The Guardian • Issue #2046

The fight against public service austerity

CPA Canberra Branch

  • The Guardian
  • Issue #2046

Jack McPhillips.

No matter how much employers want workers to understand otherwise, the COVID-19 pandemic has been a boom period for capital. Finance capital, represented most obviously in Australia by the “big four” banks, is recording record profits. The same goes for fossil fuel, food, housing and other major industries. Inflation in commodity prices (initially negatively impacted by COVID-related supply chain pressures, but maintained even as these pressures have disappeared), as well as an interest rate environment that benefits banks and asset-owners are contributing enormously to this.

The capitalist myth of wage-price inflation is being used by capital – particularly its unelected and unaccountable representatives in our Reserve Bank – as an excuse for both the cause of inflation and need for contractionary monetary policy. Just as in the 1970s, the myth of wage-price spirals, rather than their actuality, was used to justify austerity measures.

So it is in the public service. Both the ACT Public Service and Australian Public Service (including associated corporations, like the ABC) are in the midst of, or about to commence, bargaining. Signs so far indicate that, unlike the December agreement for teachers in Queensland’s public education system, the ACT and Federal Labor governments are not willing to come to the table with guaranteed real wage parity, let alone growth, for their workers.

For the ACT government, this has meant 12 months of protracted negotiations on an Enterprise Agreement initially scheduled to end in 2021, with no pay increases for any of its workers since June 2022. As the impact of inflation hurts ACT government employees more and more – some were reporting to be sleeping in their cars as early as August last year – this depletion in real wages (7.8 per cent inflation against a 2.7 per cent wage rise from December 2021 to January 2022, representing a 5.1 per cent drop in purchasing power) is the number one issue needing remedy under the new Agreement.

The Labor government, however, has flatly refused to countenance anything approaching real wage rises in its core agreements, in spite of a commitment from the Chief Minister, Andrew Barr, to at least match inflation less than 12 months ago. What has been tabled, both initially and this month is a mix of minimal percentage increases (1 per cent) and flat payments, neither of which come close to ensuring wage growth for the vast majority of its workforce (a similar percentage plus fixed figure arrangement has been tabled with ABC workers).

Tellingly, in its media releases, the government has pushed hard on the angle that the proposed arrangements will benefit low-paid workers the most – singling out those on the very bottom of the pay scale as examples. Those on $53,868, they say, will see a 17.1 per cent increase in pay over the course of the three-year agreement. What they fail to note, however, is that these Class 1 salaries represent a tiny fraction of a workforce whose median salary is over $90,000 a year. For the majority of workers, the proposed arrangements don’t even come close to matching current levels of inflation. The “cost-of-living” supplement of $1,250 will barely pay the bond on any one bedroom apartment currently on the market. It is for these reasons that it appears more and more likely that the Community and Public Sector Union (CPSU) will vote for strike action in ACT government for the first time in at least two decades.

So what is behind this hard-nosed approach? From the perspective of the employer, it’s all about the bottom line; or at least the perceived one. In the ACT, for example, the pandemic saw increased temporary employment of public servants under the Jobs for Canberra campaign, an arrangement that is being used to justify the austerity narrative. These jobs, however, are not ongoing. The costs of the public health response as well, no doubt a burden on the public system, were shared significantly with the Commonwealth. These costs are also not ongoing, with, for example, the last public testing clinic closed last month.

What about revenue? As of 2022, rates represent 30 per cent of ACT government revenue, with land tax and stamp duty representing a further 27 per cent. Profits from land sales represent a further portion of property-related revenue to government. Property sale and rental prices in the ACT have inflated drastically since 2020 – greatly increasing the revenue paid by Canberrans across these income streams via bracket creep. Stamp duty payable on the median house price has inflated by almost $16,000 in a decade, whilst land values (the indicator impacting rates) in some suburbs have increased by more than 35 per cent year-on-year. At the same time, government profit margins from land sales have surged to 72 per cent since 2018 (against 46 per cent in the preceding nine-year period).

This represents an enormous – and largely unexpected – boost to the Territory budget. The accounts from the upcoming ACT government budget will indicate the extent to which pandemic costs have been absorbed by this windfall, but the austerity narrative already being brought to the bargaining table clearly does not hold water. If anything, the ACT government, like big capital, has benefited from the pandemic.

Why then are negotiations dragging on, forcing one of Australia’s least militant unions into possible strike action? Uncertainty, despite the boom, is seeing the government aim for the most conservative of outcomes – lower wage costs over the course of the agreement guarantee a good fiscal position regardless of other factors. Labor, never a worker’s party, always a party mediating in favour of capital, also clearly have their ear to the ground regarding the wage price spiral fear-mongering. If the corporates on the Reserve Bank board are implementing anti-worker policy, so must the party of pokies and the Accord.

Most pertinently, however, Labor is perhaps most cognisant of upcoming bargaining across the Australian Public Service. At a time of uncertainty and increasing class antagonism, the self-proclaimed party of the union movement is certainly aware that heightened wage expectations may lead to greater labour agitation – a situation that does not benefit a government set on parading itself as one of fiscal moderation. If a conservative standard is established at the Territory level in Canberra, it can be replicated across the wider public service. After a decade of affiliated union campaigns explicitly supporting the return of a Federal Labor government to wind back Liberal cost-cutting and wage freezes across the Service, that very Labor government appears set to continue this trend.

For Party delegates and workers in the public service, this moment represents a real opportunity to demonstrate the power of collective action and to push back against an austerity narrative “from the left.” As Jack McPhillips noted, “the correct stand for communists in the trade unions is to work to ensure forms of union organisation, union rules, and everyday practices which facilitate and encourage the maximum participation of the members.” Public service Party cadre should be using these months of negotiation (or pre-negotiation) to become delegates, encourage greater membership across their workplaces and supporting these comrades to push for a bargaining position that reflects their interests – regardless of executive positioning. For members in the ACT government, this is especially accessible given the existence of elected delegate representatives on both Section and Governing Council. In the Commonwealth service, increased union access under the new government should also be advantageous.

Just as Labor was the instigator of neoliberal reform in Australia, it is not afraid, as in the ACT government today, to throw the worker under the bus to conform to real, and unreal, pressures propounded by capital. It is the role of a worker’s party and its members to fight this.

Jack McPhillips, Communists and the Trade Unions, published by CPA NSW State Committee

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