A maverick Liberal MP crossed the floor of a state parliament this year to help the push for a Job Guarantee. Callum Foote and Michael West report on the radical political outcome in Tasmania to tackle rising systemic unemployment, and the economic case behind it, MMT.
An extraordinary thing happened in the Tasmanian parliament this year. Liberal MP, Sue Hickey, Speaker of the House, crossed the floor to cast the deciding vote in favour of a Greens motion to investigate a Job Guarantee.
It was the first time Liberal government had lost a vote in the house since Peter Gutwein took over as Premier in January this year. Sue Hickey is often described as “maverick Liberal MP”. Maverick or not, it is highly unusual for parliamentarians to cross the floor, to side with their political adversaries rather than their colleagues, and Hickey’s decision spoke volumes about the subject matter at hand.
A Job Guarantee is an “unconditional offer of public employment at a socially inclusive minimum wage to anyone who wants to work but cannot currently find employment,” says the Centre of Full Employment and Equity (CofFEE). Unlike the “Universal Basic Income” (UBI), an idea which has also gained currency in the debate over the future of work, a Job Guarantee entails the promise of training and skills, of useful employment.
Both ideas are driven by the inescapable fact that automation in the workplace will continue to wipe out jobs and create permanent, systemic underemployment and unemployment – which will lead to social problems.
The Tasmanian motion to investigate a job guarantee – put by Greens leader Cassy O’Connor – is the first of its kind to be proposed and supported in an Australian parliament. It is based on research by Newcastle Emeritus Professor and Modern Monetary theorist (MMT) Bill Mitchell.
Professor Mitchell, the director of CofFEE, said that to get to the stage of winning such an historic motion in parliament required a lot of behind the scenes work. He has been briefing state and federal politicians and running workshops with governments and trade unions on the “nuts and bolts” of MMT.
According to Mitchell, “a growing number of different groups are becoming supportive and interested and are trying to sort out nuts and bolts [of a Job Guarantee]”.
The success of the motion shows that Mitchell’s theories have moved beyond the theoretical and may enter the realm of policy.
What does a Jobs Guarantee have to do with MMT?
According to a report produced by CofFEE, under the job guarantee, government becomes the employer of last resort, picking up the slack left by the private sector.
The percentage of the workforce requiring a job provided by the government would vary depending on private sector activity, with more jobs on offer when activity is low and fewer jobs when the economy is booming.
Pearson imagines the jobs would be provided in areas that are “broadly understood to provide a public good”, such as in community transport, education, environmental services, public works and community infrastructure, with local councils acting as the intermediary.
What is the argument for a Jobs Guarantee?
Traditional Australian economics has consistently failed to achieve a low unemployment rate, and with the current Covid-19 recession this problem is reaching record levels.
According to CofFEE, Australia’s unemployment rate has averaged 6.2% since 1978.
Since the 1990s, unemployment has averaged 7.6%.
The ABS recently noted that if the increase in workers who were classified as ‘not in the labour force’ since March 2020, the so-called “hidden unemployed”, had been officially recorded, then the unemployment rate would have been higher by 4.2 percentage points in May 2020.
This means that as of June 2020, a more accurate unemployment rate would be 10.6%, because it includes the hidden unemployed who have given up looking for a job in the current climate.
The reality could, in fact, be even worse. In July, Treasurer Josh Frydenberg said the real unemployment rate was 13.3%.
Dr Stephen Hail, of the School of Economics at the University of Adelaide, estimates that both unemployment and underemployment, called under-utilisation, is hovering around 20% in Tasmania.
MMT is founded in the belief that countries like Australia that can print their own currency ought to leverage this capacity to ensure full employment. The resulting return in productivity would add billions to GDP but would also eliminate the social and emotional toll that unemployment has on people.
Politicians are starting to take notice
Professor Mitchell believes that “even the conservatives are acknowledging that without state life support, the system is going to collapse. All the mainstream economic ideas are out the window. They no longer have any credibility.”
One only has to look at Frydenberg’s recent backflip on the household budget style of Liberal economic management, what Mitchell calls the “mainstream obsession with surplus”, to see this in action.
A Jobs Guarantee is an effective way to ensure full employment and stimulate Australia’s economy out of the current recession.
Which is exactly what happened last election.
Now that as a result of the Coronavirus recession, “a lot of the usual job creation options are not going to be available and lots of sectors are going to be sidelined for a long time” it is the time to explore a state and federal Jobs Guarantee.
“People are realising. They understand the future for their kids with only jobs available in a gig-economy that has been absolutely devastated by the Coronavirus. This future is not what any parent wants for their children.”
Mitchell first proposes a youth and/or long term-unemployed guarantee to ensure a guaranteed transition from school to work and paid vocational training without the need to engage in the often predatory job service sector.