2022 RENATE KAMENER ORATION
Cape York Institute for Policy and Leadership
27 March 2022
J’ACCUSE: AUSTRALIA’S GREAT CRIME AGAINST THE JOBLESS
The creation and perpetuation of the passive welfare underclass and the urgent need for a universal Job Guarantee.
I honour the Wurundjeri people of the Kulin Nation: and bring greetings from Cape York Peninsula.
The descendants of Renate Kamener honour me with this privilege of speaking in her memory as an inveterate champion of human rights. It is fitting my subject today is a human right that near disappeared from rights talk in the last quarter of the twentieth century, and barely resurfaced in these first two decades of the twenty-first: the human right to a job.
Thankyou Martin and Larry for this invitation to tread briefly the path of your mother. I will endeavour to emulate some of her fearlessness and conviction in the dignity of all humans.
I thank Larry and my Boston Consulting Group family here in Melbourne and Sydney. Your support is now 22 years long, since I entered the circle of friendship of Colin Carter at a gathering in Weipa at the turn of the century, when BCG first committed to support our Cape York Agenda. Let me thank Colin for his steadfast love. For me and my people. He and BCG have been a great succour to our work.
Before making my argument proper, when asked by Larry and Martin last year to nominate a topic for this oration I confess my temper was febrile, because I chose to evoke Zola’s 1898 accusations in the Dreyfus Case, against those at whose feet I will argue responsibility for the needless destruction of needless joblessness might properly be laid. After six months of reflection I have not resiled from my accusations, but let me first accuse myself: for not waking up to this argument sooner. Much effort has been in vain and many lives and futures squandered as long as we have not prosecuted the case for the human right to a job. A human right of all Australians. A human right systematically denied to generations of Australian citizens from the lowest bottom of Australian society.
Let me make a second preliminary point about my conviction that Australia’s remote communities desperately need a government jobs program – the single most decisive reform if we are serious about the fate of these communities.
If leaders are dealers in hope then the unabating problems of despair in Australia’s remote communities, exemplified by the recent media concerning Yuendumu, leaves the nihilists who say “fuck hope” in commanding authority – because the facts on the ground support them rather than those erstwhile leaders, like me, who try to deal in hope. Yuendemu is only the latest instalment in a decades long story of despair and long tolerance of misery and destruction of lives.
Little has changed for the better and much for the worse. The key numbers are all worse today than the year 2000.
The Liberal National Coalition has been as impotent as Labor in the past. There I’ve said it. At the state and territory level as well as the Commonwealth. Each is partly right in their own way. Each is wrong-headed in their own way. Both end up being neglectful and putting the misery of remote communities in the too-hard basket.
And the one thing we have not done is ensured that people in remote communities have the jobs they need to get out of welfare dependency.
From the press conferences we are encouraged to believe Australia has recovered strongly from the pandemic. We are told Australia’s job “generation performance has outpaced every single G7 economy during the two years of the global pandemic” and unemployment is at a thirteen-year low.
But despite the policy insights enabled by the pandemic, Australia is contemplating returning to the past in at least one important respect: a state of affairs in which a significant cohort of Australians are deliberately kept unemployed, so the rest of us can enjoy stable prices. That this cohort is slightly smaller than in the past hides a more complex and ugly reality, because although unemployment has decreased, hours worked have decreased and underemployment has increased. There is an ongoing tacit acceptance that there will always be Australians relegated to permanent unemployment, and therefore poverty and hopelessness.
I too accepted the prevailing economic orthodoxy that tells us we must keep a ‘buffer stock’ of Australians unemployed to maintain stable prices. I was diverted, along with everyone else, by the ideas that justified permanent structural unemployment for the lowest classes in Australia. I swallowed the fiction that full employment wasn’t about every person who wants work having work, but that it was some unfixed number determined by the country’s economic managers to be around 95 per cent of the workforce with 5 per cent unemployed – the so-called ‘Natural Rate’ of unemployment, or NAIRU. I accepted that government could not and should not be an employer of last resort for those for whom the market could not and did not provide jobs. I accepted what we were told were the fiscal constraints on the government’s capacity to afford a full employment program. Moreover, I internalised the general disdain with which public job programs came to be viewed; they were ‘make-work’, involving ‘painting rocks’ and so on. I had, of course, internalised the argument of the economists about the trade-off between employment and inflation and that managing inflation was the first and last imperative.
