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Issue #1921      June 29, 2020

The way forward to economic recovery

As the economic crisis continues to unfold, the government is already talking about a budget surplus and a return to its neoliberal agenda. Its plans will only deepen and prolong the economic crisis and create even more hardship for working people who are on the receiving end of these policies.

More than one in five workers is either unemployed and looking for work or underemployed. Since February 2020, 838,000 jobs have been lost. Young workers aged fifteen to twenty-four are the hardest hit, with an official unemployment rate of 16.1 per cent as their employment plunged by a whopping 102,900. (ABS 6202.0)

Close to 3.6 million people receive the JobKeeper payment. They have either been stood down or are still working but not necessarily for the same hours or paid as much as before.

These are just a few of the cold, hard statistics released earlier this month. Every single one of those hundreds of thousands of affected workers and their families represents real people, facing an uncertain future.

Prior to the pandemic, almost four decades of neoliberal economic policies and the attacks on the trade union movement had already taken a substantial toll on working arrangements, job security and wages. Australia had the third highest rate of insecure work of any OECD country with three million or more workers employed as casual, contract, labour hire, and gig workers.

These workers are denied basic rights such as sick leave, annual leave and other forms of paid leave. They are less likely to be organised in a trade union or to benefit from collective bargaining or occupational health and safety protections. Their hours and income could fluctuate from zero to fourteen hours or more in a day, with no certainty of enough work to pay the bills.

Excess capacity

Prior to the pandemic, the Australian economy was already heading into a recession. The private sector was experiencing reduced demand for goods and services. There was excess capacity in the economy. Since then the influx of migrants, international students and visa workers has dried up, further restricting growth.

The Reserve Bank of Australia Governor Phillip Lowe had been begging the government to provide a stimulus to the economy, all to no avail. It had even called for higher wages.

With the massive increase in unemployment and underemployment there will be even less demand and a tendency by many workers and their families to only spend on absolute necessities for fear of what the future holds.

Excess capacity does not require measures to increase capacity which is the neoliberal approach. Giving the corporate sector more tax cuts will not result in new investments. The private sector will only make new investments when it believes it will be profitable to do so. At present it sees no point in doing this.

Nor can the crisis be addressed by giving the rich further tax cuts. That money will not flow back into the economy creating demand.

Job creation will not and cannot come from the private sector in the present conditions. It must be a public sector-led recovery with the public sector taking responsibility for job creation and the future direction of the economy.

Role of public sector

The anarchistic nature of capitalism is such that the economy is not planned. It is left to the “markets” – meaning foreign monopolies. As a result Australia’s economy is distorted, in particular, lacking in sophisticated manufacturing and a technology sector.

Australia does not have a public pharmaceutical industry as such, it relies heavily on the privatised Commonwealth Serum Laboratories and over-priced imports. Both the pharmaceutical industry and manufacturing were seen wanting from the onset of the pandemic.

The private hospital system was not in a position to handle the health crisis. It was necessary for the state to take over their hospitals.

It quickly became apparent when the crisis hit just how heavily Australia relies on imports for many of life’s essentials. The consequences of the destruction of Australian shipping also became apparent.

The resources sector been able to buy-off successive governments, and build an economy heavily reliant on mining, turning Australia into a large quarry without consideration of the environmental consequences, the loss of fertile farming land, the theft of Aboriginal land, and the destruction of sacred Aboriginal sites.

The Australian government also has failed to adopt measures to address climate change, loss of biodiversity, let alone plan for a just transition to sustainable energy sources.

Government planning for the use of land and allocation of resources is vital to a recovery and Australia’s long-term future.

The higher education sector has been increasingly starved of funding, and as a consequence the reliance on foreign students left it very vulnerable, by a government that does not value education.

Neoliberalism found the public sector unprepared for such a pandemic. The private sector, on which the government relied, had not found it profitable to take the necessary measures such as stockpiling personal protective equipment. The manufacturing sector was found wanting. It had largely gone offshore, again hampering measures to address the coronavirus.

