The federal government's $42 billion Nation Building and Jobs Plan stimulus package passed the senate on February 13 with the support of the Greens, Family First Senator Steve Fielding and independent Nick Xenophon.
The passing of the legislation was greeted by an enormous sigh of relief from unions, business groups and community organisations. All expect that Prime Minister Kevin Rudd's stimulus package will be "good for jobs and good for working Australians" as Australian Council of Trade Unions (ACTU) president Sharan Burrow said on February 13.
The package promises to pour billions of dollars into the pockets of private developers. Most working people will receive $900 — a little more if they have children. While it's clear to see why business is supporting the package, what about the rest of us?
The Australian Industry Group was impressed with the package from the date of its release. "In particular, business welcomes the $2.7 billion investment incentive", AIG CEO Heather Ridout crooned on February 3. "This measure will help sustain business investment and support jobs and productivity improvements."
The Australian Chamber of Commerce and Industry also backed the package because of its likely stimulatory impact, at least on company profits. However, speaking to ABC Radio National's World Today on February 5, ACCI CEO Peter Anderson admitted that "jobs that may be created in areas related to new infrastructure spending are really offsetting jobs that will be lost elsewhere in the economy".
At best the package will therefore only replace some job losses. It won't stop unemployment from rising.
Anderson continued: "we are going to lose in the order of 300,000 jobs over the course of the next year or so and that is a dramatic hit on the Australian labour market if unemployment does indeed move up to seven percent. And that's even with the measures that this package proposes."
For its part, the Business Council of Australia particularly welcomed the fact that the impact of the stimulus package would be short term. "The BCA welcomes the reliance on temporary measures and the clear articulation of an 'exit strategy' to return the budget to surplus as growth resumes", BCA CEO Katie Lehay said on February 3.
As a representative of the largest 200 Australian companies, the BCA has little interest in the government funding badly needed improvements to public transport, health or other major social infrastructure over the longer term. It wants to turn a quick buck "through projects able be delivered in the next one to two years", Lehay said.
She particularly welcomed the fact that "the spending will not be a dead weight on our ability to achieve future growth and surpluses".
Community groups' response
On February 3, ACTU secretary Jeff Lawrence raised concerns about the package, arguing that the government must include "policies that deter employers from laying off workers".
With the threat that the package may not be passed, the ACTU's concerns went to water. "This package is urgent in order to pre-empt the increasing impact of unemployment and weakening economic demand that will effect the lives of working Australians", Burrow said on February 10, although calling for "conditions" to be placed on money given to the banking sector, "including retention of jobs and branch networks, and initiatives to prevent mortgage foreclosures".
The Brotherhood of St Laurence welcomed the stimulus package almost without reservation. "This package balances the need for bold, decisive action with the need to make lasting investments in the social and economic infrastructure of the nation", Tony Nicholson, executive director of the Brotherhood of St Laurence, said on February 3.
Greens and the 'sledge hammer'
The Greens senators, who along with Fielding and X
enephon had to vote for the package to allow it to become law, used their position to secure certain changes. However, their attitude to the bill was outlined by Greens senate leader Bob Brown, speaking to ABC Radio National's AM on February 7.
"I don't think the Senate should put itself in the guise of being the government. We're there to improve this package, but not take a sledge hammer to it", he said.
The Greens did win some minor concessions. They negotiated with the government to ensure that all students enrolled by the end of March were entitled to the government's handout (the initial cut-off for enrolments was February 3) and to double the amount of savings (from $2500 to $5000) that newly unemployed people could have before being denied unemployment benefits.
The party also negotiated a $435 million Local Green Jobs Package and that $40 million be spent on providing bike paths.
The cost of the Greens' concessions, however, will be fronted by those workers and students receiving the government's handout. "Because the government agreed to cut the tax bonuses from $950 to $900", Brown said on February 15, "these measures together with the much wider job-creating components of the agreement with the Greens, add no cost to the $42 billion package and therefore do not add to new government debt."
By contrast, Xenophon negotiated for an extra $900 million to go to long-term water projects to improve the flow of the Murray River as the cost of his support for the package.
Alternatives
In approving the stimulus package as it stands, the Greens, ACTU and others are accepting the agreement reached by the Rudd government and business groups, particularly that any stimulus must be short-term and must be repaid (as and when economic conditions improve).
While the social spending initiatives included in the package ($6 billion for 20,000 public houses, $9.7 billion for public school buildings, $3.6 billion for free insulation) are positive, they are not enough — neither to make a substantial improvement to much needed public infrastructure, nor to stem the expected rise in unemployment.
What is needed is a long-term commitment of government investment to renovate, rebuild and provide much-needed public transport systems, public education, health and housing facilities and to provide a pathway to the 100% use of renewable energy by 2020.
The Rudd government, however, is dancing to a different beat.
In his February 17 scribblings for the Sydney Morning Herald, right-wing columnist Gerard Henderson articulated the next steps according to business. While supporting the stimulus package, Henderson argued that "there is much that can be done to support employment, especially in small business, without in any way further increasing the budget deficit".
Henderson went on to articulate the real program being pushed by the ACCI, the AIG and the BCA. "Unfair dismissal legislation is a clear disincentive to small business to take on full-time workers", he argued. Clearly this has to go.
In fact, "it would make sense for the prime minister to at least delay Labor's Fair Work Australia legislation" in its totality. Even the less-than-adequate carbon trading scheme, by which the government hopes to reduce CO2 emissions by a paltry 5% by 2020, cops a hit from Henderson — "it makes sense to delay the policy until the end of the economic crisis", he bleats.
The logic of the Rudd government/business strategy in dealing with the economic crisis is clear: spend just enough to (hopefully) stop unemployment blowing out completely, but not enough to give everyone a job or make a sustained difference to social infrastructure.
Force working people to repay the spending through decreased government services (already the paid maternity scheme seems to have evaporated) and higher costs. And use the downturn as a cover for reneging on social legislation and winding back working people's expectations. Call for "wage restraint" to lower real wages, but offset this with a paltry $900, and hope that no one notices the slide.