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Creating effective employment solutions for regional Australia. Professor Bill Mitchell Centre of Full Employment and Equity University of Newcastle NSW, Australia. “ The Northern Territory is a vast wild land, full of huge possibilities .
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Creating effective employment solutions for regional Australia Professor Bill Mitchell Centre of Full Employment and Equity University of Newcastle NSW, Australia
“The Northern Territory is a vast wild land, full of huge possibilities “The Northern Territory is a vast wild land, full of huge possibilities, but, up to now, a colossal failure.” THE BANJO Source:http://trove.nla.gov.au/ndp/del/page/826234
The Davos mindset • Alcatel CEO Ben Verwaayen said: • the concept of a nation was disappearing and being replaced by direct relationships between local regions and global markets. • The problem is that policymakers are still operating as if there was a national prerogative that policy could service. • “New regionalism” – is part of the overall neo-liberal mindset that has blighted regional development theory and practice.
Outline of talk • Policy makers get captured by dominant paradigms – “mindsets”, “ideologies”. • Regional development theory and policy exemplifies this. • We need to re-think the role of the state and the region – to garner those “huge possibilities”. • A new policy framework is required if we are to create effective employment opportunities and inclusive regions.
The purpose of regional development • The goal of economic activity should be to advance the well-being of all – to maximise public purpose. • The sustainable goal should be the zero waste of people! • We don’t want new industries or firms for their own sake. • Our goals have to be focused on people and the natural environment that sustains us. • The goal of regional development should begin with that presumption.
Goal of regional development • This goal requires – at least – that the state to maximise employment which sustains both our material and non-material needs. • Once the private sector has made its spending decision based on its expectations of the future, the government has to render those private decisions consistent with the objective of full employment. • Non-government sector typically desires to save over the business cycle. What does this imply? • A macroeconomic imperative! • Typical and atypical spending behaviour.
Evidence of policy failure • Despite political rhetoric to the contrary Australia has never gone close to full employment during the long growth period since the mid-1970s. • Australia does not produce enough jobs nor hours of work. • The work opportunities are spatially concentrated – two-or-more-speed economy! • There is a constant tension between social settlement and economic settlement. • Regional development strategies have largely failed. • Why?
The full employment era • The Post WW2 settlement was mediated by the full employment framework. • Coherent macroeconomic policy supported full employment. • A national skills development created dynamic efficiency – firms had to offer skills and jobs. • Coherent regional development policies meant there were jobs and infrastructure where people lived. • Inclusive redistributive approaches.
Neo-liberal era … • The neo-liberal era began – around mid-1970s. • Promotion of the idea that private markets self-regulate and deliver optimal outcomes – wealth maximisation. • Features: • Abandoned government commitment to full employment – fiscal surpluses. • Accelerated deregulation of labour market and financial markets. • Massive unsupervised growth of financial sector. • Privatisation – loss of training capacity in public sector. • “Individual” promoted - “collective” eschewed. • Abandonment of explicit regional strategies – “market would fix” • Intergenerational myths.
Flawed neo-liberal agendas • Several “new” ways of thinking emerged to flesh out the neo-liberal agenda at the regional and community level. • New regionalism – the “state” is irrelevant – promotion of the individual – abandoned notion of systemic crisis. • Social entrepreneurship – built on the “market” model. • ABCD – further accentuated the individual construction.
Failure of neo-liberal approach • The current crisis is the direct result of this approach. • Real wages failed to keep pace with productivity and national income was redistributed towards profits. • Consumption driven by credit not real wages growth. • Private indebtedness became unsustainable - collapse. • Pursuit of surpluses degraded public infrastructure especially in regions. • Spatial inequality rose. • “Market” failed to drive appropriate net migration and commuting patterns.
Failure of neo-liberal approach • High rates of labour underutilisation especially among 15-24 year olds and older workers. • Poorly structured training framework – waste of funds. • Welfare system has become a pernicious compliance mechanism.