The economic orthodoxy, which for too long I took as gospel, was bolstered by the political rhetoric that demonised the unemployed. For close to fifty years, we, the elites who have never had it better for ourselves and for our own families, have been convinced by the policy ideas that permeate the nostrums of our culture – and we have come to convince ourselves and other Australians of these same nostrums – that unemployment is an individual shortcoming. Australia is a country of lifters and “leaners”, we have been told. The leaners are “dole bludgers”, lazy, indolent and ill-disciplined. This language entered general parlance with the emergence of structural unemployment in the 1970s. “Dole bludgers” entered the Australian English lexicon at the same time as “scroungers” in Britain and “welfare queens” in America. They have little to offer the nation and are happy to suck money from the pockets of hard-working Australians. They could find a job if they just lifted themselves up by their bootstraps. This all-pervasive narrative not only absolved government of responsibility for unemployment but allowed politicians to direct Australian’s fears and economic securities towards those apparently sucking on the government’s teat. If only Australia’s leaners would do their share of the lifting.
What this narrative elides is there aren’t enough jobs for all Australians, especially those without qualifications:
Over the past 15 years entry level jobs have collapsed by 50%
In June 2021, there were 12 job seeker applicants for each entry level vacancy
It now takes an average of 4.7 years for a young person to move into a full-time job after completing their education
None of my argument here today is new. Many campaigners for social justice have made the argument for government to step up and become the employer of last resort for the benefit of the lowest and most parlous, needy bottom of society – here and throughout the western world – to no avail. It was the subject of the last campaign of Reverend Dr Martin Luther King Jnr, who together with trade unionists A Phillip Randolph and Bayard Rustin published the Freedom Budget in 1967, proposing a job guarantee for every American in need of work. This advocacy was continued by his widow, Corretta Scott King – to no avail.
As always, Dr King summed up the hypocrisy of the situation the best when he said: “It’s all right to tell a man to lift himself up by his own bootstraps, but it’s cruel to say to a bootless man that he ought to lift himself by his own bootstraps.”
The truth is unemployment is an economic problem, not a moral one. And the decision to solve it sits with government on behalf of any good society. The Commonwealth has the power to end unemployment for the most needy in Australia, but there has been a bipartisan resistance to using its power.
I have spent more than two decades lamenting what I came to call passive welfare. It was my conviction that passive welfare is a scourge, not just for my people but for all disadvantaged Australians regardless of colour or ethnicity – and my convictions about this remain undimmed. It is the central problem that must be solved to tackle poverty and social exclusion in our nation. We must end passive welfare if we want our country to be a great country for all of us.
Furthermore, I always understood the recipients of passive welfare were not to blame for their situation. They were victims of the policy and economic structures that relegated them to the mendicancy of a handout rather than the handup of a job. I know this is not a moral failing as it is too often characterised.
My position is between the old left and the old right on this question.
I agree with the left that the origins of the problem of welfare dependency are structural and that people are not to blame for the society and economy’s failure to provide jobs for all. Too many people on the right are in denial about the structural cause of the problem and only want to see it as a failure of personal responsibility.
I agree with the right that long-term welfare dependency erodes personal responsibility and mastery, that it is corrosive to individuals, their families and their communities, and produces family and social breakdown with all of its attendant social problems. Too many people on the left are in denial about the effect of dependency on the collapse of personal responsibility and want to see it as a failure of structural opportunity and of inequality alone. Furthermore, too many people on the left think that the solution is income alone rather than work, which is why there are public campaigns for raising unemployment benefits and for universal basic incomes, but no campaigns for jobs.
The negative intergenerational effects of passive welfare are real. The left’s denial of this reality is matched by the right’s hypocrisy in blaming the jobless for their predicament while simultaneously running an economic policy that keeps a “buffer stock” of citizens deliberately unemployed. Let me be clear again: welfare dependency is not the fault of the unemployed. It is a structural problem and, fundamentally, a policy choice. And the best solution to welfare dependency is to provide the unemployed jobs.
