Today’s discussion is about how employment policy becomes so corrupted by neo-liberal ideology (overlaid with some healthy racism) that the government causes damage rather than advances well-being. The examples I outline demonstrate the wider problem that neo-liberal inspired governments clearly understand the economy is not working yet they cannot bring themselves to introduce obvious solutions to the problems identified. Further, while they claim their policy choices are constrained by the ‘money’ they have to spend (limited according to their narrative), when they do spend ‘money’ they bias the benefits to corporate interests as a profit subsidy rather than providing sustainable income support for the most disadvantaged who just become pawns in the subsidy to capital. And then, they pretend, they are obeying ‘market’ dictates when the ‘free market (not!)’ was never in the picture anyway. The on-going hypocrisy of this neo-liberal era.
Job creation gone wrong
At the weekend, the Secretary of the Australian Council of Trade Unions made a speech at the Garma Festival, which, in the words of the organisers “has become Australia’s Indigenous equivalent of the World Economic Forum held annually at Davos”. It is held in North East Arnhem land (Northern Territory) and “attracts an exclusive gathering of 2,500 political and business leaders from across the globe”.
The aim of the Garma Festival is to educate the participants “about the economic challenges, the steps that need to be taken to ensure that there are economic opportunities for Aboriginal people” as well as strengthening Australia’s “cultural genius through the preservation and maintenance of a culture 50,000+ years old.”
The Speech was reported in these articles:
1. Sally McManus ratchets up campaign against ‘racist’ work-for-the-dole program (August 5, 2017).
3. Remote work-for-the-dole scheme is racist, ACTU head Sally McManus says (August 6, 2017).
The situation is this.
The Community Development Program (CDP) is a special work-for-the-dole applied (mostly) to indigenous Australians.
A large proportion of indigenous Australians live in remote areas of Australia where there are zero alternative income generating alternatives.
There is a systemic failure of these local areas to generate enough jobs. The lack of jobs is endemic and the individuals who are victims of that failure because of their geographic location (reflecting history, culture, social considerations, family etc) are dependent on federal government income support as they are on the air they breathe.
As a result of the high unemployment and inadequate income support, there is widespread poverty in these areas. The pitiful amount of income support that is begrudgingly provided by the Government ensures the recipients remain below the poverty line.
The Government also imposes so-called Income Management (IM) on these people which amounts to an autocratic intrusion into the daily lives of those that the Government forces to remain in poverty as a result of the government’s own policy.
Even the ‘passive welfare’ connotation is loaded given the pernicious activity tests that are imposed on income support recipients.
These include need to search for a certain number of jobs and attend interviews at Government offices every two weeks and satisfy other intrusions (attend interviews, participate in useless training programs etc).
So the culture of income support in these areas completely ignores the fact that not only has the Federal government undermined job creation in Australia via its fiscal austerity obsession but it also has failed to take responsibility for providing sufficient work to all Australians.
The problem is worse in remote areas. Previously, residents in these areas depended on so-called Community Development Employment Projects (CDEP), which was a Federal job creation program that provided necessary work and income where private labour markets were scant.
In effect, the CDEP provided an employment guarantee for indigenous Australians in remote areas.
The first Governor of the Reserve Bank of Australia in 1960, H.C. Coombs, who had previously been a major player in the creation of the White Paper on Full Employment in Australia, was also a major proponent of the CDEP.
Please read my blog – A national disgrace – the abandonment of full employment – for more discussion on this point.
… that rather than pay lots of Aboriginal people in remote areas unemployment benefits it would be more constructive for them to be employed … to undertake socially useful tasks.
For those who would like to see a summary of the political machinations surrounding the CDEP this – Timeline of Remote Jobs Programs – is useful.
I wrote about the Community Development Employment Projects system in this blog – So infested with neo-liberalism that they cannot add up anymore.
When the current conservative government were in office (1996-2007), it progressively cut the program that was crucial to remote communities.
In 2007, towards the end of its tenure, it defunded it.
At the time, the decision to scrap the CDEP scheme by the previous Conservative government was described by researchers as just plain dumb.
I recall a discussion I had with a senior conservative federal politician at the time it was scrapped (July 2007) – he said the Government wanted CDEP participants to be forced to move into the private labour market and not be cossetted by artificial government jobs.
He, of-course, had an ‘artificial’ (non-‘market’-created), yet highly-paid government job but that reality seemed lost on him.
But the substantive point I made is that while I rejected the real/artificial distinction between private and public employment that was at the heart of his policy framework, the reality was something more stark.
There was basically NO PRIVATE LABOUR MARKET in most of the regions where CDEP provided work.
It is one thing to believe in incentives to get workers into the ‘market’ but there has to be a operating ‘market’ to get into.
The CDEP was, for many remote indigenous communities the only employment available.
When they regained office in 2013, the current government brought the indigenous communities within the aegis of its ‘Work-for-the-Dole’ program.
On July 1, 2015, it introduced the so-called – Community Development Programme (CDP) – which it claimed “better serves people in remote Australia, leading to better job opportunities and helping community members to help themselves.”
