Guest editorial.

Mitchell, William ; Wrightson, Graham

This special issue of the Australian Journal of Social Issues presents a number of papers by researchers largely working at the Centre of Full Employment and Equity (CofFEE), which is an official research centre at the University of Newcastle, Australia. The exception is the paper by Catherine McDonald and Greg Marston who work in social work at the University of Queensland, but who maintain close ties with CofFEE. Most of the papers were based on research that has been presented at various workshops and conferences over the last 12 months and have been re-written to appeal to the readership of this journal.

The research mission of CofFEE is to promote research aimed at restoring full employment and achieving an economy that delivers equitable outcomes for all. Over the last 30 years we have seen an abandonment of the goal of full employment by government and the emergence of a new goal, which has been termed 'full employability'. The former recognises the role of the system over the individual in providing enough jobs to meet the desires of the workforce whereas the latter focuses on the characteristics, attitudes and motivations of the individual. The application of the new 'active labour market approach' has changed the way we view 'rights of citizenship' in that increasingly onerous requirements have been placed on individuals in order to get income support. CofFEE contends that this 'individualistic' approach merely blames the victims of erroneous federal macroeconomic policy which has generated a systemic constraint on the freedom of individuals to work and enjoy income. In addition to being a paucity of jobs and hours of work, a majority of new jobs are now part-time and increasingly casual. Workers now are more precariously attached to the labour market than before and this trend will worsen as the gains made by unions through arbitral processes over the last 100 or so years are wound back with the advent of the new Work Choices legislation. The papers examine various aspects of the labour market changes that have occurred in the 'neo-liberal' era and present a different picture to the constructions provided by mainstream economic and social policy analysis. They also provide, in our view, material which allows progressive commentators and policy activists to build viable critiques of government policy with the aim of restoring full employment and equity in Australia.

The papers also reflect the team-based nature of work at CofFEE where academics at different stages of research maturity typically work together on large projects. Much of the research reported in this volume has been funded by the Australian Research Council Discovery and Linkage grants schemes.

Three glaring facts describe macroeconomic outcomes in Australia over the last 10 years or so: (a) the Federal Government has consistently run record budget surpluses; (b) the private sector has achieved record levels of indebtedness; and (c) labour underutilisation (unemployment and underemployment) has persisted at high levels (around 10 per cent of more). The three outcomes are related and driven by the first. The consequences of these linkages underpin much of the research reported here.

Far from deserving congratulations for the surplus, the Government should be condemned for ripping off the Australian public the critical health, education and environmental services, which underwrite a fair and sustainable future. Overlooked by policy makers is the issue of our tolerance for badly needed forgone real output, as evidenced by persistently high levels of labour underutilisation. Real issues like this, which will determine whether there is a real capacity by the population to enjoy adequate health and aged care in the future, are being overshadowed by an errant comprehension of government finances. The relentless pursuit of budget surpluses is not good economics. They retard economic growth and the purchasing power seized is lost forever. They do help government accumulate future spending capacity, to meet the needs of our ageing population. The path to a fair and sustainable future is to maintain full employment through appropriate levels of spending requiring budget deficits. Our willingness to applaud the surplus mongers is one of the great ironies in public life.

To address these issues, the first paper by William Mitchell and Warren Mosler Understanding the economic fallacies of the intergenerational debate develops a basic macroeconomic framework that binds the papers in the volume. This framework is applied to the so-called intergenerational debate. The authors highlight the flaws in Federal Government claims that a number of federal programs (such as health, social security, and education) are sensitive to demographic factors and with population ageing, the budget 'blow out' will be unsustainable. They challenge, at their most elemental level, the validity of the 2002 Federal Intergenerational Report claims that: (a) the budget cannot be allowed to reach the projected level because the increasing public debt would push interest rates up and 'crowd out' productive private investment; (b) increasing debt will also impose higher future taxation burdens for our children which will reduce their future disposable incomes and erode work incentives.

They argue that while some of the Government's real aims are sound (for example, high quality health care) the pursuit of budget surpluses undermines the capacity, of the economy to provide future real goods and services of a particular composition desirable to an ageing population. Their analysis indicates that Government would be providing the best basis for future real growth by achieving and maintaining full employment via appropriate levels of deficit spending now. They conclude that in a fully employed economy, the intergenerational spending decisions come down to political choices sometimes constrained by real resource availability, but never constrained by monetary issues, either now or in the future. Their case is based on a detailed study of the spending, taxation and debt issuing systems which ineluctably shows that federal spending is not financially constrained. They conclude that neo-liberal misconceptions expressed in the intergenerational report lead to the nonsensical claim that by running surpluses now the Government will be better able (because it has 'more funds stored away') to cope with future spending demands.