It is no coincidence that the word “dole bludger” was invented in the 1970s shortly after the abandonment of the commitment to full employment. Before this, unemployment was seen for what it truly is – an economic problem that could be solved through fiscal and monetary action.
When Prime Minister John Curtin introduced unemployment benefits in 1945, they were not meant to be a permanent destination. They were a temporary safety net measure that would help people to live in between work and during sickness.
Curtin lived through the Depression and witnessed first-hand the devastating consequences of mass unemployment. To build an equitable and productive Australia, he knew, first and foremost, every person had to be offered a job. It was against this background of full employment that welfare was introduced.
Curtin saw employment as a right of every Australian – he said: “The Commonwealth Government recognises every Australian’s right, not merely to unemployment benefits, but to work”. And he was willing to use all available levers to create full employment.
It was clear Curtin and Chifley believed that over time social security payments would become less necessary. Why? Because government would use its policy tools and financial power to ensure and create full employment.
This transformative approach led to a period of unprecedented productivity, with an average unemployment rate of 2% into the early 1970s. It was a golden era overseen by governments that used the Commonwealth’s financial muscle to bring about growth, productivity and prosperity.
Compare this to the Australia of the past 40 years:
We have locked out the lowest strata of our society from the opportunities of Australian life. We have come to accept that they will be denied a fundamental right of their citizenship, to have a job and earn a living wage. We have come to believe they are a different species of Australian citizen, who do not need the same opportunities we have. They can live with deprivations that the rest of us would find impossible.
The human catastrophe wrought in the passive welfare era is enormous. Putting aside the original peoples, it would have been unimaginable to Curtin and Chifley, who used the Commonwealth’s power to create and deliver opportunity.
In the 1970s, a new economic orthodoxy emerged, marking the victory of the ideas of Friedrich Hayek and Milton Friedman over the Keynesians of the post-war era. Daniel Yergin and Joseph Stanislaw tell the story of how the neoliberals waged a relentless war of ideas against Keynes from the midst of the Second World War. Their 1998 book, The Commanding Heights: The Battle for the World Economy, tells how the Keynesian post-war consensus dominated economics around the world. In the 1980s however, Hayek and Friedman took the commanding heights and became the demigods of economics for the next forty years, unto this day.
Since 1975, Australian policy makers have taken unemployment to mean an unemployment rate of 5 per cent more or less. But whether this 5 per cent is right or wrong is neither here nor there for elites like us, as the devastation wrought by these policies is of little concern to us.
As John Kenneth Gilbraith observed: “Unemployment is rarely considered desirable except by those who have not experienced it.”
To us elites, the unemployed are not a group of fellow humans left to suffer on the periphery of the Australian economy, they are the economic policy tool of choice in a faux war against inflation.
The politicians and technocrats who allowed this social disaster to play out have never been held to account for what was done – and is still being done. They destroyed lives. I could take you on a tour of the graves of many of the victims who I knew and who I loved and for whom I grieve.
They did this so that the rest of us prospered from the economy they presided over. Reflect on the obscenity: the most disadvantaged propped up the macroeconomic system to manage wages and inflation: 3 to 5 per cent of the country enable the 95 per cent to enjoy the advantages and prosperity that are the right of all Australians but not available to all. Whenever an Australian politician approves of employment numbers that are less than full employment, they are essentially saying that it is acceptable and correct that this 3 to 5 per cent be excluded from the life-sustaining opportunities other Australians enjoy.
Think about it. The Australian structure of economic prosperity and well-being sits on top of a buffer of permanent unemployment representing the bodies of the underclass and their children. These are the people for whom educational failure, poor health, out-of-home care for children, family dysfunction, and juvenile and adult incarceration are at acute levels. This is ground zero of the deaths of despair: suicide, addiction, violence and chronic disease.
This underclass suffers these problems intergenerationally and the country has no solution for them. This much the Productivity Commission admitted in its pre-pandemic 2018 report on Rising Inequality: “About three per cent of Australians (roughly 700,000 people) have been in income poverty continuously for the last four years. People living in single parent families, unemployed people, people with disabilities and Indigenous Australians are particularly likely to experience income poverty, deprivation and social exclusion.”
