Why Australia needs a Job Guarantee Scheme

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Introduction

Jobs or lack thereof are at crisis point in Australia – it has been for years. However, many people in employment remain unaware of the problem.

Buried beneath the snow storm of PR headlines for over a decade were an unseen group of workers. These included, the unemployed, underemployed, migrants, students, and experienced workers. They haven’t disappeared, they’re still there, untouched by over 20 years of growth. Their bulging ranks are continuing to swell with new labor-market entrants and the precariat.

For each available job, 8 people are competing for one job. According to David Shoebridge, MLC it’s 16 job seekers applying for one job. For some jobs, the level of competition spiked in the 1990s.

Given the centrality of work to life sustenance, what is transpiring here is a crisis. Yet the major parties are offering no solutions. It’s the same old stuff penalties, demonisation and debt slavery.

The old let the market rip won’t work (it never did).

What is a job guarantee?

Enter a job guarantee scheme. A job guarantee scheme would guarantee job seekers real work. A job guarantee is also not a punitive, populist workfare scheme.

Those employed within the Job Guarantee Scheme would be paid a living wage. They would also be entitled to leave, including award wages, sick leave and overtime.

Workers would not be employees of the Australian Public Service, but part of a new publicly funded service. Government would not need to acquire businesses. All jobs created would be new jobs, no existing employees would be displaced. Job Guarantee participants like support workers would work for agencies. Hence, the Commonwealth is the payer and the agency the service provider.

Some may ask, isn’t creating new jobs just reinventing the wheel? No actually it isn’t because the data clearly shows that the private sector has not delivered the jobs for the unemployed.

Furthermore, since the ’70s inflation has been prioritised over unemployment by policy-makers. According to Professor John Buchanan ” years on, it’s… clear that has been an ineffectual strategy for really doing something serious about unemployment — and, basically, triggered a significant rise in underemployment.”

How would a Job Guarantee Scheme work?

So, let’s say a recent graduate or a mature job seeker is seeking employment, as a a Job Guarantee Scheme participant. They would see a job counsellor at a local organisation (preferably newly re-established CES, more on that later). The JSG counsellor would interview and match the JGS participant to a federally-funded job. This job might be in environmental work, community, child care or caring work.

Under a job guarantee, JGS workers engaged in their communities would spend more within their communities. They would pay more tax, which results in more GST revenue and also improved business tax revenue. All up, the cost is approx $25 billion. This money would kickstart an ailing economy, as happened during the GFC with Kevin Rudd’s stimulus package.

Furthermore, to implement a Job Guarantee Scheme, Australia must re-establish the CES. This is imperative. It’s not profit driven, so it would be focused on job-seekers ,unlike the Job Services Network, which even Coalition stalwart Peter Strong at the Small Business Council says “government-funded employment services (such as Job Active and Australian Apprenticeship Centres) are a woeful waste of money and do not meet the needs of local employers or employees.”

Payments

All workers under a job guarantee would be paid at a minimum or living wage. These would be financed “out of general government revenue, not income tax“, as current social security payments are, according to Professor Peter Whiteford of the ANU Crawford School of Public Policy.

When social security can be financed from the government revenue, why does the government not choose to finance employment from there instead?

Spending decisions made by government impacts on levels of employment. In fact, unemployment is a government policy choice. This is a point agreed on by progressive economists, some academics, and some bureaucrats.

The political giants of the twentieth century – Franklin D Roosevelt, Clement Attlee, John Curtin and Ben Chifley and their immediate successors understood this. They knew that only government had the capacity to implement genuine full-employment. When any form of crisis is apparent, the onus is on government to act, arguments about affordability are bunkum.

The cost to the taxpayer

A Job Guarantee Scheme could be financed through government borrowing. Under borrowing arrangements, taxpayers don’t finance the expenditure. Investors (often super funds) lend the money to government. Taxpayers would repay that debt.

Furthermore, government debt isn’t a laden weight on future generations. Quite the reverse.

People will only be worse off if the government cuts spending and increases unemployment, according to Warwick Smith, an economist at Percapita. Reduced consumer spending hits the whole economy. It also reduces the taxation returned to the government.

How do we pay for it?

Paying for a Job Guarantee Scheme is easy. Is affordability for JGS participation is an issue for cash-strapped households? Absolutely! However, affordability isn’t an issue for governments, who can easily finance expenditure in a crisis.

Parliament would pass an appropriation bill, and the Reserve Bank of Australia would clear the payment.

Government bonds could finance a job guarantee.

Alternatively, Modern Monetary Theorists (MMTs) advocate that while spare capacity exists in the economy, a currency-issuing government should use targeted expenditure. The main constraint on spending is inflation, not taxation or borrowing.

The Overall obstacle to a Job Guarantee Scheme

There are two obstacles to a Job Guarantee Scheme. The first is the mindless neo-liberal mantra of low government debt. Neither high or low government debt proves economic competence – it’s what the money is spent on.

The second reason why money isn’t going to the neediest is because it’s been stuffed into the already swollen pockets of fat plutocrats. Want examples of this lavish government spending? Here’s just two: with money from the job services program and the Cashless welfare card alone, the government could finance a Job Guarantee Scheme.

Conclusion

In the past, Australia would have opted for a market solution. At present, Australia is confronted by skyrocketing levels of inequality. Hence, the ‘hands- off, let the market solve the problem’ attitude is no longer fit for the purpose (it never really was). Furthermore, the challenges of the 21st century require nation-building solutions. They do not require tone-deaf chants about fiscal responsibility and budget repair. The history books will condemn those politicians who ignored the most significant problems.

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Author: lifesconundrums58988681

Concerned about the state of public policy and media debate, which is often responsible for burying rather than illuminating problems.

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