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Government directing Australia towards ‘low-wage America’, shadow minister says

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Shadow assistant minister for treasury and charities Andrew Leigh has said the government has failed to protect workers’ interests and prepare effectively for the future in this year’s budget.

Speaking at the Institute of Public Accountants (IPA) Virtual Federal Budget Breakfast, the Labor MP pointed to a lack of funding towards education and upskilling, as well as climate change and childcare. 

The government has pledged $4 billion towards a JobMaker hiring credit program, which will provide businesses with subsidies to encourage them to hire Australians under the age of 35, who are on JobSeeker. But Dr Leigh criticised the lack of similar initiatives geared towards older workers, particularly as businesses look to implement machine automation.

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“At a time when we should be investing in people, the government has put its priorities elsewhere,” he said.

“A centrepiece of the budget is a plan to encourage firms to bring forward business investment and to hire workers aged 35 and under, but there’s very little planned for how this will affect older workers. There’s 928,000 people aged over 35 on unemployment benefits who are going to be ineligible for the hiring bonuses and vulnerable to automation.”

According to a report commissioned by the government, from the industry department, 54 per cent of workers are susceptible to automation. The share of jobs that could be lost to automation is projected to be highest in Queensland and Tasmania.

Further, Dr Leigh noted challenges in city economies such as automation and deurbanisation, affecting workers across hospitality, construction and transport. 

“The right response to these challenges would have been to invest in education, but that’s not what we’ve seen,” the MP said.

“…Right now we’ve got a budget which is accelerating automation and freezing education. The risk is as a result, we go further down the path of low-wage America, rather than down the path of high-wage Scandinavia.”

While he said there should have been more done across schooling, vocational training and tertiary education, Dr Leigh signalled the government had moved in the right direction to increase university places. 

Grattan Institute chief executive Danielle Wood also weighed in on what she thought was missing from the budget at the Morningstar Investment Conference. For her, the government had failed in not offering much in terms of support for the recreation, hospitality, administration and tourism sectors.

“I would have liked to have seen more targeted support for those sectors that are hard hit,” Ms Wood said.

“We have seen a lot of creative things happening overseas in terms of government vouchers and discounts to actually get people out there and spending in those sectors. The great thing about those schemes is every dollar hits the economy, we don’t have that issue of leakage, savings, as you do with tax. 

“But you can target it to those sectors that are really hard hit and you can actually generate behavioural change. We need to get people back into that mindset of going out for dinner again.”

The government’s spending will result in net debt that is set to rise to $703 billion this year and peak at $966 billion, or 44 per cent of GDP, in 2024. 

But Australia was already in a weak position prior to the COVID crisis. Real GDP increased by 2.3 per cent in 2019, down from 2.9 per cent the year before, while wage growth was slowed to record lows.

Dr Leigh termed the prior period the “Morrison stagnation”, which took place before what the Labor Party has termed the “Morrison recession”. 

JobKeeper, JobSeeker and unemployment

Unemployment has been forecast to peak at 8 per cent, from its previous forecasts of 10 per cent, but direct support in the form of JobKeeper and Jobseeker extensions was not included in the budget. Treasurer Josh Frydenberg also signalled support would be wound back when unemployment was “comfortably on its way back to pre-crisis levels”.

“We want the government to succeed, we want the unemployment rate to come back down. Unemployment is a terrible scourge, just a waste of human resources,” Dr Leigh said. 

“And yet, while 160,000 people are forecast to lose their jobs by the end of the year, we’ve had JobKeeper cut, by $300 per worker and that decline and cut in support, at the same time that the need has risen, causes me significant concern.

“The focus for small business needs to be a focus on growth. We need more rapid growth in the Australian economy but I think that requires more attention to the drivers of growth, more attention to how we get a surge in productivity than what is delivered through this budget.”

Ms Wood has also raised the adjustment of JobSeeker as a lost opportunity, noting it is “universally agreed” that the old rate of $40 a day should be increased. 

“The government says it is waiting to see the economic condition, but my argument would be if you’re doing something permanently, really the key question is what is the minimum people need to live a basic dignified existence and to be able to continue to job search?” she said.

“We should be able to answer that now and locking it now would provide greater certainty as well as an economic boost.”

 

Government directing Australia towards ‘low-wage America’, shadow minister says
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Sarah Simpkins

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth. 

Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio. 

You can contact her on [email protected].

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