What is not admitted is that our advantage sits directly atop this misery. If they didn’t help make up the numbers of the unemployment buffer, and if they were not forced to gift their families and their bodies to it, we wouldn’t have the system of economic management that has underwritten our good fortune for decades now.
The fact is, public policy choices were made by the Treasury and the Reserve Bank for the underclass: the Treasury decided public job programs were unaffordable, and the Reserve Bank interpreted the data of full employment in a way that could not be more careless of the implications and impact on Australia’s poorest citizens. The choices they made spoke volumes for their concern for this underclass. They never saw any value in them. They never saw that the children of the debilitated should have the chance to be free of debility themselves if proper public policy were made in their favour. Why should intergenerational disadvantage be taken to be inevitable, unbreakable and acceptable?
Economist William Mitchell’s design of a federal job guarantee, proposing an employment buffer through a minimum wage, makes this story even more sickening. This is what I realised two years ago, reading Mitchell’s work: it was not necessary to use an unemployment buffer to manage wage inflation. Inflation could be managed through an employment buffer, using the minimum wage.
For the past thirty years I have watched the devastation of my people from Cape York Peninsula from inter-generational welfare dependency.
The awarding of equal wages for Aboriginal stock workers did not result in the economic equity many had hoped for. Many lost their jobs, migrated to townships and are today churned through unsuccessful employment programs with no real pathways to the mainstream economy.
The 1970s saw many Indigenous people, along with other Australians, moved onto welfare where they stayed for life. This social catastrophe was complemented by the introduction of pubs and poker machines, which allow welfare cheques to be recycled back to government and their corporate friends in these vice industries. Verily, as the black American economist Thomas Sowell once said: “The poor are a gold mine”.
But my people were not the only victims of the shift away from full employment. Since the mid 1970’s the number of long term unemployed in Australia has continued to rise, despite 30 years of uninterrupted growth for the rest of us.
There are now pockets of suburbs and towns that have experienced between 50-70% unemployment over successive generations. All of our communities in Cape York Peninsula fall into this category.
Since the mid-1970s, we, the Australian elite, abandoned full employment with little regard for the impact on the most marginalised – the disabled, the poorly educated, Indigenous people, newly arrived non-English speaking migrants and sole parents.
Australia was never meant to be a country of haves and have-nots. Those who reconstructed the nation after World War Two were at pains to ensure that no one was left out, putting aside the original peoples. They truly believed everyone had something to contribute, putting aside the original peoples. And they designed policies to ensure this occurred, putting aside the original peoples. The dividend was a nation that experienced unprecedented productivity and full employment, putting aside the original peoples.
Please pardon my repeated qualifications here. I have the difficult task of trying to remind mainstream Australians of the golden years of post-war full employment and prosperity for white and migrant Australians, whilst not forgetting that the indigenous peoples were still excluded from this growth and opportunity. It is the same dilemma Americans have when they remember the great advances made as a result of Franklin Roosevelt’s New Deal, whilst having to admit the exclusion of black Americans from its benefits was also the truth.
But allow me to nevertheless evoke the memory of the prosperity of the post-war period for your people, especially the disadvantaged among them.
Regrettably, more than seven decades after World War Two, Australia is a country of haves and have-nots. This is not because we had to be, but because of policy choices that were made.
The people of Cape York were the first movers on welfare reform in Australia. We knew it was our right to take responsibility for our future. We got on the front-foot and designed a reform model that focused on building the capability of those on welfare so they could take a fair place in our own land, in our own country, Australia. The people whose dispossession – in the famous words of Justices Deane and Gaudron in Mabo’s Case – “underwrote the development of the nation”.
We designed the Families Responsibilities Commission. Run by local leaders the Commission builds the capability of those on welfare who have not exercised responsibility in caring for their children, sending them to school, upholding their housing agreements and refraining from violence. The Commission conferences our people and supports them to take up the personal responsibilities which passive welfare has eroded.
Fourteen years on and this model is yielding profoundly important results. Over the past six years in the five communities in which it operates:
Child Protection Notices have reduced by 69%
Tenancy Breaches have dropped by 32%; and
Serious offences have fallen by 23%.
Money management has improved, and parents have saved hundreds of thousands of dollars collectively in Student Trusts accounts to cover the costs of their children and grandchildren’s education.
