‘Far too many’ Victorians are going to work while sick. Far too many have no choice

Julian Teicher, CQUniversity Australia and Bernadine Van Gramberg

There is nothing new about people turning up to work when they’re sick. During the 1918 Spanish Flu pandemic, many Melburnians had no option but to carry on working in defiance of public health advice, during an era before paid sick leave and with virtually no social safety net.

Today many employees are entitled to sick leave. And yet Victorian Premier Daniel Andrews this week complained that “far too many people” are going to work with COVID-19 symptoms, describing this as the “biggest driver” of the state’s persistently high rates of transmission.

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It’s easy to understand Andrews’ frustration. But while times have indeed changed for many employees since 1918, those in the casual and part-time workforce face the same stark choice – stay home or get paid – as their counterparts more than a century ago.

Casuals account for 25% of the Australian workforce, mainly in lower-paid jobs. This creates huge vulnerability, both in terms of these workers’ personal circumstances and in the public’s efforts to suppress COVID-19.

This pandemic has starkly revealed the consequences of casualisation in industries such as food distribution, meat processing, health care and private security. In April, a cluster of cases associated with the Cedar Meats abbatoir in Melbourne’s west was traced to casual workers employed by a Brisbane-based labour hire contractor.

Labour hire came under further scrutiny over the Victorian government’s decision to manage its hotel quarantine with the help of three private security firms, one of which subcontracted to other labour hire firms. One guard claims to have been hired via WhatsApp and said he received no training and was paid as little as A$18 per hour. Add to the mix alleged shortages of PPE and hand sanitiser, and the recipe for uncontrolled transmission begins to take shape.

Multiple jobs, no sick pay

The problem is compounded by the fact that many casual and part-time workers need more than one job to make ends meet. This means when they turn up to work despite being sick or waiting on test results, they are turning up sick to more than one workplace.

It gets worse still. Many people with more than one job work in the health sector, and particularly in aged care, where hourly wages are low. According to industry peak body Leading Age Services, 20-30% of the aged-care workforce have jobs in more than one facility.

Federal Aged Care Minister Richard Colbeck has pledged to help aged-care providers cover the costs of employees’ entitlements so they can work at just one facility. But the problem is an entrenched one.

What help is available?

The Andrews government has offered various forms of assistance to encourage workers to stay home if unwell or being tested for COVID-19. But there are some exclusions.

Workers can claim a one-off payment of A$1,500 if unable to work during isolation, and a A$300 payment to cover isolation while awaiting COVID-19 test results, but only if they don’t already receive any other benefits or income and have already exhausted any paid leave entitlements. As the aged-care workforce is predominantly low-paid, an estimated 16% are already on some form of benefit and will likely miss out.

In April, the Fair Work Commission updated the terms of many industry awards to specifically include annual leave or unpaid leave for COVID-19-related absences. Yet this ruling did not cover casual workers or the 40% of workers on enterprise agreements, and unpaid leave would be an unpalatable option for those who have already used up their paid entitlement.

This week the Commission ordered paid COVID-19 leave in three health and aged-care awards to cover both ongoing and casual workers, although some employers have complained the measure will be difficult and costly to implement.

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Workforce casualisation is part of a wider move towards increasing “labour flexibility”. This is touted as a way for workers to enjoy more control over their lives, but in practice it allows employers to offer lower-paid, less secure jobs while freeing themselves of obligation to their employees and in some cases even receiving government subsidies into the bargain.

A classic example is private aged-care homes, which are staffed via layers of labour hire agencies, have received a federal government cash injection to help them deal with COVID-19, and are not bound by the same staffing conditions enforced in Victoria’s public aged-care facilities.

These facilities are in a full-blown public health crisis, accounting for a worrying proportion of Victoria’s COVID-19 cases. Yet their owners have argued that the government and even the elderly residents themselves should fund their workers’ pandemic leave.

It is a profound irony, given how “flexible” work practices have worsened the spread of COVID-19, that Prime Minister Scott Morrison and Treasurer Josh Frydenberg are now calling for even more labour market flexibility as part of the process of economic recovery from the pandemic.

Julian Teicher, Professor of Human Resources and Employment and Deputy Dean (Research), School of Business and Law, CQUniversity Australia and Bernadine Van Gramberg, Pro Vice Chancellor (Graduate Research and Research Training), Swinburne University of Technology

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Mapping COVID-19 spread in Melbourne shows link to job types and ability to stay home

Shutterstock

Melanie Davern, RMIT University; Mary-Louise McLaws, UNSW, and Ori Gudes, UNSW

COVID-19 provides a stark reminder of inequity and the spread of disease. These aren’t new ideas and can be traced back to John Snow’s cholera maps and Charles Booth and his colour-coded maps of occupation types and poverty in the 19th century. Today, as case numbers soar in Melbourne, large clusters of COVID-19 cases have been identified across the northern and western suburbs, raising questions about occupation types and socio-economic differences across the city.

One of the most important messages from government during the pandemic has been to work from home if you can. Though what happens if your work isn’t suited to this?

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Snow and Booth were forefathers of modern geographical information systems (GIS) analysis. It’s a powerful tool for mapping and visualising differences or inequities across cities and the spread of disease. We mapped the connection between occupation types, indicating the ability to work from home, and the locations of COVID-19 cases across Melbourne in the recent second wave.

Why is equity a health issue?

Hotspot suburbs were first identified and ring-fenced in early July. A hard lockdown was applied to the 3,000 residents of nine high-density public housing estates in inner Melbourne.

