

A systematic approach

Our approach to this policy challenge must be multi-dimensional. 

Unemployment can only be dealt with by addressing both the demand and the supply elements at the same time.

Economic growth on its own it is not enough.

While it is necessary to generate the jobs, without active labour market assistance you can’t ensure that the long-term unemployed get their share of the job growth and therefore you too quickly run into supply problems, putting pressure on wages and constraining further growth.

At the macroeconomic level economic growth must be underpinned by investment and innovation.

At the microeconomic level, it must be underpinned by addressing the disposable incomes of Australians, the costs of labour, the incentives to move from welfare to work, and the reduction in poverty traps. Education, skills and training must buttress these reforms.

Training obligations, partnerships, new work opportunities, resourcing of the national training effort all formed part of the reciprocal obligation principle under Labor.

It is this systematic approach that is lacking under the current government.

In developing the new consensus we have to better understand and respond to the regional perspective of the unemployment problem and develop greater empowerment in our regions.

This means encouraging regions to develop their own agendas for growth, both economic and social, with confidence that they will be resourced. 

Under Working Nation Labor empowered regions by creating genuine partnerships with industry and communities, incorporating work opportunities and training. 

We challenged the regions to identify their employment and training needs with the commitment that the resources would follow.

But we must also accept that if regions are to realise their full potential they need access to the infrastructure and services that will support the new jobs. 

It shouldn’t be the government determining what those issues are, but a new confidence needs to be given to regions that in developing their agendas all levels of government will respond.

Labour market flexibility is also important.

We do recognise that the cost of employing labour can influence its demand, but not increasing disposable incomes reduces consumer demand.  Wages represent not just a cost to employers but also income for Australians.

Tax credits

That’s why Labor supports tax credits as part of a systematic approach to unemployment.

Last week’s decision on the living wage of $12 per week, while welcome, translates into an after tax and benefit wage of just $1.74 per week for a single income family earning $23,550. 

In stark contrast, for the same family, the tax credit proposal Labor took to the last election would translate to around $45 per week - 26 times the benefit the family would get from the wage increase or equivalent. 

This is because Labor's tax credit is both tax-free and is not counted for social security purposes.

Tax credits are not a substitute for the living wage, but the living wage can be comprised of an industrial component and a social component.  The example I have used demonstrates the power of the tax credit to take pressure off wages by significantly lifting disposable income.

More than tax credits

Over and above tax credits, further supply side considerations are necessary.

Just as we want to reward people to get into work by widening the gap between welfare and work and reducing poverty traps, we want to reward people more for skills and innovation.

We want to become a high-skills, high-wage economy.

We all know the importance of getting a start, but we must also recognise that skills lead to employability.  We must address both these issues.

This is the situation the young and the long term unemployed find themselves in. 

Their fundamental barriers are the lack of any, or any recent work experience, or insufficient or the wrong skills.

Skills and knowledge allow people to adapt to a rapidly changing world, and this surely is the ultimate in labour market and workplace flexi bility.

Such flexibility - born of skills and knowledge - minimises economic deadweight losses in a dynamic world, and enable the enterprise, indeed our polity, to initiate the transition to new modes of thinking and production.

Well targeted training programs and a genuine skills-job matching system are important elements in restoring dignity to the unemployed and building bridges across the unemployment fault-line.

While tax credits generate incentives to move from welfare to work, education related supply side improvements maximise the ability of those close to the labour market to cross the bridge to employment and open the way to greater opportunity in employment.

The information and knowledge based economy demands our collective and individual investment in skills, knowledge, and technology. 

We will fail our nation both present and future if we do not grasp this and respond.

Conclusion

The unemployment fault-line has driven a widening chasm through our society - between our regions, between and within families, between generations. 

No one should pretend that we can fill it quickly.

But action is needed to commence that task.  Failure to do so will see it widening.

We must stop the chasm from widening. We must build the bridges that cross it. 

 

 

 

jy 06051999