The federal government’s JobKeeper allowance, introduced on April 8, made way for payments of $750 a week per employee to bosses whose businesses have been impacted by the COVID-19 crisis.
While touted as “pretty close to a form of socialism”, by Sky News commentator Peta Credlin, the JobKeeper payments are, in fact, intended as a guarantee of private property. As Guy Rundle argues in an article for Crikey on March 31, the “wage subsidy in this form remains a socialisation of capital’s losses, and an abolition of its risk”.
As a subsidy designed to support the private enterprise system, JobKeeper payments are available only to privately owned businesses (and charities). Significantly, local councils, which employ more than 190,000 people across Australia, were excluded from the payments.
“If there is support necessary for local governments that will be provided by the state and territory governments,” Prime Minister Scott Morrison said on 3 April.
As Morrison would be well aware, however, state governments have for years been increasing the financial burden on councils by cost shifting. There is little indication that the COVID-19 crisis will reverse that.
According to Local Government New South Wales (LGNSW), the peak organisation representing NSW general and special purpose councils, “Cost shifting undermines the financial sustainability of the local government sector by forcing councils to assume responsibility for more infrastructure and services, without sufficient corresponding revenue.” LGNSW estimated that the NSW government had increased the financial burden on councils by $6.2 billion in the 10 years to 2018.
Local government is responsible for a wide range of essential services. In addition to curbside rubbish collection and maintenance of local roads, councils also maintain most parks and open space, stormwater drainage systems, public libraries and community facilities. Outside of the major cities, councils are also generally responsible for drinking water and sewage services. Many local councils also provide high-quality childcare and preschool services, with some also providing after-school care.
Childcare an exception
From April 6, the Morrison government introduced “free” childcare, at least until the end of June.
To guarantee the financial sustainability of the (largely) privately-owned childcare sector, which was struggling to cope as many parents withdrew their children in response to COVID-19, the government pegged childcare subsidy payments to operators at the number of children enrolled in the fortnight before March 2. Private childcare operators will also be able to claim the JobKeeper payment for each employee.
The government’s decision not to allow local councils to be eligible for JobKeeper payments means that many are threatened with significant shortfalls. By April 7, the Cumberland and Georges River Councils in Sydney were reporting they were no longer able to afford to keep their childcare centres open.
On April 9, the federal education department begrudgingly accepted the need to provide additional funding to those childcare centres ineligible for JobKeeper, including council-run centres. But rather than being guaranteed additional funding, councils now have to beg for a government “top up”.
A fact sheet on the federal education department’s website says: “If a provider/service is not eligible for JobKeeper Payment, it may be eligible for a supplementary payment”. There are no guarantees that the government will make up the entire shortfall, however. The fact sheet makes clear that it will consider requests on a case-by-case basis.
On the same day, the NSW government announced it would spend $82 million to compensate council-run childcare centres for their ineligibility to claim the JobKeeper payment.
Wage cuts and stand downs
Faced with dwindling incomes as a result of rate reductions and facility closures during the COVID-19 crisis, many local councils are attempting to shift the financial burden onto their own employees.
Adelaide City Council sent home 400 workers on March 26, giving permanent staff two weeks' wages, but otherwise forcing them to use accumulated leave for at least two weeks thereafter.
Meanwhile, Brisbane City Council will attempt to impose a two-year wage freeze on all council employees, to save $36 million. Unions have promised to fight both attacks.
In Geelong, almost 600 workers have been stood down by the Greater Geelong City Council. Workers have been told to rely on their accumulated entitlements, including annual and long service leave, after being given only two week’s additional paid leave.
Casual workers hit hardest
Casual council workers, including library staff, fitness centre employees and swimming pool attendants, are being hit hardest by the COVID-19 crisis. Unlike private sector casual workers, council workers are not eligible for JobKeeper payments, regardless of how long they have been employed. Many will be forced to subsist on the $550-a-week JobSeeker payment.
In NSW, the United Services Union is attempting to negotiate a “splinter award”, as a partial protection for full- and part-time (but not casual) council employees. It runs parallel to the substantive NSW Local Government State Award and will guarantee payments of $875 a week for permanent council employees who are stood down.
Workers have the option to top up the payment to their usual wage, by drawing on their annual or long-service leave entitlements. Workers will be required to agree to a reasonable request for redeployment to other areas within Council to be covered by the splinter award.
Far from heralding an end to neoliberalism, the federal government’s treatment of local councils exposes its privatisation agenda.
While private business is to be subsidised to go into “hibernation” for the duration of the COVID-19 pandemic, local councils have been left to deal with the crisis largely without assistance, leading to layoffs, wage cuts and increased uncertainty for workers and the community.
[Graham Matthews works for a local council in Sydney and is a member of the Socialist Alliance.]