Ring fencing is a powerful method of containing a disease. It’s most appropriate where a specific location has a distinctive pattern of risk. It should also be applied without bias.

As the public housing towers lockdown reminded us, there is an inequity in health.

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Many people associate equality with treating everyone the same regardless of their needs. This is very different to equity, which is about treating people according to their needs. Unlike equality, equity is providing people with extra help when it is needed.

The picture below makes the concept of equity easier to understand.

Craig Froehle/Medium, CC BY

In the context of this pandemic, a recent discussion of housing affordability raised the issue of equality versus equity.

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Overcrowding and affordability stress: Melbourne’s COVID-19 hotspots are also housing crisis hotspots

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We see a stark difference between the initial transmission of COVID-19 and the second wave. The earliest cases were concentrated in Melbourne’s wealthier areas and associated with international travel. In the second wave we have seen a different pattern of spread across disadvantaged areas of Melbourne.

This pattern is possibly linked to inequity associated with living and work conditions. People with higher education tend to work in occupations that often enable them to work from home, making it easier to self-isolate.

Outer areas of Melbourne have had more cases of COVID-19 cases in the second wave and this might be associated with job types and education levels. Residents living in inner areas of Melbourne are more likely to hold tertiary qualifications needed for occupations more suited to working from home.

What does mapping reveal?

We analysed Australian Bureau of Statistics Census data on employment types from the Australian and New Zealand Standard Classification of Occupations. We identified 93 major occupation types suitable for working from home.

We linked and mapped these occupation data along with COVID-19 incidence according to local government areas. The map below shows data from July 16.

Data: DHHS, July 16, Author provided

The map reveals lower proportions (shown by lighter-coloured areas) of people employed in occupations suitable for working from home in many outer northern and western areas of Melbourne. In particular, the proportion is low in Hume, one of the local government areas where COVID-19 cases have been concentrated.

In the inner and outer eastern areas of Melbourne, residents are more likely to be able to work from home. Nillumbik in the outer north-east has the highest proportion of people able to work remotely. It has very few cases of COVID-19.

Greater Dandenong is an exception to this pattern. As a manufacturing hub for Melbourne, it has a low proportion of people in occupations suitable from working from home, but has few cases.

COVID-19 is spread through community transmission or close contact with others who are infected, as happened in meatworks factory clusters in northern and western Melbourne. Greater Dandenong may have been protected by the small number of cases across south-eastern Melbourne where more residents have occupations suitable for working from home.

The Victorian Department of Health and Human Services updates COVID-19 incidence data hourly. We first sourced data on July 16, a week after the Melbourne-wide lockdown began, to understand the patterns of occupation types and COVID-19 clusters as they evolved. To continue monitoring, we have developed a data dashboard, which is shown below.

Ori Gudes, Author provided

We hope this data dashboard will be released in coming days with updated data.

Using inclusive data to protect everyone

The related patterns of occupations and COVID-19 incidence remind us of the importance of the well-known relationships between health and place.

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This pandemic takes advantage of inequity and our most vulnerable communities. It shows us why we must include the full spectrum of society (not only those we know best) when we make decisions, communicate and ask people to work from home.

Many workers are engaged in casual and insecure employment and work is a critical determinant of health. Our mapping provides evidence that can help authorities decide where and how to focus preventive measures when planning public health interventions.

These methods of GIS analysis and easily understood maps should be freely available. The community will then be able to interrogate the data so they can realise in close to real time the rationale for public health directives.

These same principles have been used to understand health and liveability in cities though the Australian Urban Observatory to inform city planning.

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We thank Weijia Liu of UNSW for assisting with data collection in this study.

Melanie Davern, Senior Research Fellow, Director Australian Urban Observatory, Co-Director Healthy Liveable Cities Group, Centre for Urban Research, RMIT University; Mary-Louise McLaws, Professor of Epidemiology Healthcare Infection and Infectious Diseases Control, UNSW, and Ori Gudes, Senior Research Fellow, Geospatial Health Lab, University of Canberra, and Adjunct Senior Lecturer, School of Public Health and Community Medicine, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Let’s “SnapBack” to better society with more secure jobs: Anthony Albanese

Michelle Grattan, University of Canberra

Anthony Albanese says Australia must use the pandemic experience to move to a more resilient society, creating more permanent jobs and revitalising high value manufacturing.

In his fifth “vision statement”, delivered against the background of the government foreshadowing an extensive post-crisis reform agenda, Albanese is giving a broad outline of Labor’s priorities for change.

The Monday speech, issued ahead of delivery, comes a day before parliament resumes for a three-day sitting expected to be more combative than the previous two one-day sittings. It also precedes Josh Frydenberg’s economic update on Tuesday – the day the treasurer was, pre-pandemic, due to deliver the budget, now delayed until October.

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Referring to the government’s “SnapBack” terminology, Albanese says: “Let’s not SnapBack to insecure work, to jobseekers stuck in poverty, to scientists being ignored.”

“It’s no time for a ‘SnapBack’ to the Liberal agenda of cutting services, suppressing wages and undermining job security.

“This pandemic has shown that Labor’s values of fairness and security and our belief in the power of government to shape change to the advantage of working people are the right ones.

“A constrained fiscal position does mean difficult choices. But a reform agenda that doesn’t work for all Australians isn’t one we should pursue”.

