Budget means more unemployment

Wednesday, August 28, 1991

By Peter Boyle

Robert Hudson, executive director of the Victorian Council of Social Services, is blunt in his assessment of the Hawke government's ninth budget, presented on August 20: Labor has turned its back on the unemployed at a time when record numbers are out of work. Some 1.3 million people are dependent on unemployment benefits, says Hudson, and this does not include "hidden unemployment" — the thousands who have lost jobs or never had one but who are deemed ineligible for benefits because they are classed as dependents or discouraged job-seekers.

The budget totally shuns job creation measures, instead allocating to dole payments 2.1% of a 2.6% real increase in overall outlays and leaving the economy to fix itself. In fact, the budget promises to add to the pain by throwing another 130,000 people on the jobless heap in order to shave $1.7 billion off spending.

While the corporate elite has accepted the main directions of the budget, small business representatives say the compulsory superannuation levy will force more people out of work because it will act as a tax on labour costs.

New reductions in tariff protection for manufacturing industry will add to unemployment, especially in Victoria. The budget statement concedes that the recession has speeded the process of industry restructuring by forcing many manufacturers to the wall and others to cut back.

"Already over 30 unemployed people are competing for every available job. The failure to create more jobs means that the stress of hopeless job competition will be experienced by even larger numbers of people", says Hudson.

Permanent unemployment

The budget statement predicts that unemployment will average 10.5% over the next year. On these projections, says Hudson, more than 250,000 people will have been unemployed for 12 months or more by the end of the year.

"These people will have lost their confidence and skills and will rapidly be on the way to becoming unemployable. Even when economic conditions improve, these people will be left way behind in the jobs race. Experience from the 1982-83 recession showed that for every 13 jobs created [in the recovery], only one went to a long-term unemployed person."

While the government made much of the extra allocation of funds for employment and training programs, this was far outstripped by the

growth of jobless numbers in the last year. The government will be spending 20% less per unemployed person in these programs than it did before the recession and one-third less than in the last recession. Only one in four people would get access to these programs.

Meanwhile, the government expects to save millions of dollars by tightening eligibility for welfare and greater surveillance and pressure on recipients. It hopes compliance measures will save it $3.6 million in 1991-92 and $46.6 million in 1992-93; assets testing and "deeming" rules will save another $43.1 million in 1991-92 and $44.2 million in 1992-93.

While the union movement might be expected to be up in arms over a budget that threatens the livelihoods of hundreds of thousands of its members, ACTU president Martin Ferguson defended the budget when NSW Labor opposition leader Bob Carr criticised it for ignoring the unemployment problem.

ACTU deal

The budget reveals two elements of a deal stitched up between ACTU chiefs and the government the week before: compulsory superannuation legislation and a move to put in place Bill Kelty's vision of enterprise bargaining.

According to the ACTU, compulsory superannuation will guarantee a decent retirement income for all and compensate for the wage restraint (actually a wage freeze) imposed on the labour movement since 1983.

It seems the ACTU chiefs have traded wage increases for the super legislation. The budget forecasts a 4.5% aggregate wage growth in 1991-92, but wage increases already promised under earlier Accords will easily make this up when they finally come out of the pipeline. The 5% wages growth promised to the ACTU, according to press leaks, would not cover much more.

Treasurer John Kerin explained these figures by referring to the benefits of delaying delivery of Accord promises. "If any case is delayed or any decision is late a month or two, the figure, by definition, gets less even though you are still working on the same aggregate wage outcome". Through such delays, most workers were denied any real wage increase last year, which meant their wages were cut by inflation.

The ACTU officials are keen on the super legislation and moving to enterprise bargaining because both ensure their own power and position. ACTU officials often serve on super fund management boards, and enterprise bargaining will ensure that there will always be a layer of better-paid workers upon whom they can build some political base even as the majority become worse off.

The government and ACTU officials insist that compulsory superannuation is the only way to ensure adequate retirement income for the growing proportion of aged people predicted for early next century. But if money must be set aside for an ageing population, this can more fairly be done from revenues obtained through progressive income taxation.

Welfare officials point out that the superannuation system is an inequitable way of providing for retirement incomes. First, it means some of the aged will receive small pensions while others will receive much larger super payments. Second, the better off will receive most of the benefits from the tax deductions allowed for super contributions, and the corporate elite will make billions of dollars from the investments of the large super funds.

Welfare cuts

The same "user pays" rationale underlies the cut to Medicare rebates, which follows the slashing of subsidies for pharmaceutical prescriptions. Rebates for visits to general practitioners will be cut by $3.50 ($5.00 late next year). This will shift $163.9 million of medical costs (and a further $1.5 billion over the next three years) onto individual patients.

Most of this cost will be borne by patients in lower to lower middle income brackets. Although health care concession card holders will be exempt, the Australian Council of Social Services calculates that at least 500,000 low income earners will fall through the government's "safety net".

The decision to increase tertiary fees by $144 on top of the automatic indexed rise (full-time student fees will be $2250 on average next year) to pay for increased places, is again a shift of social responsibility back onto the individual.

These three decisions understate the full extent of the budget's assault on social services. Some of the most painful cuts are in the area of state spending due to a 1.7% reduction in Commonwealth grants to the states at a time when state revenues are at an all-time low because of the recession.

These measures were summed up by a picketer outside health, housing and community services minister Brian Howe's electorate office in Melbourne on August 23: "This is Labor's consumption tax". She said Labor hypocritically opposed the opposition's consumption tax while implementing the same principle in the budget.

The central message of Hawke Labor's latest budget is that it is determined to let the recession do the job of forcibly restructuring the Australian economy — regardless of how long the unemployment queues may grow.

The result, they assure us, will be a more competitive Australia and a more sustainable recovery. But according to the budget forecasts, the new society they are trying to sell will be characterised by low wages, poor conditions, permanently high unemployment and minimal social services.

Environment

The environment gets a token $143 million (compared to $9.5 billion for defence) and is not integrated into the plans for the economy. There is no mention of ecologically sustainable development.

The Business Council of Australia (which includes the biggest corporate chiefs) made it clear in recent statements that the "more competitive" economy idealised in the budget statement can be achieved only with generous resource security guarantees for business and as long as the planned Environment Protection Agency turns out to be a $8 million toothless wonder.

In what has been interpreted as the ALP left's pay-off for supporting Hawke against Keating, $56 million has been set aside for Brian Howe's Building Better Cities program, which has the laudable aim of reshaping cities to save on resources and improve the quality of life. But if Howe's national housing strategy is any guide to his dreams about social reform, the Better Cities program will include extensive subsidies to private landlords and developers, of the kind pioneered by NSW Premier Nick Greiner.

The Hawke-Kerin vision, as restated in this budget, amounts to a nightmare for most of us. Yet it is the logical outcome of the course steered by Hawke Labor since 1983 as it has spurned even its traditional electoral base in the hope of winning approval from a corporate elite whose dreams of ever greater wealth and power depend on the creation of a harsher, less equitable and less civilised society.

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