THE FEDERAL Government's decision to spend large amount over the next few years on various programs which purport to reduce unemployment does not seriously address the underlying situation. Had the Government done so, it would have announced major industrial relations and other reforms to reduce business costs across-the-board so as to create real jobs on a sustainable basis.
The failure to institute substantive economic reforms reflects to an important extent the continued power of the union movement to resist changes which it perceives as undermining the award system and conditions that were allegedly hard-won in the past.
The union movement is now the bulwark of Australian conservatism, fiercely resistent to the variety of changes that are needed to reduce unemployment. In particular, its relationship with the Government through the Accord has preserved an industrial relations framework that still protects those who have jobs against competition from those who do not.
Of course, the programs announced may lead to some reduction in unemployment over and above that which will occur naturally in the course of the economy's recovery. It has always been possible for governments to create jobs, at least for a time, by establishing employment schemes or providing employment subsidies to employers.
The Nordic countries have been the prime exponents of such shemes which, by disguising the real rate of unemployment, have created the impression that they are caring societies.
More recently, those countries have had to face economic reforms and even the official rate of unemployment has risen. In Sweden, for example, the official rate is up from two per cent in 1990 to more than eight per cent today and the real rate -- that is, inclduing those still on labor market programs -- is around 13 per cent. Perhaps that is why we now hear less from the ACTU about the Swedish model that formed the basis for its infamous "Australia Reconstructed" proposal in 1987.
The point of mentioning the Nordic experience is that we should not be reduced into thinking that a caring society is one which should avoid further economic reforms and which can instead look after the unemployed with government-funded labor market programs. This is the real danger that lies behind the political hype accompanying the white paper, and it is the way to the economic stagnation that much of Europe is experiencing today.
The reduction of unemployment requires changes to increase competition and improve economic efficiency. There is now in existence any number of economic analyses (including some by the Government's own advisers) which demonstrate that such changes would reduce unemployment over time, and by much more than would otherwise occur. Many predict that unemployment could in due course be brought down to five per cent.
None of these analyses includes any allowance for Government spending on labor market programs.
The problem is not that we don't know what to do or that we lack any plan: it is, rather, that we lack the federal political leadership and will to tackle union and other conservative forces that are resisting change and to convince people of its merits. Regrettably, we also now have an Opposition which appears to lack the capacity to put pressure on the Government to improve its performance and to clearly enunciate real policy alternatives.
Some still argue that the experience of the 1980s demonstrates that we have had enough of economic efficiency and that a caring society requires more attention to compassionate measures to help the unemployed. However, a caring society is surely not one that resists change simply because of the potential for adverse effects on some individuals. If the change would lead to improved economic and employment prospects for others, and the economy as a whole, it cannot be regarded as compassionate to halt reforms because they may cause some to lose their jobs, perhaps only temporarily.
On the contrary, it is highly inequitable for governments to continue allowing individuals, industries, or unions to maintain inefficient practices when they impose costs on the rest of the community and hold down living standards and employment. A caring society has an obligation to the present and future generations to rid itself of such practices unless they can be shown to have benefits which more than outweigh the costs of maintaining them.
Naturally, society also has an obligation to help people who are adversely affected by change and who do not have adequate means of support. But we already have in place a vast social security, health and housing system to deal with such situations. During the so-called "greedy 1980s", social security and welfare assistance increased from 8.5 per cent of GDP to well over 10 per cent; and the real value of welfare benefits to individual recipients was also increased.
There can be no doubt, therefore, that the social security system has responded -- perhaps too well -- to the perceived needs of a caring society. But a genuinely caring society would also now press ahead with the economic reforms that are the only way of achieving a sustained higher level of employment and standard of living.
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