Albanese says Labor has been constructive during the crisis, not allowing “the perfect to be the enemy of the good”; he contrasts its approach with the Coalition’s negativity against the Labor government during the global financial crisis.

While Australians have been getting through the crisis together, it has been tougher for some than others, including those who have lost jobs and businesses, he says.

“Sharing the sacrifice to get through the crisis together has to mean working to secure a recovery in which no one is left behind.

“We have to be clear in recognising that those with the least, have suffered the most through this crisis – something that must change.

“It’s critical that we are still saying , ‘we’re all in this together’, after the lockdown has come to an end,” Albanese says.

“We must move forward to having not just survived the pandemic, but having learned from it.

“To secure a more resilient society, given just how quickly things can change, through no fault of anyone.

“To better recognise the contributions of unsung heroes, like our cleaners, supermarket workers and delivery workers. To honour our health and aged care workers.

“To recognise that young people have done more than their share.

“Young people deserve better than an economy and society that consigns them to a lifetime of low wages, job insecurity, and unaffordable housing.

“We must ensure that what emerges is a society that no longer seems stacked against them, or denies them the opportunity and economic security of older generations”.

Albanese says this is a once-in-a-political lifetime event that “creates once-in-a-century opportunity to renew and revitalise the federation” and “a once-in-a-generation chance to shape our economy so it works for people and deepens the meaning of a fair go”.

“We must build more permanent jobs, an industrial relations system that promotes co-operation, productivity improvements and shared benefits,” he says.

“We must revitalise high value Australian manufacturing using our clean energy resources.”

He also urges nation building infrastructure including high speed rail and the local construction of trains; a decentralisation strategy including restoring public service jobs in agencies such as Centrelink that deliver services to regional areas; a conservation program to boost regional employment; and governments working with the private sector and superannuation funds to deliver investment in social and affordable housing.

“A housing construction package should include funding to make it easier for essential workers to find affordable rental accommodation closer to work.”

Albanese says that “too much of the risk in our economy has been shifted onto those with the least capacity to manage in tougher times.

“The broadest burden has been put on the narrowest shoulders.

“Our economy has become riskier, and we need to think through what that means for us all.

“We need to realise that a good society can’t thrive when the balance between risk and security falls out of step.”

Albanese says there needs to be an emphasis on growth, “because only inclusive economic growth can raise our living standards.

“We need to put more emphasis on secure employment – especially for the next generation of younger workers who nowadays have little idea of the meaning of reliable income or holiday pay”.

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Which jobs are most at risk from the coronavirus shutdown?

Jeff Borland, University of Melbourne

The immediate impact of the coronavirus shutdown is striking in its magnitude, its speed and its concentration on a small set of industries.

My attempt to identify where the virus and the shutdown will have the biggest effect suggests that in February 2020 about 2.7 million workers were employed in the most exposed industries.

And while it won’t be possible to know for sure until April 16 when we get data from the Bureau of Statistics on the labour force in March, I believe it’s reasonable to think the jobs of about 900,000 are already under threat.

Which jobs are most at risk?

In the table below I list those whom I think are most at risk.

For one group of about 1.4 million workers – primarily in industries involving eating out, entertainment, recreation, accommodation and air travel – the loss of work is the inevitable result of government shutdowns.

February 2020,
ABS 6291.0.55.003

Another group, comprising about 900 thousand workers, are in retail trades (non-food) and personal services, where the effect on jobs is coming from consumers cutting spending apart from on essential items.

February 2020,
ABS 6291.0.55.003

Workers in both at-risk groups are predominantly young. More than half are under 35 years of age. Six out of seven are employees. About one in every seven is an owner/manager or works in a family business.

A slightly higher proportion are female than male. They are evenly split between full-time and part-time.

Some industries will grow

Some industries are seeing rapid increases in demand due to the coronavirus. They include the retail grocery trade and associated logistic services, and the supply of office essentials needed to work at home.

In a relatively short period there is also likely to be an increase in demand from the health care and health services industries.

Other areas where increased demand seems likely are the home delivery of goods bought online, cleaning services and services usually undertaken by volunteers and government agencies who are occupied dealing with COVID-19.

The total workforce will shrink

So far there has been little impact of the supply of workers, but it will happen.

It is beginning to occur as schools and childcare centres close and workers withdraw in order to care for their children, and it is accentuated by parents not wanting to risk outsourcing the task to grandparents.

In the coming weeks, there will be further hits to labour supply as illness from COVID-19 causes workers to need to take leave and other workers withdraw to provide care for family members who become ill.

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It is difficult to be precise about the magnitude of withdrawal from the labour market, but it is potentially large.

To start with, most of the impact is likely to come from withdrawal for caring or to avoid illness.

As an indication of the potential scale of withdrawal, in 2019 there were 1.21 million families with children aged from 0-9 years in which either a sole parent or both parents were in paid work.

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In 2016 there were 634,500 people aged 65 to 84 doing voluntary work.

Workers becoming ill might also have a substantial impact on labour supply.

Under a (hopefully pessimistic) scenario that COVID-19 continues its current rate of growth over the next three weeks, with those infected in the previous two weeks then unable to work, this would be about 67,500 persons out of work due to illness.

COVID-19 has already had a dramatic effect on employment – that much is evident from news images of queues at Centrelink.

Further impacts are almost certain in coming weeks.

February 2020,
ABS 6291.0.55.003

The scale and speed of what’s happening is creating the most serious labour market policy challenge of the post-war era.

