By Chow Wei Cheng
The government's long-awaited white paper, optimistically titled "Working Nation", has promised to cut unemployment to 5% by the turn of the century by implementing "reforms" in the labour market and in industry which will cost taxpayers $6.5 billion.
The reception has been mixed. The Liberals, stunned by this obviously election-geared pitch, have supported many of the "rationalist" measures in the paper, claiming — with some justification — to have thought of many of them first.
The Democrats and ACTU have lauded its "Whitlamesque" pump priming. Industry groups such as the Business Council of Australia and large corporations such as BHP and Ford have praised it. Financial markets have given it the thumbs down for its possible inflationary consequences.
The Greens were the only parliamentary party to be critical.
For working people and unemployed, the changes are not as rosy as they may seem. The effect will be to erode wages and awards. There will be further restrictions and hassles for the unemployed in what amounts to force them to work for poverty wages. Increases in taxes to pay for it are likely.
On the other hand, business will receive a deluge of grants, subsidies, tax breaks and privatisation.
Of the total of $6.5 billion in direct outlays, $1.7 billion will be grants and subsidies to industry. (Industry will gain much more through tax concessions.) $4.6 billion will be spent on unemployment and training in the "Job Compact" over four years.
This is supposed to create 560,000 work and training places through a national training wage, subsidies to firms which hire the unemployed and private sector competition for the CES.
Under the Job Compact, long-term (more than 18 months) unemployed must accept any "reasonable offer" of employment or lose unemployment benefits. This takes the decisions about work out of the hands of the individual, who will be forced to accept poverty-line wages — for youth the wage is around $190-$215 for a full week's work.
Individuals will be managed on a "case by case" basis by the CES or a private competitor to the CES. Private firms, seeking to make a profit out of placing someone into these schemes, will ruthlessly speed up the pace and ensure that no "reasonable offer" is refused and that almost any offer is deemed reasonable.
The training wage, set at 80% of the award rate, will further undermine award wages. This is in a climate where unemployment has already forced down wages. In a recent study by the Washington-based Wyatt Company, Australian workers will receive the lowest wage increase in the region this year (0.4% in real terms).
The government will pay a substantial subsidy to firms hiring unemployed individuals. The actual cost of hiring a worker to the firm will be as low as $10 per week due to the training wage and the Jobstart subsidy.
The training wage, along with the suspension of the Training Guarantee Levy (which firms currently have to pay) will "rightly put the cost of training back onto the individual worker", according to the Australian Financial Review.
The subsidy lasts only for one year, after which the firm is free to lay off those workers and start again with a new pool. This artificially removes from the unemployment statistics a large number of unemployed who will be categorised as working or in training.
There are other benefits for industry. Multinationals which set up headquarters in Australia will be exempt from paying the 10% dividend withholding tax, allowing more repatriation of capital.
The government also plans to step up its privatisation program. Already Commonwealth Serum Laboratories and Australian National Line are on the chopping block and further deregulation is planned in the telecommunications sector. Funding the white paper will be the justification for the complete privatisation of the Federal Airports Corporation.
The government plans to sell off the airports one by one. However, only half of the 23 airports are profitable, so the rest will be flogged off cheaply and made to become profitable, which can ultimately only mean higher costs for travellers.
The paper also contains more tax incentives to buy infrastructure bonds. This will mean more public works will be funded privately, which means private investors will have to make a return on their investment. That spells only one thing: profitable public works. Sewerage systems, aviation facilities, electricity, gas and water works will all have to be profitable, so tariffs to consumers will have to be set higher than otherwise.
The white paper also reaffirms the ALP's commitment to enterprise bargaining, setting the target for 80% of employees under federal awards to be under direct bargains by 1996.
It seems the only thing which the business community is worried about is the possible inflationary effects of the white paper.
Financial markets received a scolding from Prime Minister Keating for selling off bonds and shares due to speculation about inflation. In one day, $4.2 billion was wiped from the paper value of stocks (almost the cost of the Job Compact), further fuelling fears that investors could take the wind out of the recovery.
Studies have revealed that government revenue no longer rises abruptly during upturns, because of lower inflation. Thus growth may not give the government as much in tax revenue as it is counting on. Spending will be harder to finance purely out of economic growth.