The practical consequences for government employment social workers of the shift to a residual welfare state and an emphasis on disciplining welfare recipients are examined in Room to move? Professional discretion at the frontline of welfare-to-work, Catherine McDonald and Greg Marston, both social policy researchers at University of Queensland. They examine how different forms of professional knowledge are either supported or weakened as well as how organisational structures can block or form possibilities for judgement and consideration. To pursue these aims, the authors use the Australian government's welfare-to-work agenda to focus on the practices of social workers in Centrelink. The authors relate that Centrelink social workers belong to a work culture that goes back to the late 1940s when the Departments of Employment and Social Security aimed to improve the well-being of people in receipt of income support. Within this culture, front-line staff exercised discretion in their work and readily tackled senior staff about best practice.

The paper tracks a transition phase from welfare to workfare in the late 1990s and show that professionals working within Centrelink influenced policy and protected welfare rights and entitlements. However, the new 'participation' agenda has led to changes in Centrelink work practices which have made it difficult for professionals to exercise discretion with their clientele and to influence their managers.

Somewhat tangential is John Jenkins paper, Non-Resident Fathers Engagement with their Children: The Salience of Leisure which critically examines the nature of the leisure relationship between non-resident fathers and their children. The link with the other papers is established once we recognise that a parent's labour market activities influence their ability to enjoy leisure. Unemployment is not leisure despite the mainstream text-book depiction of non-work. Disadvantages in the labour market spill over into leisure space. Jenkins' paper is motivated by the increasing incidence of non-resident fathers as a result of family fracture. While the literature indicates the importance of fathers in determining their children's well-being, for many reasons non-resident fathers contact with their children is inadequate. One time dimension is leisure, which allows a non-resident father and his child to engage in mutually beneficial activities. However, within this space constraints of limited and affordable contact are real and set the responsibilities and commitments are often legally determined.

The author seeks to redress the scant literature on this topic by focusing on the opportunities and constraints that mediate the leisure relationship between non-resident fathers and their children. He provides qualitative survey evidence which shows that non-resident fathers struggle to have adequate contact time with their children. The policy import is clear given the changes to legislation in recent days. It is important to determine the factors which influence the time a father spends with his children and to determine whether non-residence is an intrinsic factor or not.

Beth Cook's paper Privatising health: the demise of Medicare considers the policy developments in health care in Australia with particular emphasis on Medicare. She demonstrates that health policy was an integral component of the post-war Welfare State, which in effect was a non-market, nationally-based class compromise providing income support and service provision In the post-war period, national government assumed 'responsibility for a socially just level of welfare'. There were three components to this: (a) a commitment to full employment; (b) income support to smooth out market fluctuations around full employment; and (c) entitlement as a 'right of citizenship.' In recent decades, national governments have been retrenching their welfare state commitments largely because they have falsely assumed that they were financially constrained and could no longer afford the outlays.

The author uses the rise and decline of the universal health system (Medicare) as the case study to demonstrate her argument about the decline in government commitment. It is shown that Medicare has been subjected to continuing retrenchment since the 1970s largely driven by privatisation and the transfer of responsibility from the collective to the private sphere. Together a residual welfare system has evolved that threatens the Medicare goal of equitable access to quality medical treatment. The author concludes that the principle of universal health care has been abandoned.

The problems of the health system in the Welfare State retrenchment era are dealt with by Anthea Bill, Sally Cowling, William Mitchell and Victor Quirk in Employment programs for people with psychiatric disability: the case for change. This paper presents an evaluation of the effectiveness of existing employment policy in assisting people with psychiatric disability to find, or return to, paid work. The Australian Government is signatory to international agreements which obligate it to create policy that creates adequately remunerated employment and the reduction of unemployment for people with disability. However, the realisation of these objectives has become shackled by the operation of restrictive macroeconomic policy in many of the signatory countries. In the absence of a prescribed right to work, and a state commitment to effective full employment policy, the job prospects of those with psychiatric disability, will remain remote. The authors argue that the poor employment outcomes from current programs establish the need for a paradigmatic policy shift in the form of state-provided employment guarantees for people with psychiatric disability. Accordingly, they argue that government's role should be: (a) to provide the enough public sector jobs to satisfy need; and (b) ensure the design of jobs is flexible enough to meet the heterogeneous and variable support needs of workers. To maintain continuity, of care, an effective integration of the public job creation scheme with mental health, rehabilitation and employment support services is required.

