By John Tomlinson
[A response to the Committee on Employment Opportunities report, Restoring Full Employment, released in December.]
The Committee on Employment Opportunities is made up of four senior Commonwealth bureaucrats, two professors of economics and a professor of social work. It consistently acts as an apologist for the stupidity, bastardry and mean-minded ignorance of a succession of ministers for social security.
The committee is ever mindful of the cost of providing sensible policies and only occasionally aware of the benefits to unemployed people of decent income support and other services. Some of the committee have presided over the introduction of extensive financial deregulation of the mode of production while imposing upon the least affluent one of the most highly regulated income maintenance systems in the world.
The report is riddled with barely disguised ideological statements which the authors attempt to pass off as fact. The writers' commitment to growth over redistribution, individual obligation over governmental responsibility, equity between low income groups over equity amongst all citizens, is found throughout. The implicit and often explicit conclusion which committee members draw from all this is that the poor have to be forced to work.
The committee concentrates on unemployed people and the things which governments have done, are doing or might do to them. It would have made more sense to concentrate on the failure of business and government to invest in productive infrastructure (which might have created employment), the fraud of many entrepreneurs and leading business operatives and the Keating/Hawke government s pandering to the rich s desire to avoid tax by legitimising tax minimisation through share imputation and superannuation.
Had the committee chosen to look for real cures for unemployment, it might have concentrated on increasing social justice in this country through such equity vehicles as a wealth tax.
The major failing of the committee is that it accepts unquestioningly the rhetoric that targeted income security programs are more efficient than universal payments in meeting financial need. As a result of this error, it spends inordinate amounts of time supporting programs which involve governments second guessing what is in the best interests of people.
The committee is incapable of divorcing the issue of income support from the related but separate issues of employment and training.
The problem
The committee's deliberations are inadequate because they tinker with the edges of a social security system and fail to come to a solution which will do anything more than reduce unemployment to "around 5%" by the turn of the century. The committee seems oblivious to the fact that, irrespective of the long-term outcomes, unemployed people and their families need to eat every day.
The committee acknowledge that "The loss of production through unemployment is the single greatest source of inefficiency in our economy. Unemployment is also the most important cause of inequality and alienation for individuals, families and communities."
They identify the real issue when they say "Changing employment patterns in Australia over the last couple of decades raise doubts about the value of incremental adjustments to both the level and the way labour market and other assistance is provided to unemployed people. Tinkering at the edges is not sufficient. Bolder and more radical approaches are required." (Italics added.) They then spend the rest of the report backing away from this imperative.
Labour market programs
The committee recognise that only "about a third" of long-term unemployed people received labour market programs last year. They optimistically claim that job creation of 1.6 million, between 1983 and 1990, lessened unemployment by 100,000. Peter Saunders, director of the Social Welfare Research Centre put this job creation into a less sanguine perspective when he pointed out that many of the jobs were part time or went to those who were entering the job market for the first time; only 39,000 families were lifted out of poverty.
Most of the training/skilling to which the unemployed are subjected prepares them for low skilled jobs which will disappear.
The committee accept that the government's failure to offer little more than Mickey Mouse skilling opportunities to a third of the long-term unemployed will be insufficient to get all Australians working again. There are about 1.5 million Australians out of work, underemployed or discouraged labour market participants. There are a further half million who could play some role in the work force were decent educational and employment opportunities available.
If we were to get serious about facilitating the entry of these 2 million Australians into the work force, it would necessitate substantial expansion of child-care facilities, creative developments in post school education, and proper remedial and student support services, and it would need to be underpinned by a universal income support system and appropriate services.
All but the income guarantee would themselves create socially meaningful employment for many who are now unemployed. A universal income support system would free officers of the Commonwealth Employment Service and Social Security, so allowing them to concentrate full time on finding jobs for people and assisting people to obtain educational and other support necessary for them to obtain employment.
Compulsion
The committee are obsessed by the need to compel unemployed people to accept certain obligations in return for income support. The majority of these obligations centre around preparedness to seek and obtain employment or to attend prescribed skilling programs.