Jeff Borland, Professor of Economics, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Want more jobs in Australia? Cut our ore exports and make more metals at home

Trucks taking iron ore from mines in Western Australia where it will probably be shipped overseas.
Shutterstock/Inc

Michael Lord, University of Melbourne

Australia could create tens of thousands of new jobs and generate many billions of dollars in export revenues if it turned more to manufacturing metals rather than exporting ore to other countries.

That’s a finding of our report, From Mining to Making, released by the Energy Transition Hub.

As international climate action accelerates, there is a need to produce goods without the carbon emissions. The report describes opportunities for Australia to use its exceptional wind and solar resources to make zero-emissions metals.

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The need for metal

Demand for metals is set to grow, not least because of their importance in nearly all renewable energy technologies. Wind turbines are made from steel, copper and rarer metals such as cobalt and neodymium. Solar panels and batteries use metals including silicon, lithium, manganese, nickel and titanium.

As the global economy tries to reduce carbon emissions we must change the way metals are made. Metal production is energy intensive and accounts for around 9% of global greenhouse gas emissions. Herein lies Australia’s opportunity.

Australia is already a major source of the world’s metal. It is among the top three exporters of iron ore, bauxite, lithium, manganese and rare earth metals.

A small proportion of these metals are refined domestically, but most are shipped overseas in their raw mineral form. For example, we found Australia converts less than 1% of its iron ore into steel.

By exporting raw ores, Australia is selling non-renewable resources at the lowest point of the value chain. Processed metal is worth much more than ore.

Metal needs energy

Many metals are made through electrically-driven processes so we can reduce carbon emissions by switching to cheaper renewable electricity.

One example for this approach is Sun Metals, near Townsville in Queensland. The company built a 125MW solar farm to supply a third of the energy required by its zinc refinery. It is now considering adding wind power and battery storage.

Similar opportunities exist with the production of other metals such as manganese, copper, nickel and rare earths.

Another angle for Australia is to make specialised metal products with higher profit margins. Element 25, in Western Australia, plans to produce high-value manganese metal using an energy-efficient process developed with CSIRO. The company says a 90% renewable energy mix could lower production costs and help it compete with Chinese producers.

Renewable energy could even relieve Australia’s ailing aluminium industry. The owners of three of Australia’s existing aluminium smelters said they were “not sustainable” with current electricity prices. Could cheap wind and solar energy provide a lifeline?

The usual objection is that aluminium smelters need a steady power input, not variable solar and wind energy. But, new technologies enable more flexible operation, allowing smelters to react to market conditions, while relieving pressure on the grid during peaks in demand.

Steel production presents a different kind of problem. It uses so much coal that it accounts for 7% of global emissions. But new steel can be made without coal.

Many steelmakers around the world use an alternative process, called direct reduction, fuelled by natural gas. This technique reduces emissions by about 40% and can be modified to run on pure renewable hydrogen, enabling production of near-zero emissions steel.

At least five companies in Europe are actively pursuing hydrogen-based steel production as part of their efforts to eliminate emissions. So far there are no similar plans in Australia despite this country’s unrivalled wealth of iron ore and renewable resources.

The jobs boom

Zero-emissions metals could become a major export industry. Our report explores a scenario in which Australia could double the value of its iron and steel exports to A$150 billion by converting just 18% of currently mined iron ore into steel using renewable hydrogen.

This would be a welcome boost for the national balance of trade, counteracting any reduction in coal exports due to climate and energy policies among Australia’s trading partners.

Making this amount of zero-emissions steel requires a huge amount of renewable electricity – almost double the total electricity generated in Australia in 2018.

But this demand for renewable energy is part of the point – Australia can do this, most of our competitors cannot due to their greater energy demand relative to land suitable for generating renewable energy.

A successful zero emissions metal industry would bring many thousands of steady jobs, often in regional areas with higher unemployment. It could also support towns such as Portland, in Victoria, and Gladstone, in Queensland, where metal producers are already the chief employer.

The market for zero-emissions metals is likely to be enormous. Until recently, emissions embodied in materials have been neglected. But this is changing, as hundreds of the world’s largest companies commit to reducing the emissions of their supply chains.

For example, car makers Volkswagen and Toyota are aiming for zero-carbon production.

In September the World Green Building Council challenged the global construction sector to ensure all new buildings have net-zero embodied carbon by 2050. Such public commitments are a strong signal to manufacturers everywhere.

Make it happen

Zero-emissions metals could be one of Australia’s most significant new industries of the 21st century.

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To make it happen, our report recommends governments acknowledge this opportunity by creating a National Zero-Emissions Metals strategy, committing serious resources to ensure it succeeds. This strategy should identify and evaluate Australia’s best opportunities within the metals sector.

If we don’t do something then, as South Australian Senator Rex Patrick put it, we’ll just continue to “export rocks” and let others reap the benefits from developing technologies to process them.

Michael Lord, Zero Carbon Researcher, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Why Christopher Pyne and Julie Bishop fail the ‘pub test’ with their new jobs

Questions have been raised about the new private-sector roles of former ministers Christopher Pyne and Julie Bishop.
Lukas Coch/Mick Tsikas/AAP

Yee-Fui Ng, Monash University

Labor has criticised former ministers Christopher Pyne and Julie Bishop for taking up new roles related to their government portfolios, saying these actions breach ministerial standards.