The Cape York welfare reform model is working on the personal and family responsibility side of the equation. Personal responsibility is crucial to progress.
The other side of the welfare reform equation is opportunity. And in particular the opportunity of jobs. But jobs have not been realised as part of the welfare reform deal.
The results we have achieved with personal and family responsibilities would be amplified if people were provided with real jobs. Over the past fourteen years, job numbers in our communities have remained stagnant. Close to 70% of our people are unemployed. Most live in social housing.
In our original report to the Commonwealth Government in 2007, we argued that quid pro quo for responsibility and obligations should be opportunities for jobs, education and home ownership.
The gap in Indigenous Affairs will only be closed when responsibility and opportunity are combined equally. Attempts to achieve this are non-existent in Australia.
President Bill Clinton tried with the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act in 1996. Let me repeat the name of this legislation because it captures correctly the necessary policy combination: the Personal Responsibility and Work Opportunity Reconciliation Act. The legislation aimed to reconcile the behavioural dimension of personal responsibility in the face of welfare dependency and the structural opportunity of employment.
It is clear this reconciliation was dependent on the availability of work. The deal showed signs of working during the Clinton years of economic growth, when jobs became available, but could not be sustained in the economic downturn. You can mandate personal responsibility but if you leave work opportunity to the market then the reconciliation collapses when there is a downturn. True reconciliation required the mandating of personal responsibility and work opportunity. If Clinton had done this he would have fulfilled Dr King’s vision in the Freedom Budget whose bedrock was a government jobs program. He didn’t do it. He mandated only one side of the equation. He was under the grip of the neo-liberal turn in social democratic economic policy thinking that eschewed full employment as socialist nostalgia, in favour of market solutions. Moreover the pittance of the American minimum wage and the unconscionable way in which workers in the lowest strata of the labour force have to stitch together multiple jobs to earn a living – made the PRWORA reforms a tragic farce.
If we are going to close the gap, not only between Indigenous and non-Indigenous people but between the unemployed and the rest of Australia we must ensure there are enough jobs for all those able to work and who want work.
Two years ago, I had to confront this great truth. A truth that had never been fully apparent to me.
The truth was that full employment was possible without letting the inflation genie out of the bottle.
I had swallowed the economic orthodoxy that 5 per cent unemployment was the price the nation had to pay for economic stability, continued private sector investment and high living standards.
That was until I read University of Newcastle economics Professor William Mitchell’s proposal for a universal Job Guarantee.
His concept is simple. It is a job for all those needing and able to work. The job pays the minimum wage, superannuation contributions and leave entitlements. It brings the dignity of work to every Australian including the disabled, mentally ill and extremely disadvantaged. And it is a completely superior alternative to passive welfare.
The first benefit of the Job Guarantee is that it lifts the income of the poorest Australians to a decent level. Only those who have never lived on the dole can say that people can live on the dole.
The second benefit of the Job Guarantee is that it gives people all of the intangible personal, psychological and social benefits, that come with work. Only those accustomed to the opportunity of work can afford the luxury of the idea that work is not foundational to the wellbeing of all humans.
Mitchell’s insight on the government job guarantee came to him as a student studying agricultural economics at the University of Melbourne in the late 1970s, learning the logic of the one-time wool stabilisation scheme. To stabilise the income of producers through the seasonal heights and troughs of the wool clip, and to minimise inflationary prices, the scheme provided for the government to buy the surplus and store it in those ubiquitous red-brick woolsheds near the country’s wharves. The retained surplus was released in the years when the clip was poor.
The anguished memory of his working-class father’s descent into unemployment had become the young student’s life-defining purpose, and he asked himself: if the government could buy up idle wool from producers and release it to the market when demand picked up, why could not the same be done with idle labour?
This was Mitchell’s Eureka moment, and he dedicated his life to the pursuit of full employment and the concept of a government-funded job guarantee.
The crucial breakthrough Mitchell made with his job guarantee is that its design would mean that full employment with the government as employer of last resort would be non-inflationary. He argues there are two ways to manage inflation in employment policy: the first is to use unemployment as a buffer stock against inflationary pressures, and the second is to use employment as a buffer stock. Provided the job guarantee is anchored at the minimum wage, a universally available full employment scheme will not be inflationary.