Starting point - macroeconomics • Policy must refocus on full employment, higher rates of participation and dynamic skills development. • Even with the major shifts in patterns of trade and production, the national state remains relevant. • Regions dance to the tune of the macroeconomy. • Regional development must be supported by a strong macroeconomic environment. • Deregulated markets fail.
Macroeconomic reality • Australian government issues its own currency and can never run out of money. • Unemployment is always a choice of government. • Government can always maintain full employment by ensuring its net spending fills private spending gap. • Budget deficits are NORMAL if private sector saves.
Faux issues ... • Fiscal consolidation. • National saving. • Intergenerational debate – ageing society. • Primacy of bond markets. • Governments living beyond their means. • The fear of hyperinflation. • Household budget analogy. • Ricardian agents. • Cutting spending leads to more spending! The “fiscal contraction expansion” myth.
Australian people and place • Australia has unique challenges. • Proximity to South-East Asia – the new “growth” centre – major changes in supply chain etc. • Reliance on primary commodities for growth – “Dutch disease” – Two-speed economy - East coast recession. • Spatial disadvantage and spill-overs even with growth. • Rising inequality. • Climate change issues – carbon-basedeconomy. • Role of government versus the market.
All development requires a minimal safety net • The Federal Government has to gear its fiscal strategy towards direct job creation. • There should be a Job Guarantee - an unconditional and universal employment guarantee paid the federal minimum wage to any workers who want a job but cannot get one. • Purchasing a resource that has no market demand is not inflationary? • We should start with a Youth Guarantee– 25 per cent of 15-24 years olds who desire work are idle.
3-year ARC-funded regional development study • Surveyed all Australian local governments to assess unmet community and environmental need at local level. • How many low-wage permanent jobs they could offer if funded federally? • Asked quantity engineers to cost the whole plan. • Outcomes: • Massive unmet needs • Hundreds of thousands of jobs can be created – we have a huge inventory of jobs identified. • 547 thousand FTE jobs would require an investment of $8.3 billion a year.
A renewed investment in skill development … • A renewed investment in human skill development is the most durable investment that a government can make. • The Federal Government in partnership with other levels of government should take responsibility to develop a coherent and integrated national skills development framework. • Concepts like “new apprenticeships” have degraded the concept of skill. • This should be done within the context of a Job Guarantee.
National infrastructure with green focus… • National infrastructure development with a focus on fostering green industry initiatives and the skills that will be required to sustain the new activities. • Green jobs agenda – mostly currently focused on skilled workers. • But perfect vehicle for creation of low-wage, low-skilled jobs with mechanisms for skills development. • Huge regional challenge - land and water restoration, degraded public infrastructure.
Industries and economies • The Northern Territory is a regional economy • Depends on a range of industries – extractive, public sector, services (tourism) etc. • Has high levels of income inequality. • Has climate change challenges. • Has indigenous communities juxtaposed to “economic assets”. • Has growing population – labour-force.
Regional and spatial research opportunities • Development of spatial or regional understandings • How is macroeconomic activity spatially distributed? • Clusters of social disadvantage – estimation and explanation. • Spatial econometric models. • Multi-level models and neighbourhood effects. • Development of new geographies in social science. • Labour mobility – migration and commuting patterns. • Concepts of regional development • How do regions grow? • Role of public sector - tied in with buffer stock capacity. • Skill development in regions.
Regions and sustainability … • Industry restructuring – development of renewable industries. • Modelling specific industry change. • Concept of spatial social disadvantage. • National infrastructure … communications, transport.
Peoples and Societies • Social aspects of economic development in Northern Australia. • Indigenous Australians … • Social disadvantage … • Rural-urban linkages …
Climate change … • Tropical countries face environmental challenges such as urban air and water pollution, land degradation, deforestation and biodiversity loss • Modelling labour market implications • Industry. • Occupation. • Developing critiques of “market-based” systems to emissions.
Health … • Tropical nations have some of the poorest levels of health worldwide. • Growing mental health issues … • How to deal with disabilities at a regional level …
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