Accompanying the macro spending restraint have been major employment policy changes. The radical new industrial relations terrain in Australia and the likely outcomes for disadvantaged workers are considered by Sally Cowling, Robert LaJeunesse, William Mitchell and Martin Watts in Work Choices: the low productivity road to an underclass. The Work Choices legislation became law in March 2006 amid claims by the Federal Government that a fairer balance of forces within the labour market and higher employment, productivity and real wages will result. The authors argue that Work Choices jettisons the last vestige of equity in the labour market--the judicially-determined wage-setting and dispute resolution machinery. While low-paid workers will bear the brunt of the impact, few workers will be garrisoned from the radical and damaging transformation in the way we work, earn income, take leisure, and engage in social relationships. Far from being a move to increasing flexibility and liberalisation, the authors argue that Work Choices is, in fact, a significant reregulation of the labour market in favour of capital.

They propose that under Work Choices, the imperative is to minimise labour costs which will spur a race to the bottom and a profusion of insecure, low-paid, poor-quality work. Allocative inefficiency will result because a low-wage regime represents a subsidy to low productivity firms. In addition, the failure of the Act to promote physical and human capital formation to raise productivity signals dynamic inefficiency and a future characterised by stagnant real wages and living standards, and declining international competitiveness; it ignores the role of macroeconomic policy in directly addressing the efficiency, fairness and distributional issues that have been said to motivate its provisions. The Bill also ignores the different bargaining power of workers and capital and pays no attention to the serious social repercussions that will flow when labour is treated like a commodity.

CofFEE researchers consider that the macroeconomic context (particularly the Federal fiscal policy position) dominates in the determination of employment. However, to explain why significant regional unemployment disparities persist, the challenge is to uncover how macroeconomic constraints are 'distributed' across regional space. The paper by Anthea Bill, William Mitchell and Martin Watts entitled Examining commuting patterns, employment growth and unemployment in Sydney, focuses on labour mobility in the Sydney Main Statistical Region between 1996 and 2001. The paper shows that when employment growth is spatially uneven regionally localised growth (and stagnation) may promote strong migratory and commuting responses, as relatively advantaged workers seek out new employment opportunities. It is the unevenness in the distribution of employment opportunities that is the key factor, rather than differentials in the rewards and risks of the destination region that motivates mobility.

From a policy view point, strong in-commuting may frustrate the attempts of local policymakers to deliver opportunities to resident unemployed or to stimulate local business via increased resident purchasing power. On the other hand, local job creation strategies may not be strictly necessary to revitalise flagging local economies, if resident workers are able to secure employment in neighbouring regions. This reliance on residential mobility may heavily disadvantage low-skilled workers who are less likely to commute or migrate. As a consequence, local employment generation does not typically benefit the most disadvantaged unemployed local residents. The authors conclude that the main problem motivating the mobility flows is that overall employment growth has not been sufficient to generate enough jobs to satisfy the desires of the workers. This is a macroeconomic problem as indicated in the first paper in this special issue.

The final paper by William Mitchell, Jenny Myers and James Juniper, The dynamics of job creation and destruction in Australia examines the labour market from the perspective of job flows, which is unusual in the Australian context. They develop measures of job creation and destruction for different industry sectors and show how these flows behave during the 1991 recessions. They show that recessions impact differentially on job creation and destruction for part-time employment compared with full-time employment. Recessions particularly damage full-time work and with an underlying trend towards high proportions of part-time work. Full-time job creation is positively related to GDP growth but asymmetries are present--it declines more when GDP growth is negative than it rises when GDP growth is positive. In the case of goods production, part-time job destruction is lower when GDP growth is negative. Full-time job destruction is highly asymmetric and rises sharply when GDP growth is negative, especially in the Goods and Trades sectors. Part-time job creation is less volatile. The policy implications of these cyclical sensitivities are straightforward. What is lost through net job loss during the downturn takes much longer to recover from in the upturn. Moreover, recessions appear to leave a residue of underemployment, largely through their differential influence over the composition of part-time and full-time employment. As a policy application, the authors use their empirical results to conjecture about the likely consequences of the Work Choices legislation.

We thank Louise Sims at AJSI for her patience in dealing with the guest editors and Deborah Mitchell for inviting us to bring this research to a wider, non-economics audience. Graham Wrightson, a co-editor of this issue, handled all the refereeing and quality control.

We hope you find the issue interesting and thought-provoking.

Bill Mitchell and Graham Wrightson

May 2006