From Mitchell we have the means to achieve full employment without increasing inflation. This is the third benefit of the job guarantee, it works as an automatic stabiliser in the economy: the pool of workers in the scheme rises and falls with the economic cycle. In a downturn the pool grows and when the labour market picks up the pool shrinks close to zero.
Mitchell has provided a policy solution to the social catastrophe playing out amongst Australia’s most disadvantaged.
In Indigenous policy in particular , Mitchell has given us the most powerful policy tool to close the gap, not just on employment, but most other gaps – dependent upon employment, something which has addled the bureaucrats and technocrats.
Since discovering Mitchell’s proposal, I have advocated to all governments for a universal Job Guarantee.
I have been told in response that:
The jobs would be unproductive
Aboriginal people would just be painting rocks
The scheme would undercut private investment
It would antagonise the Unions
It would drain the budget
The unemployed aren’t capable of working
But these are not the real reasons for the lack of interest.
The real reason is that acceptance of Mitchell’s argument would require us – the new elites of the neo-liberal turn – to admit we have it wrong
It would require us the new elites of the neo-liberal turn to admit that we aided and abetted a social catastrophe of enormous scale amongst the voiceless Australians
It would require us the elites of the neo-liberal turn to consider the family breakdown, addiction, violence, misery and suffering that our policies have caused to the voiceless Australians
It would require us the elites of the neo-liberal turn to admit that the unemployed are not innately lazy or defective.
It would require us the elites of the neo-liberal turn to admit the government has the fiscal capacity to fund real jobs instead of passive welfare but has chosen not to use it.
And most excruciatingly, it would require us the elites of the neo-liberal turn to change the system that has gifted us and our own families significant wealth and power at a time when the unemployed and their families were broken and left bereft.
The reasons we struggle to gain traction on a Job Guarantee are three-fold:
Firstly, so many of us myself included submitted to the economic orthodoxy that lower levels of unemployment will be inflationary.
Secondly, this orthodoxy suited business who prefer that at the lowest reaches of the economy the scarcity of work should maintain a race to the bottom on wages.
And finally, the political class know that our social security system does an outstanding job at pacifying the excluded and the disadvantaged by cutting off their hope and aspiration and giving them the false promise that their secondary services and programs will ameliorate their personal and social problems, and if not, then the tertiary services in the form of end-stage medical care, out of home care for children and detention and incarceration facilities can always be expanded.
And it is the passive, not the capable, that neither threaten nor make demands on the political system for a better deal. The unemployed become conditioned to think they are inferior and undeserving of anything better. And they give up.
I accuse successive Australian Government of deliberately confining over 800 000 Australians who live in families where adults are on the unemployment line, where they unnecessarily suffer from poverty, powerlessness and prejudice.
I accuse the Reserve Bank of Australia of not meeting its legislative mandate of full employment, by uncritically upholding ideas about a natural rate of unemployment, they destroyed countless lives, the consequences of which they and their own never have to bear.
I accuse the Treasury of pedalling the fiction that unemployment is natural, inevitable and necessary to control inflation and resist fiscal intervention in favour of jobs for those Australians in desperate need of jobs in the name of budgetary rectitude and debt management – but are quick to change their view when a pandemic threatens the jobs of middle Australia.
I accuse politicians for using the unemployed for political gain by directing people’s economic insecurity and fears towards the most disadvantaged and away from government itself.
I accuse the industry of job agencies of undertaking a fictitious tick-the-box exercise that does nothing to help the unemployed but instead delivers profits to those who least need them.
I accuse the liberals and conservatives of purveying the term “dole bludger” and creating the illusion that unemployment is an individual moral problem rather than a structural problem perpetuated by neglectful governments.
And I accuse social democrats and the left for not doing enough to challenge the economic orthodoxy that has so deadened the nation’s economic reform aspirations, and in doing so, abandoning the country’s most vulnerable citizens who looked to them to champion their cause.
Lastly I accuse myself for not having the policy insight and courage to have said this before.
I implore the political parties of all persuasions, to gather up the moral and political courage to face these truths, to transform our conventional thinking, and to move past the old false orthodoxies. I implore the parliament and the new executive government in the next term to wield its monetary and fiscal power to guarantee full employment for all Australians.