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Issue #1932      September 14, 2020

It’s official: we’re in recession

Australia’s economy is officially in recession. Australia’s Gross Domestic Product, a measure of the wealth produced, shrank by 7.2 per cent in the three months leading to 30th June. The number of unemployed or underemployed totals a staggering 2.5 million with the worst most likely to come.

For many households, it is the first deep recession that they will have experienced. What governments do now will have an impact for many years to come. By all accounts next month’s federal budget is shaping up to be a bonanza for big business and the wealthy. Workers, the unemployed and social security recipients can expect little if anything in it to alleviate the pain.

Reverse the cuts

Just at a time when the economy needs an increase in demand for goods and services, the government is slashing its payments to the unemployed who are on JobSeeker and those still connected to their employer on JobKeeper. These schemes play a critical role in preventing the present economic contraction from being far worse and keeping food on the table for many households. Now is the worst time to be cutting them.

JobSeeker will be halved as from 28th September, down from $1,500 to $750 a fortnight. As rental holidays come to an end and banks expect customers to resume mortgage repayments, families will be under even more pressure than they are today.

Anglicare Australia executive director Kasy Chambers said unemployed renters faced a “ticking time bomb” if JobSeeker rates were cut as planned. Unfortunately, legislation making the cuts law, went through the week before last.

Unemployment set to rise

The legislation phasing out JobSeeker also cuts the JobKeeper allowance in two tranches (See #1926, “Workers in the firing line”).

The first tranche commences on 28th September and the second at the beginning of 2021. It is set to end on 21st March. It will be a two-tiered system with lower payments for part-time and casual workers.

When JobKeeper is cut, thousands of small and not so small businesses are likely to go under. Many are barely keeping their head above water now. That will only add to the ranks of the unemployed.

These two schemes play a vital role for millions of workers who would have ended up on skid row without that support. The government, with one eye on its holy grail of a budget surplus, and another on serving its masters in big business, is not waiting until the economy is back on its feet before withdrawing the programs.

Homelessness

Anglicare did an analysis of almost 77,000 rental listings on the first weekend of August and found only 808 were considered affordable for singles on JobSeeker. That is only one per cent of rentals were considered affordable – less than thirty per cent of a household’s gross income.

The unemployed simply cannot afford housing in the capital cities. They face being thrown out onto the streets. State and territory governments had insufficient public housing to accommodate the pre-pandemic homeless population, let alone a surge in homeless.

This is one area where governments should not be waiting to take action. With federal government assistance this is one of the main areas of infrastructure that would assist people in need and create thousands of jobs. We don’t need more roads and toll ways.

According to the agencies that respond to domestic violence, the number of cases has skyrocketed during the pandemic. Again, this is an area where governments had failed to address pre-pandemic needs. Construction of crisis accommodation; employment of more social workers; more funds for legal and other support centres; and the employment of suitably qualified staff would be so important. Such measures would also create jobs.

Mental health is another critical area where numbers are rocketing but there are far too few facilities including personnel.

Nationalisation

It is ridiculous that with so many unmet needs for both education and training, universities are sacking thousands of staff and TAFE has all but been destroyed by the privatisation of that sector.

There is great potential to rebuild the university sector and TAFE by restoring full federal funding and re-employing thousands of trainers and lecturers along with support staff. The skills are needed.

Instead it has been left to the “markets” which are guided by profits not needs.

Age care has largely been pushed off the agenda by the government, but there is a crying need for tight regulation of the sector and to bring it under public ownership and democratic control.

This sector is also hugely understaffed and underfunded. There is a conflict of interest between care and for-profit aims. Residents cannot receive the best care when a centre becomes a vehicle for returning maximum profits to shareholders.

The whole health sector is starved of funding and inadequately staffed. Alongside aged care there is scope for many more jobs in aged and also community care.

The above are just a few of the ways of in which jobs could be created. Another important area is the research and development of renewable energy sources and environmental protection.

As for the funding, the government should look at abandoning the $158 billion in personal income tax cuts that are mostly targeted at those on higher incomes. It should forget corporate tax cuts. Finally, it would not threaten Australia’s security to halve the $40 billion plus per annum, and rising, military expenditure. Australia’s security would be better enhanced by developing cordial relations within our region, including with China.

Next article – Editorial: Coalition-ALP tag team against the working class

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