Pyne, the former defence minister, was appointed as defence consultant to consulting firm EY a month after leaving parliament, while Bishop, the former foreign minister, was appointed to the board of the private overseas aid consultancy firm Palladium, less than a year after quitting the ministry.

Following the threat by Senator Rex Patrick to call a Senate inquiry into Pyne’s new job, Prime Minister Scott Morrison has sought advice from the head of his department on whether there has been a breach of ministerial standards.

What do the ministerial standards say?

Ministerial standards set out the standards of conduct expected of ministers. The principle underlying the standards is that ministers should uphold the public’s trust since they wield a great deal of power deriving from their public office.

Morrison’s statement of ministerial standards proclaims

All ministers and assistant ministers are expected to conduct themselves in line with standards established in this statement in order to maintain the trust of the Australian people.

In the cases of Pyne and Bishop, the standards further state that ministers must not “lobby, advocate or have business meetings with members of the government, parliament, public service or defence force” for 18 months after leaving parliament on matters they dealt with in their final 18 months as ministers.

It also prohibits ministers from taking personal advantage of information to which they have had access as a minister, where that information is not generally available to the public.

Pyne and Bishop have both claimed their new jobs are consistent with the ministerial standards.

Pyne argued that providing occasional high-level strategic advice in his new role at EY does not equate to lobbying or involve the use of information he had acquired in his portfolio.

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Bishop, meanwhile, has defended her new role by saying

I am obviously aware of the obligations of the ministerial guidelines and I am entirely confident that I am and will remain compliant with them.

Regardless of their statements of assurances, it can be argued that neither of these new positions pass the “pub test.”

Why should we have cooling-off periods for ministers?

The Grattan Institute has found that one in four former ministers go on to take lucrative roles with special interest groups after leaving politics.

Likewise, as my co-authored discussion paper for the NSW Independent Commission Against Corruption shows, more than one-third of lobbyists are former government representatives (that is, former politicians, senior public servants or ministerial advisers).

There is, thus, a well-established revolving door between government and lobbying due to the extensive and beneficial networks developed by public officials in the course of their duties.

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The post-ministerial employment restrictions have been put into place to reduce the risk of corruption and undue influence by former public officials-turned-lobbyists hoping to sway their former colleagues and underlings and influence public policy for the benefit of their clients.

There are three main ethical and democratic issues underlying this phenomenon.

The first is the possession of confidential information by former officials.

Second, there is the issue of a minister-turned-lobbyist’s access to and influence over key decision-makers in government – connections that can be used to benefit cheque-writing interest groups.

And third, there is the risk that powerful industry groups may approach ministers while they are still in office with promises of lucrative positions after politics if their grants or applications are approved.

Despite these issues, the cooling-off periods for ex-ministers who go on to lobbying roles have been historically poorly enforced. As a result, former politicians are often able to take up roles in breach of these post-employment restrictions without any repercussions.

For example, former Australian trade minister Andrew Robb walked into a $880,000-a-year consultancy with Chinese company Landbridge five months after leaving parliament in 2016. The then-special minister of state ruled that this did not breach ministerial rules, claiming that someone with a broad portfolio like Robb should not be prohibited completely from work after they leave parliament.

How can we fix the system?

The post-employment separation requirements serve a legitimate purpose in reducing the risk of corruption and undue influence in our democracy.

The first step for the government to address the problem is to properly enforce the cooling-off periods. Having these requirements in ministerial standards does no good if prime ministers turn a blind eye to these kinds of appointments. We need to pass a law to give an independent commissioner the power to punish those who are in breach.

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For example, Canada has a law mandating a five-year post-separation period for ministers, MPs, ministerial advisers and senior public servants before taking up positions as third-party or in-house lobbyists. This law is strongly enforced by an independent commissioner of lobbying. Breaches are an offence punishable by a C$50,000 fine.

Second, the rules need to be tightened to avoid technical arguments about compliance. For example, laws are needed to explicitly ban former ministers, their advisers and senior public servants from carrying out lobbying activities for a certain period of time, whether as individuals, or on behalf of organisations or corporations, including consulting firms.

More broadly, there is also a need for greater transparency in the lobbying industry – specifically, what types of individuals and organisations are successfully gaining access to and influencing government.

Due to concerns over this, the NSW ICAC has launched a public inquiry into the regulation of political lobbying called “Operation Eclipse.” The outcome of this inquiry should provide many options for reform at both the federal and state levels.

The regulation of the revolving door between politicians and lobbying groups has been extraordinarily weak in Australia. The phenomenon of ministers taking up plum positions that create actual or perceived conflicts of interest has continued unabated for many years.

To restore public trust in government, it is time to tighten the rules and be serious about enforcement.

Yee-Fui Ng, Senior Lecturer, Faculty of Law, Monash University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Morrison commits to 1.25 million new jobs over five years

Michelle Grattan, University of Canberra

A re-elected Coalition government would create 1.25 million jobs over
the next five years, Scott Morrison will promise as he campaigns on
the next stage of the government’s economic plan.

Beginning a tour of south east Queensland on Tuesday, Morrison will
claim the title of “a jobs government” and also foreshadow
announcements of “congestion-busting” infrastructure projects.

With Queensland containing many marginal seats, both leaders are
putting time in there before the return of parliament. Last week
Morrison was in the north of the state. His days in the south east
will include campaigning with the embattled Home Affairs Minister
Peter Dutton who is under heavy assault in his seat of Dickson.

In a major economic address in Brisbane on Tuesday, Morrison will
point out that at the coming election only half of those of voting age
will have been through a recession in their working lives.