It operates in 60 regions (1000 communities) around Australia and more than 80 per cent of the approximately 35,000 participants. 83 per cent of the participants “identify as Aboriginal and Torres Strait Islander people.”
The facts are as follows:
1. Whereas under the old CDEP, the workers received a legally-minimum wage, under the revised CDP, a person receives the unemployment benefit but must work 25 hours per week in return.
2. The legal National Minimum Wage in Australia is $694.90 per 38 hour week (before tax) or $A18.29 per hour. Casual employees also have to paid at least a 25 per cent casual loading in recognition they surrender their statutory entitlements such as holiday pay etc (note: this loading is grossly inadequate given what the casual worker forgoes).
3. No one can be lawfully paid less than that in Australia. If an employer is found to be paying workers below that legal minimum they are heavily fined (for example, $228,000 penalty for business operator who thinks minimum pay rates are “just crazy”).
4. The Adult Unemployment Benefit payment (Newstart) for a single person is currently $A535.60 per fortnight (Source).
5. So, under the Federal CDP, a worker puts in 25 forced hours in return for the unemployment benefit, which amounts to a payment of $A10.70 per hour. That is, less than 58.60 per cent of the legal minimum wage.
6. This scheme thus forces people to undertake work at below the legally minimum wage.
7. The CDP is a special ‘work-for-the-dole’ program because CDP participants have to work longer hours than other work-for-dole participants elsewhere in Australia.
The ABC report (October 3, 2016) – Remote work for the dole scheme ‘causing more harm than good’ – indicated that:
Under the program, participants are required to attend work for the dole for five hours per day, on five days a week, all year round.
By comparison, non-remote programs do not include any work for the dole requirements until the second year … people in remote communities were incurring financial penalties at 70 times the rate incurred in the rest of the community.
The question that has to be asked is why are these rules different?
Further, it gets worse.
We now know that indigenous Australians who are forced to work in the CDP just to receive their unemployment benefit, which should be a right of citizenship without conditions, are subjected to harsh financial penalties for minor incursions relating to their work performance.
On Friday, October 21, 2016, information released – Document – under the guise of the Federal Senate Estimates process showed at the time that:
1. There were 33,000 CDP participants working for largely private contractors under contract to the Federal government.
2. In the June-quarter 2016, of those 33,000, “12,235 job seekers received financial penalties”
3. For the year 2015-16, there were 146,654 “financial penalty events” (20,409 “unique job seekers), meaning the same persons were fined at least more than once.
4. Of those 20,409 people penalised, 18,325 were Indigenous. So disproportionately over-represented.
5. Where there is no alternative work (such as in the Northern Territory) the fining was more extensive.
The evidence is then clear. I spent nearly 2 years working on regional projects in remote NT areas (between 2012-2014) and the results on loss of income support are devastating.
People go hungry, disease increases, and children are neglected.
See this article (June 27, 2017) – NT families go hungry under the Community Development Program.
Which brings me to the speech by the ACTU Secretary at the Garma Festival.
Sally McManus said that the CDP “is a stark reminder that racism still endures”:
… workers performing work under the CDP program are not even considered workers. Unlike every other “work for the dole” program or the $4/hour internships the Turnbull Government has introduced for young unemployed people, the CDP is immediately compulsory …
We have a system for unemployed people in our country, a compulsory work-for-the-dole program, 25 hours a week, 52 weeks a year. For non-remote programs, it’s 15 hours a week, 6 months of the year. And CDP workers, in our poorest communities, are being fined at a rate 70 times higher than metropolitan work-for-the-dole programs.
The workers are being paid $10/hour – way less than the minimum wage of $18.86, with no rights, no leave, no superannuation, no workers compensation – so much less rights and protections of any other worker. How can we accept this? How can we accept some people have less rights than everyone else? …
The CDP is only in regional and remote areas. Clearly this is discriminatory. One set of laws for one group of Australians, and another for others based on where they live. But let’s not whitewash this, 85 per cent of the people affected by these laws are Indigenous.
While the government claims the scheme gets people off welfare, the reality is that it just shifts workers from income support (without pernicious work requirements) to income support (with pernicious work requirements).
These requirements include forcing them to work for below the legal minimum wage and then imposing such harsh work requirements that they are fined and lose significant proportions of their income support.
Does this enhance the viability of any private labour market? Typically no.
But then we learn more.
In fact, this scheme which pays what I would consider to be illegal wage rates, is now being used to subsidise profit-seeking operations.
Sally McManus said that:
People are working, some of them in jobs they were once paid award wages for and often for for-profit companies. The employers are getting CDP workers for free.
An example she provided concerns “a for-profit fencing company working in remote areas”.
That work clearly needs to be done but they’ve got workers on CDP to do it. If it wasn’t for CDP they’d have to pay people proper wages for it. It’s not like these are made up jobs. They’re jobs that have to be done.
The reality is that there are thousands of such activities being performed right across remote Australia that generate profits for the ‘providers’ and replace what would otherwise be paid employment in private sector with cheap, forced CDP labour.