Corporate tax cuts and expansion of fossil fuel industries, as the government plans, will not work. Apart from increasing Australia’s carbon footprint and creating relatively few jobs, it robs the budget of finances to do what is necessary.

Keep jobkeeper and jobseeker

If the government shuts down JobKeeper or begins to wind it back at the end of September, it will not only drive hundreds of thousands of workers into poverty, but will reduce their prospects of a return to work in the near future or ever.

JobKeeper and JobSeeker and the cash payments to people on low incomes have and still are playing an important role in reducing the severity of the crisis. They not only are of benefit to their recipients but play a critical role in keeping some businesses afloat and provide people with the means to purchase goods and services.

This was understood at the time the Treasurer introduced them, but has been quickly overlooked as the pressure mounts to remove them from the hard right within the Coalition.

Any reduction in JobSeeker would be catastrophic for the unemployed, as would a return of the Youth Allowance and Austudy to their former levels. Prior to the introduction of an additional coronavirus payment of $550 per fortnight, the unemployed were expected to survive on $40 a day, and students and unemployed youth (aged 18-24 living away from home) on $33 a day.

JobKeeper should be extended until the end of the year as a minimum and the JobSeeker payment remain at $1,100 per fortnight. This is important for the wellbeing of their recipients and for the economy.

Job security and living wage

At the same time, the millions of “casual” workers who are in ongoing roles should have permanent full-time or part-time work, as they request, and be paid a living wage. Body hire should be restricted to where it is absolutely unavoidable. All workers should receive full leave entitlements and other benefits of union negotiated industry agreements.

All casuals, visa workers and others who were excluded from JobKeeper should be included. This punitive, “blame the victim” approach, is unjust and based on the lie that it is the fault of the unemployed that they are unemployed. It’s not. The capitalist system is the cause of unemployment.

The recent decision to increase the minimum wage by a miserly $13 per week falls far short of what is needed. All workers should be paid a living wage. It is scandalous that in a wealthy country such as Australia, there is a large strata of working poor, many of whom rely on charities to get by.

There is an immediate need to increase household spending, which means putting more money in people’s pockets, increasing the purchasing power of people to boost demand.

Job creation

Governments at all levels must take the lead, provide the wherewithal for job creation and ensure that people have money for every day basics. The superannuation funds can also play an important role in this. Funding should be allocated to the public sector. These projects should include construction and additional staffing for:

  • affordable housing
  • aged care centres
  • schools and early childhood education centres
  • transport
  • hospitals
  • preventative health care
  • services to regional and rural areas.

If Australia is to have a highly educated and skilled workforce, then there should be free early childhood education and abolition of TAFE and university fees with an increase in Austudy.

Centre Link requires a complete overhaul. It has been deliberately run into the ground, making it almost impossible to get through on the phone due to lack of staffing. Contracting out of job placement and other services should cease. The built-in layer of profits could be redirected to the employment of more staff.

At the same time, job creation programs should be based on a just transition to renewables, with jobs and retraining provided to workers in the fossil fuel sector. No worker should be left behind and no worker should see their income decline.

Trade union rights

Job creation, improvements in living standards, and protection of wages and working conditions will not come from a Coalition government or from the bosses. It will take a struggle in the workplace and the wider community.

One of the priorities in this struggle is the right to strike and the repeal of all anti-union laws. The government has not given up on its Ensuring Integrity legislation. Its contents will reappear, perhaps in a bill by another name with even harsher measures.

At the same time it is essential to rebuild a strong, militant trade union movement prepared to advance the class struggle and political struggle. Without that, it will be a “recovery” for big business, not a people’s recovery.

The Communist Party of Australia is committed to supporting that struggle. It is also committed to changing the system from capitalism to socialism. Only under socialism can people’s needs become the priority.

Next article – Editorial – Arts and humanities suffer under new government plan

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