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He will talk up the government’s economic record, and say that “a
strong economy is the foundation for everything else”, including
spending on health, education, the NDIS and drought relief.

A weaker economy – which he claims a Labor government would bring –
“will not produce a fairer Australia. It will not guarantee the
essential services that Australians rely on,” the Prime Minister says
in his speech, released ahead of delivery.

The proof of a strong economy is jobs, he says. “Under our government,
over 1.2 million new jobs have been created.

“Last month, over 20,000 jobs were created taking unemployment down to
5 per cent – the lowest level in over 7 years. This government is
delivering the same high employment economy that the Howard government
delivered,” he says.

“This is a jobs government that is a creating a jobs economy.”

Morrison stresses that “everyone is sharing the benefits”, pointing to
the lowest levels of working age people on welfare in 30 years, record
highs in female participation, and more than 100,000 young people
getting a job last financial year.

“And in what economists call “prime age population” – those aged 25
to 54 – the share employed is at an all-time high – above 80 per
cent.“

In the next stage of its economic plan the government commits to

…keep the budget strong;

…lower taxes;

…back small and family businesses;

…reliable and affordable energy;

…build the infrastructure Australia needs;

…drive all our industries forward, not just the new ones;

…safe and prosperous workplaces;

…work skills for all generations;

…keep big business accountable;

…even more access to overseas markets for exporters.

The plan will be backed by the April 2 budget and other announcements
in coming months, Morrison says.

He says that as he moves around South East Queensland this week he
will make fresh announcements of “congestion-busting investments”.

“Investments that will means families can get around the table at
night for their evening meal, parents can help their kids with their
homework, small business people can spend more time on the job than in
the traffic”.

Morrison says a Shorten government would hit house prices, hurt
business profitability and bring a return of the “old days of
industrial conflict”.

“You can be sure the budget will unravel, because the last time Mr
Shorten’s party delivered a surplus was in 1989!”, he says.

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Research check: we still don’t have proof that cutting company taxes will boost jobs and wages

There still isn’t clear research showing company tax cuts will increase employment or wages.
Shutterstock

Ross Guest, Griffith University

If you read these headlines you might think we finally have proof that cutting company taxes will boost employment and investment:

• Company tax cuts work, according to first-ever ‘real time’ local study
• Small business company tax cuts boost jobs but not wages
• Half the Australian businesses that got a tax cut have banked the cash
• Company tax cuts lift  jobs growth, study finds

These stories are based on analysis of the 2015 company tax cut by consultants AlphaBeta. But the study, as well as some of the media coverage of it, show a worrying misunderstanding of how company tax cuts work.

Simply comparing companies that receive a tax cut with those that don’t isn’t the right methodology to conclude that the 2015 tax cuts created more employment or higher wages.

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Read more:
There isn’t solid research or theory to support cutting corporate taxes to boost wages

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Cutting taxes lets companies keep more of their profits, allowing them to invest in new equipment and premises for example. The company then needs to hire more workers to work with these new assets. The newly created jobs require businesses to compete for workers and this increased demand pushes up wages across the entire economy.

Suppose a retail company gets a tax cut and opens a new store. It advertises for workers, many of whom are already employed by a rival store that didn’t get the tax cut. The first company will need to offer the workers higher wages to entice them away. The rival store will need to consider matching the wages in order to keep the workers.

In other words, even workers in companies that don’t receive the tax cut should see a wage rise.

Going through the AlphaBeta report

In 2015, the federal government cut the tax rate from 30% to 28.5% for businesses with less than A$2 million in revenue. Eligible businesses saved around A$2,940 on average because of the tax cut.

AlphaBeta used transaction data from 70,000 businesses to compare businesses just below the A$2 million threshold to companies that were just above it.

The analysis looked at the differences between the two groups of firms in terms of whether they hired new workers, invested in their businesses, increased worker wages, or kept some of the cash as a reserve.

AlphaBeta chalked any differences between companies that received the tax cut and those that didn’t to the company tax cuts.

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Read more:
The full story on company tax cuts and your hip pocket

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As reported in The Australian, AlphaBeta found that companies that received the tax cut increased their employee headcount by 2.6%. The companies that didn’t receive the cut increased employment by just 2.1%.

This difference turned out to be “statistically significant”, meaning it is very unlikely to be the result of random chance.

As the Sydney Morning Herald pointed out, AlphaBeta also concluded that 51% of the tax cut was kept as cash, 27% went towards new investment, but only 3% was paid to workers in higher wages.

In other words, wages increased by just A$1.44 per week. This is not only a small amount, it was also found to be not statistically significant.

Problematic methodology

The main issue with this study’s methodology is actually noted by AlphaBeta in the report itself (and echoed in the coverage by the ABC and Sydney Morning Herald).

The problem is that we cannot draw any conclusions about the effect of company tax cuts on jobs or wages by studying a bunch of firms that received them and another bunch that did not, even if the firms are only slightly different.

This is because, as noted above, the effect of company tax cuts on jobs and wages take place in the entire labour market. An increase in demand for labour flows through to all business, and therefore, so do higher wages.

So we should not expect to see wages rising only in those businesses that receive the tax cuts. The finding that an increase in wages is small and insignificant is exactly what we would expect to see from this study.

Another problem is that we do not know whether the characteristics of the companies in AlphaBeta’s sample. Were some industries with particularly pronounced employment or wage increases over represented in one group but not the other, for instance?