Local councils are offenders in this regard as well. They use CDP labour to perform civic functions (including bus drivers, parks and gardens staffing, etc) which would otherwise be done by workers (skilled and unskilled) who would be paid the legal wage relevant to their category of employment.
In those situations, crying poor – ‘there is no money’ – is just a lie. The Federal government could hire all these workers at the correct legal wage and extend their working week to improve the incomes received by the families and then, through spending, the wider community.
The federal government should not be subsidising private profit-seeking companies by providing them with free labour (under the CDP scheme the ‘providers’ do not pay the benefit payment) paid by the government at below, legal minimum wages.
This is just a neo-liberal obscenity. Australia, further, loses any claim to decency as a result of this sort of program.
A key player in the sector (from Jobs Australia) was quoted in the ABC report (October 3, 2016) – Remote work for the dole scheme ‘causing more harm than good’ – as saying:
Wherever possible, Indigenous and other Australians should be helped into work, and for Indigenous people who suffer higher rates of unemployment, absolutely … But the reality of the labour markets in remote communities is there are not enough jobs to go around.
Even if every job being performed in those communities was being performed by an Indigenous person, there would still not be enough jobs to go around.
The arrangements for CDP need to take account of that, rather than pretending that by requiring people to turn up for five hours a day for five days a week, it’ll get them ready for work that actually doesn’t exist.
Pretty sound logic.
The solution is obvious.
Instead of a racist CDP and the other ‘work-for-the-dole’ program, the Federal government should announce the introduction of a Job Guarantee, where any worker, no matter where they live or the colour of their skin etc could access a minimum wage public sector job if they were unable to find work elsewhere.
None of these jobs would serve to provide ‘free’ labour to private, for-profit firms.
Another crucial aspect of making job creation schemes effective is attending to other constraints on participation, such as housing and transport.
If you read my work you will know that I advocate a strong ‘social wage’ supplement to the Job Guarantee wage, which itself would be a socially acceptable minimum wage – not an impoverished unemployment benefit below the federal minimum wage when expressed in hourly terms.
This social wage component would provide first-class and free public transport for Job Guarantee workers and provide adequate housing and skills necessary to maintain the adequacy of that housing.
In remote areas, transport and housing is shocking. Further, it is difficult to adjust from unemployment to working in these areas without additional support in these areas.
Third, first-class and free health care would be provided to all Job Guarantee workers, including assistance to escape drug and alcohol dependencies. A ‘No Show’ for these reasons would not lead to a loss of wage as long as the worker was participating in the appropriate health care program.
Fourth, mental illness is rife in remote communities, including episodic illness. A Job Guarantee would be tailored to suit the participants and ensure that supplementary clinical support was available and provided at no charge to those who relied on it.
There are no financial constraints on governments providing these jobs and the necessary support that would make the overall approach viable.
The only constraints are the faux neo-liberal claims that there is not enough money and the inherent racism that is still rife in Australia.
I was also going to write about the latest announcement (August 1, 2017) by the Australian federal minister for Employment – 10,000 opportunities for young Australians in hospitality – which claims the Government “is creating more pathways for young people to move off welfare and into a job”.
The plan in liaison with the employer association (Australian Hotels Association) is a wage subsidy scheme which just amounts to another way to give profit subsidies to for-profit employers, who already benefit from having access to workers being paid ‘working poor’ levels of wages.
Further, when one does the arithmetic, you find that, once again, anyone who participates on a full-time working week basis in the scheme will be paid below the legal federal minimum wage rate.
It is a disgraceful plan and shows that the Federal government disregards our laws whenever it chooses yet claims it is big on law and order.
Time prevented me going into detail today.
But then I am sure we (I) are depressed enough just documenting all this stuff.
Get angry then do something is the message.
Crowdfunding Request – Economics for a progressive agenda
Thanks to all those who have helped so far.
I received a request to promote this Crowdfunding effort. I note that I will receive a portion of the funds raised in the form of reimbursement of some travel expenses. I have waived my usual speaking fees and some other expenses to help this group out.
The Crowdfunding Site is for an – Economics for a progressive agenda.
As the site notes:
Professor Bill Mitchell, a leading proponent of Modern Monetary Theory, has agreed to be our speaker at a fringe meeting to be held during Labour Conference Week in Brighton in September 2017.
The meeting is being organised independently by a small group of Labour members whose goal is to start a conversation about reframing our understanding of economics to match a progressive political agenda. Our funds are limited and so we are seeking to raise money to cover the travel and other costs associated with the event. Your donations and support would be really appreciated.
For those interested in joining us the meeting will be held on Monday 25th September between 2 and 5pm and the venue is The Brighthelm Centre, North Road, Brighton, BN1 1YD. All are welcome and you don’t have to be a member of the Labour party to attend.
It will be great to see as many people in Brighton as possible.
Please give generously to ensure the organisers are not out of pocket.
That is enough for today!
(c) Copyright 2017 William Mitchell. All Rights Reserved.