September 9th 2017

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Articles from this issue:

COVER STORY Our unsafe schools are putting students at risk

EDITORIAL Turnbull needs a circuit breaker or he's a goner

CANBERRA OBSERVED 'What's the question?' is the crucial question

FOREIGN AFFAIRS Beijing applauds jailing of Hong Kong activists

NATIONAL AFFAIRS The economic agenda Australia needs won't come from Mal or Bill

MARRIAGE AND FAMILY Child-support payments and parental alienation

MARRIAGE AND LAW NSW Law Society spruiks for same-sex marriage

INTERNATIONAL AFFAIRS Germany's energy plan: a disaster in the making

MUSIC Monetising the muse: 'Frugal comfort' would be welcome

CINEMA Logan Lucky: Southern fried robbery

BOOK REVIEW Serious Bioethics salted with humour




CANBERRA OBSERVED Love may be love, but certainly consequences are consequences

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The economic agenda Australia needs won't come from Mal or Bill

by Jeremy Barth

News Weekly, September 9, 2017

Young men will only have themselves to blame if they cannot find work, because they waste too much time on computer games, according to Dr David Gruen, deputy secretary for economic policy at the Prime Minister’s Department.

Playing neatly into the “mediocre male” narrative worming its way through various opinion pieces about workplace gender and ethnicity quotas, Dr Gruen’s pronouncement at the Economic and Social Outlook Conference in July grabbed headlines, distracting attention away from the Government’s lack of a economic strategy to deal with stagnating wages, rising housing and living expenses, rising job insecurity, and unemployment that is far higher than official figures indicate.

In fact, the Government’s approach is essentially more of the extreme pro-competition, pro-free trade, and deep globalisation economic policies that have dominated for the last four decades. This despite Australia losing its natural competitive economic advantages in agriculture and manufacturing, the two industries hardest hit by these policies:

Agriculture: Although Australia’s population has grown by 75 per cent since 1975, from 13.9 to 24.3 million people, agricultural output has barely kept pace with the growth of the Australian population, let alone being ready to feed an Asian middle class anticipated to grow to 3.2 billion people by 2030, up from 504 million people in 2009.

Manufacturing: Manufacturing has shrunk from representing 13 per cent of the economy in 1975 to just 6 per cent in 2016. While the public has focused on the shuttering of factories making consumer goods and cars, nearly 40 per cent of all Australian manufacturing is related to food processing, and hence cannot be separated from the health of the agricultural sector.

Energy resources: All sectors of the economy, not only agriculture and manufacturing, are substantially affected by rising energy costs and uncertainty about Australia’s supply of base-load coal and natural gas-generated electricity. The rise in costs and growth in uncertainty have been driven primarily by the substantial subsidies Australian state and federal governments provide to the renewable energy sector, to the tune of $214 per megawatt/hour for solar energy and $74 per megawatt/hour for wind, while providing subsidies of only $0.40 per megawatt/hour for coal.

All of the above has resulted in Australia developing a ‘two-speed’ economy, which has delivered an increase in material wealth for Australians working in capital city-based, “knowledge-intensive” professions such as banking, financial services, and technology (the economy’s “fast lane”); while leading to more volatile or disappearing employment opportunities for those in the “slow lane”, including farmers, manufacturing workers, and services workers, whose jobs have been exported to countries with lower labour costs than Australia, or have been replaced by technology.

The injuriousness of this “two-speed” economy has been masked by official statistical measures which do not accurately reflect the true extent of unemployment in Australia. While the official unemployment rate for April 2017 was 5.8 per cent, economist Adam Creighton calculated Australia’s “real” unemployment rate for that month to be much higher, at 15.6 per cent. He came to this figure by including the large group of people who were looking for employment but did not meet the Australian Bureau of Statistics’ strict definition of unemployment – people who had applied for a job in the past four weeks, and were ready to start work immediately.

When the number of people who are under-employed (people in work, but wanting more hours) are added, Creighton calculates the ‘real’ rate of unemployment plus underemployment to be 24.8 per cent, or 3.4 million people. That is the equivalent of the entire Brisbane and Gold Coast population.

These figures paint a bleak picture of the outcomes for workers of the last four decades’ economic policies in conjunction with the rapid rate of technological advancement. Moreover, while many of the jobs lost in agriculture, manufacturing and energy sectors were dominated by men, the jobs now “at risk” are those that employ great numbers of women.

Research by Oxford scholars Carl Frey and Michael Osborne has indicated that many of the jobs that technology is likely to replace now are in the services sector, which employs 79 per cent of Australian workers. This includes frontline bank and retail staff, receptionists, and legal assistants.

As part of its response to these challenges, the Government has promoted a needs-based funding model for schools which leading educator Dr Kevin Donnelly asserts will not lift educational standards; and committed more funds to government employment programs and training, without first coming up with a plan to encourage job creation to make up for the jobs that have been exported or replaced by technology.

And the response from the Opposition has been little better. Its economic agenda comprises the current economic platform tweaked with higher taxes, higher energy prices (due to increased use of renewable energy), and restrictions on capital gains and negative-gearing tax concessions.

A nation needs to base its economic growth and development on its most productive industries. For Australia, these industries – manufacturing and agriculture – have been neglected at a time of unprecedented population growth and opportunity both at home and abroad.

It is clear that Australia needs a new economic agenda, not more of those same policies that have led us to the situation we find ourselves in now. This new agenda needs to be based on Australia’s proven, long-term strengths in growing and exporting agricultural products, energy and mineral resources; and developing manufacturing which uses these agricultural and mineral outputs, as well as services industries which support the above-mentioned sectors.

This new agenda needs to “play to our strengths”, to grow and keep jobs in Australia which are not easily exported overseas or replaced by technology.

Specifically, Australia needs:

  • Accurate unemployment and under-employment statistics which allow everyone to determine whether a government’s social and economic policies work.
  • A national development bank that can fund the building of new transport, agricultural, water-management, energy and communications infrastructure, without further expanding government deficits.
  • Fair farming policies that will boost the negotiating power of farmers when facing the might of the domestic supermarket duopoly, large international commodity traders and national “single desk” buyer groups, as well as encourage investment in agriculture-related manufacturing.
  • A national energy policy focused on investing in new 24/7 base-load power stations to provide cheap electricity for a growing population and for new manufacturing and services businesses.
  • The introduction of family-based income taxation, which will allow families to benefit from the economic growth the preceding four recommendations will encourage. This would enable those on low to middle incomes to opt to have one parent work and the other stay home to rear their children, without any diminution to the family’s lifestyle due to Australia’s high costs of living and rates of personal taxation.

These job-friendly and family-friendly proposals would provide the basis for long-term economic growth and social cohesion, by growing and keeping jobs in Australia that are not easily exported overseas or replaced by technology.

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