Studying the effect of company tax cuts on employment and wages also requires a longer time period – sometimes years – and careful control of other factors affecting jobs and wages in some firms relative to others.

Blind review:

The analysis in this review is generally fair and reaches a sound conclusion regarding the AlphaBeta report. However, the logic behind company tax cut raising wages is somewhat simplified.

A cut in company tax lowers the costs of production and can flow to labour, capital (including equipment and buildings) and consumers. Economics tells us that who actually benefits from a tax cut depends on what is more responsive to the tax – labour, capital or output.

The lower production costs from a company tax cut can lead to greater output and lower prices as consumers buy more goods and services. This depends, of course, on how responsive consumers are to changes in price.

In the short-run labour is more mobile than capital, which is usually regarded as fixed. Therefore, in the short-run most of the benefit is borne by owners of capital (the companies) in the form of higher after-tax profits.

However, over the longer term, companies invest their after-tax profits in the business. So most of the benefit of the tax cut goes to workers though higher wages as the increased “capital stock” (such as equipment) makes labour more productive.

It follows that there is no reason to expect a significant increase in wages over a period of one or two years (as the AlphaBeta report covers). Indeed, such a result would be somewhat surprising. – Phil Lewis

Ross Guest, Professor of Economics and National Senior Teaching Fellow, Griffith University

This article was originally published on The Conversation. Read the original article.

Budget policy check: do we need ribbon-cutting infrastructure for jobs and growth?

Hugh Batrouney, Grattan Institute

In this series – Budget policy checks – we look at the government’s justifications for policies likely to be in this year’s budget and measure them up against the evidence.

In this piece we look at the need for infrastructure projects.

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We look set for another infrastructure budget: big new projects that will, we’re told, boost growth, create jobs and tackle the pressures of our booming population. For example, the Turnbull government has already pledged up to A$5 billion for a rail link from Melbourne Airport to its CBD.

Infrastructure can play an important role, but behind the rhetoric some fundamental investment principles are missing.

Are investing in infrastructure and economic growth a sort of virtuous circle that feed each other?

Through a stronger economy, you can also invest in important infrastructure that again drives stronger growth in our economy … but also delivers the infrastructure that busts the congestion in cities, that makes rural and regional roads safer.

– Treasurer Scott Morrison

Yes, sometimes infrastructure spending and economic growth form a virtuous circle. In new suburbs and rapidly growing cities, infrastructure is needed to connect people to jobs and that in turn drives economic activity.

But we shouldn’t be fooled into thinking any spending is good spending. There are many examples where the opposite is more likely true: where poorly targeted infrastructure wastes resources and weakens economic growth.

If we want to identify the best projects, a good place to start is our biggest cities. Big cities have a productivity advantage because they match workers to jobs better and faster than smaller cities and towns. Transport infrastructure is key to this matchmaking.

But in many cases, the enormous costs of construction in big cities – acquiring land, disrupting traffic, and the physical challenge of constructing in densely developed places – often makes it hard to justify the incremental increases in accessibility that a project generates.

Instead, policies and projects targeting better use of existing infrastructure can have greater economic impacts. The trouble is, these projects usually don’t involve cutting a ribbon.

Changes to the way we set prices for the use of roads and public transport, for example, can help us get more out of the infrastructure we already have. Charging public transport users different amounts depending on the time of day they travel can reduce peak-period overcrowding on our trains. With much lower capital costs, policies like this often deliver a bigger bang for the buck than major new investments.

Are these road and rail projects the sort of infrastructure that supports growth?

Whether it’s the Tulla Rail or the M1 up in Queensland or indeed in my home city of Sydney around Western Sydney Rail from the airport and the road infrastructure that goes around that in particular, we are making important national investments in infrastructure that will support growth, bust congestion in our cities and make our transport – rural and regional roads – safer.

– Treasurer Scott Morrison

Infrastructure undeniably plays a role in supporting the economy. But not every project will add to the productivity of our economy.

On the face of it, the economics of airport rail in Melbourne look thin. Infrastructure Victoria has said upgrading airport bus services should be investigated first, because at A$50-100 million it’s a much cheaper way to tackle the same problem. It has also said that the rail line should be delivered within 15-30 years.

The perceived urgent need for airport rail in Melbourne may stem from the slow and unreliable travel to the airport over the past 18 months. This is a byproduct of the Tullamarine Freeway widening project, which is now almost complete. Responding to a short-term pressure with a multi-billion dollar investment – in the absence of a detailed business case – is a depressing example of poor policy-making.

And the Treasurer’s enthusiasm for the Western Sydney airport rail is also concerning, given that a recent state government study indicated the project wouldn’t be needed to cater for customers and workers at the airport until 2036, at the earliest. Infrastructure Australia has been clear that a rail corridor, running north-south through the airport site, needs to be preserved for a future rail line. But that is a long way from justifying billions of dollars of infrastructure that isn’t needed for nearly another 20 years.

Does Australia need infrastructure to create jobs?

Our national economic plan for jobs and growth has been getting results…A $75 billion national infrastructure investment plan that is building the runways, railways and roads Australia needs to remain competitive, and create jobs.

– Treasurer Scott Morrison

At certain points in the economic cycle, infrastructure spending can help create jobs. New projects create jobs for workers involved in planning, building and deploying each project, as well as for the suppliers of equipment and materials needed as inputs.

And in the longer term, the Treasurer is right to say that infrastructure is essential if our cities are to remain competitive.

