The government's policy agenda and the summit
Albanese at the National Press Club: a basic shift in the work of government
Sky News gave its opinion of Albanese’s National Press Club address as “predictable”, contemptuously suggesting that Albanese could have run through the government’s first 100 days’ achievements in 30 seconds or less.
Perhaps they were hoping for a flurry of hastily assembled policies as has been the case with some previous governments. By 14 days into its term the Whitlam government had abolished conscription, established diplomatic relations with China, and had started to re-shape the labour relations framework. Just a month after taking office the Abbott government set up a so-called “commission of audit”, with a brief to give his government justification for breaking his election promises. A critic could say that by contrast, Albanese couldn’t even muster the political courage to use his speech to announce a repeal of the stage 3 tax cuts.
Such a perspective entirely misses the significance of Albanese’s speech. Even though the Coalition government it replaced was corrupt, economically incompetent and lazy, leaving plenty of messes to be cleaned up, the Labor government has refrained from a “crash or crash through” approach to reform.
Albanese spoke about the important work of government and about the need for good government. That’s a cultural shift from the Liberal Party’s obsession with small government, as if government is just a burdensome and unproductive overhead.
Towards the end of his prepared speech, before a 45-minute Q&A session with journalists, he said:
Good government must drive this culture, to make the case for reform. In order to do that we need to re-build trust in government. My colleagues and I don’t share the strange self-loathing of our predecessors – raging against the role of government, while in government, obsessing over secrecy, having to be shamed into doing the bare minimum at the last possible moment, an ideology that meant even as they made government bigger, the Liberals and Nationals showed no interest in making government work better.
He avoided digging his administration into hard “positions” on policy issues. Rather, he explained Labor’s policy principles, including an emphasis on the social wage through Medicare, aged care, education and affordable housing. He emphasised the importance of productivity and investment in skills, as means towards achieving decent wages. Although such policies should achieve a redistribution of wealth and income, he avoided talk about redistributive welfare.
He outlined the work of good policy development that involves gathering and analysing evidence, consulting, and explaining, as processes towards sound policy. A respected and professionally competent public service is crucial in this process.
He acknowledged that in the task of structural adjustment there are different interests and views, but he is aware of the burden of “conflict fatigue” that has resulted from years of combative and divisive administration.
That doesn’t mean his presentation was all on the lofty plane of policy generalities. He spoke about some of the tentative agreements that were emerging in preparation for the jobs and skills summit, particularly on collective bargaining and immigration.
It was almost too easy to miss the importance of what he said on immigration. Unsurprisingly he spoke about shifting from reliance on short-term immigration to permanent settlement, attracting those with a “sense of ownership and a stake in this country”.
But he also noted a more profound shift in immigration. For almost 80 years we have relied on Australia as a place where the tired, the poor, the “huddled masses yearning to be free” (to borrow Emma Lazarus’s words) longed to come. Those days have passed: there is now a worldwide demand for skilled labour, and this is not just a post-Covid phenomenon: we are now in a highly competitive market for skilled migrants. While Albanese did not harp on the Coalition’s failures, he was scathing about the way foreigners had been treated during the pandemic, and the way public service staff cuts have resulted in intolerably long delays in processing visas. We have suffered reputational damage, and it will be hard to recover.
One could rightly observe that signalling a break from the indolence, corruption and incompetence of the previous government, and getting the political rhetoric right, is the easy work. The hard work of delivering good government lies ahead, and that is where the Albanese government will be tested. But to dismiss his speech at this stage, as lacking substance, is to misunderstand the significant change in the way the government is going about the hard work of policy development.
The summit
Let's stop hurling rocks at one another. (Mt Kankana summit)
The Conversation has done us the favour of putting links to all of its 22 articles on the Jobs and Skills Summit, and a link to Ross Garnaut’s address to the summit, on one website. There is also a Treasury issues paper, presenting a set of questions about employment and structural change.
One of the Conversation articles is a collation of views of 50 economists who were asked to choose, from a range of policy options, those which provide “the most fruitful opportunities for changes in government policy to deliver better outcomes for Australians”. The top three they chose were “education and skills” (65 percent), “broader reforms to promote productivity” (45 percent), and “migration policy” (37 percent). Notably “industrial relations”, which has been the focus of much media interest, was well down the list (18 percent). Economists tend to think about the medium to long term, while the political imperative is more immediate.
It’s quite predictable that economists will emphasise productivity, because without growth in productivity there can be no long-term growth in income, but turning the syllogism around, there can be productivity growth without income growth, if all the benefits of productivity growth are absorbed by profits. Also, “productivity” is a term that needs to be defined carefully, because it can have many different meanings. In his paper Jim Stanford of the University of Sydney explains that if productivity was the magical fix some claim, we wouldn’t need a jobs summit. Similarly in his regular column Ross Gittins explains that there is no automatic mechanism ensuring that productivity gains flow into real wages.
A broad perspective on productivity and wages is given by three economists – Dan Andrews, Adam Triggs, Gianni La Cava – in their contribution The summit needs to get us switching jobs. It’d make most of us better off. It’s about the benefits of economic dynamism: there’s no point in workers hanging around in low-productivity-low-paid jobs hoping for a pay rise that will never come. They call for stronger measures to promote competition and to guard against industry concentration, thus giving workers more choices.
The same message about the cost of increasing industry concentration and decreasing dynamism is conveyed in Andrew Leigh’s FH Gruen Lecture A more dynamic economy, delivered at ANU last week. Industry concentration, perhaps better known as “monopolization”, provides much of the explanation for the combination of rising prices, falling real wages and rising profits. Writing in The Guardian Greg Jericho of the Centre for Future Work explains the long-term deterioration in real wages: it’s not some recent anomaly or some Covid-related phenomenon.
Writing on the ABC website Gareth Hutchens reminds us that we have lost a valuable mechanism that once served us very well in matching willing workers to available jobs. The Commonwealth Employment Servicewas developed in 1946 as part of the postwar reconstruction suite of policies, and was doing a good job until the Howard Government privatized employment services in 1998. Those privatized employment services have been adept at meeting short-term performance indicators, and making profits, but they have been far less effective than the CES. There is a strong case for re-establishing the CES.
John Falzon, writing in Eureka Street, is optimistic about the summit:
While the Summit does not signal the end of neoliberalism, with its crushing of spirits and destruction of lives, it does signal a political willingness by the Albanese government to begin an inclusive, deliberative process for healing our society of some of the wounds that have been inflicted on ordinary people through the almost unfettered accumulation of superprofits on the one hand and cuts to real wages and the dismantling of social infrastructure on the other.