When they come to review the behaviour of unemployed people, they conclude, "There is little evidence that increasing the value of income support encourages people to become unemployed". However, this did not lead them to advocate raising the income support level for all unemployed to at least the poverty line. Rather they promote the status quo, relying on the unsupported assumption: "Any impact of the income support system on long-term unemployment is likely to be minimised where the administration of income support, and in particular the activity test is tight." Nowhere do they investigate the costs (economic or social) of a tight administration of the activity test.
They unashamedly advocate such a constricting activity test even though they recognise that "Nearly 95 per cent of all families with an employed person would experience a decline in their after-tax income of at least 20 per cent if they were to rely on DSS payments". They recognise that 2.5% of families receive no financial gain from working, particularly sole parents and those with large families. But this does not cause them to consider the advantages to such families of moving to a guaranteed minimum income, which would provide them with a financial incentive to engage in paid employment.
The sad fact is that the committee are acting as apologists for a system which refuses to address the real needs of unemployed Australians:
- a socially meaningful job at a livable rate of pay;
- income support at those times when they are without income;
- a decent ongoing education to equip them for future employment.
The committee fails to comprehend that the overwhelming majority of people without paid employment desire a job and the opportunity to contribute to the society which such paid work would provide.
The committee blissfully ignore the question of what will happen to those people who fail the activity test and lose their entitlement to receive income support.
Initially the bulk of them turn to family or friends, who are often also relying on income support. In the event of their not having access to such help, the option is to turn to non-legitimate sources of income. This frequently results in their being criminalised — removing them further from opportunities for future employment. Many eventually are imprisoned at an annual cost of $80,000 to state government because the Commonwealth was not prepared to spend $7000 a year.
Should the person who fails the work test have a family, it is likely to break up, leading to a loss to this nation of between one quarter and one million dollars per family. The components of this loss are income support, court costs, lowered productivity and the costs of raising children in poverty.
The sheer stupidity of the activity test being used to insist that the unemployed attend mickey mouse training programs is revealed once it is recognised that somewhere between 50,000 and 100,000 potential students fail in their voluntary efforts to obtain a place in TAFE (similar numbers for universities); then the Commonwealth Employment Service threatens to cut them off Job Search or New Start if they refuse to attend Walt Disney training schemes.
Education
We have a system which actively discourages ongoing involvement with education. The undergraduate fee, the inane second and higher degree costs, the lack of a fully functioning guaranteed minimum income, the lack of adequate child-care and proper student support services, and the other associated costs all add to the difficulties of obtaining ongoing and upgraded education. The committee, like too many other lazy people, would rather berate the workers, fail to utilise their creative potential and then engage in destructive down-sizing — all this in the name of modern management techniques.
Australia has generally managed to sustain balance of trade surpluses but has consistently encountered balance of payment deficits; thus it is the invisibles which are the major problem. We may need to borrow overseas, but if we sufficiently educate our people we could decrease our inordinate reliance on overseas ideas, which necessitates our buying imported patents.
Income support
The failure of the committee to separate the issues of income support from the other related aspects of employment and unemployment is the greatest weakness of this report. When they attempt to address the issue of income support for the unemployed, they fail most abysmally. They rule out universal income support guarantees as their starting point preferring instead to attempt to justify past and present governments income support policies. Such a blinkered approach leads them to advocate targeted income payments.
Just how confused the thinking is in this report is revealed when the committee attempts to address financial incentives to families of unemployed people. The committee state, "This proposal would not apply to pensioners who currently have more financial incentive to increase their private income than do unemployed social security recipients and for whom issues of labour market attachment are not as pressing." Non-working pensioners are as able to contribute to increased productivity as are non-working younger people. The failure to utilise the productive capacity of older Australians just legitimises the current push to privatise the income support system for aged Australians.
If this government desires to end unemployment as a social problem, it must introduce a guaranteed minimum income paid to all, expand and upgrade educational and skilling opportunities and create socially meaningful employment as part of becoming an employer of last resort.
[Dr John Tomlinson is a senior lecturer in the School of Social Science, Queensland University of Technology. This is an abridged version of a submission to the Committee on Employment Opportunities.]