But again, context is everything.

Infrastructure can put people to work when there is “slack” in the labour market – when there is unemployment or underemployment, in other words. But if there is little slack in the labour market, then the workers required to get a project off the ground will be drawn from other productive activities. In that case, there may be no boost to jobs or economic growth, because one activity is merely displacing another.

With national unemployment currently around 5.5%, there does appear to be some slack in the labour market right now. However, firms are now finding it more difficult to access the labour they want. And the slack doesn’t appear to be in the parts of the economy that would benefit most from new projects: as the RBA reports, the construction sector recently reached its highest share of total employment since the early 1900s.

What’s the verdict?

Eminent urban economist Ed Glaeser once said, “if you have a focus on jobs and macroeconomic effects, it leads to infrastructure in the wrong place”. Australia should focus on a project-by-project approach; that’s the only way we can be assured that investments represent the best possible use of available funds.

This means starting with some basics: the government should not commit to expensive new infrastructure projects until it has commissioned a detailed look at the economic impacts of the investments, and it has made public the results of that analysis.

That’s how infrastructure policy would be done in an ideal world. But sadly, in a pre-election budget, we can probably expect politics to triumph over policy, yet again.

Hugh Batrouney, Fellow, Grattan Institute

This article was originally published on The Conversation. Read the original article.

Why we are still convinced robots will take our jobs despite the evidence

Jeff Borland, University of Melbourne

The tale of new technologies causing the death of work is the prophecy that keeps on giving. Despite evidence to the contrary, we still view technological change today as being more rapid and dramatic in its consequences than ever before.

The mistaken view that robots will take our jobs may come from a human bias to believe that “we live in special times”. An absence of knowledge of history, the greater intensity of feeling about events which we experience first-hand, and perhaps a desire to attribute significance to the times in which we live, all contribute to this bias.

History repeating

In the 1930s, John Maynard Keynes envisaged that innovations such as electricity would produce a world where people spent most of their time on leisure activities. In the United States in the 1960s, Lyndon Johnson established a Presidential Commission to investigate fears that automation was permanently reducing the amount of work available.

Australia has not escaped the prophecy, with similar concerns about the future of work expressed in the 1970s.

In their history of Monash University, Graeme Davison and Kate Murphy report that:

In 1978, the historian Ian Turner, organised a symposium on the implications of the new technologies. The world, he predicted, was about to enter a period as significant as the Neolithic or Industrial revolutions. By 1988, at least a quarter of the Australian workforce would be made redundant by technological change…

Some years later, Barry Jones continued the gloomy forecasts in his best-seller Sleepers Wake!:

In the 1980s, new technologies can decimate the labour force in the goods producing sectors of the economy…

Of course, none of this came to pass in Australia; just as work did not disappear in the 1930s in the United Kingdom, or the 1960s in the United States.

Yet today, we are seeing the resurrection of the prophecy. Commentary on the Australian labour market abounds with claims that the world of work is undergoing radical and unprecedented change.

The increased application of computer-based technologies in the workplace is suggested to be causing a reduction in the total amount of work available; or to be bringing a more rapid pace of substitution of machines for humans than has been seen previously.

No evidence for the death of work

In recent research with Michael Coelli, we argue that the prophecy is no more likely to be realised in the 2010s in Australia than in the 1970s.

Certainly, there is no evidence that the death of work is at present underway. Since the mid-1960s the aggregate hours worked by the Australian population (on a per capita basis) has remained stable.

In particular, there has been no long-run decline in the aggregate amount of work that matches the timing of the progressive introduction of computers to the workplace since the early 1980s.

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Source: Borland, J. and M. Coelli (2017), ‘Are robots taking our jobs?’, Australian Economic Review, forthcoming, Figure 3

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Moreover, the pace at which workers are churning between jobs in the Australian labour market is not getting quicker. Not only is there no evidence that more workers are being forced to work in short duration jobs, but what is apparent is that the opposite has happened. The proportion of workers in very long duration jobs has increased over the past three decades.

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Source: Borland, J. and M. Coelli (2017), ‘Are robots taking our jobs?’, Australian Economic Review, forthcoming, Figure 9

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Why work is not disappearing

There are good reasons why we should not expect new technologies to cause the death of work. New technologies always cause job losses, but that is only part of the story. What also needs to be understood is how they increase the amount of work available.

One way this happens is through the increases in incomes that accompany the application of new technologies. With the introduction of these technologies, it may take less labour time to produce what used to be consumed, but higher real incomes, together with an apparently unlimited human desire to spend, bring extra demand (for existing products as well as for new types of goods and services), and hence for workers to provide those extra goods and services.

As well, new technologies are likely to substitute for some types of workers, but to be complementary to, and hence increase demand for, other types of workers. Computer-based technologies appear to be complementary to workers who perform non-routine cognitive jobs.

In a report on the digitally enabled workforce, Stefan Hajkowicz and co-authors suggest a range of examples for Australia – such as an increase in demand for photographers at the same time as demand for photographic developers and printers has decreased; an increase in demand for graphic designers versus a decrease in demand for printers and graphic press workers; and a decrease in demand for bank tellers simultaneously with an increase in demand for finance professionals.

The end of work is no closer in Australia today than at any time in the past. So, perhaps there is a need to keep disproving the prophecy, to change our mindset.

Jeff Borland, Professor of Economics, University of Melbourne

This article was originally published on The Conversation. Read the original article.