Australia Must Re-Order its Economic Priorities

The new Commonwealth government is hosting a major Jobs Summit in September 2022, bring together representatives from a range of stakeholder groups to discuss the challenges facing Australia's labour market, and how to achieve strong employment, job quality and security, and better skills and training opportunities.

In preparation for the Summit, the Australian Council of Trade Unions is publishing a series of discussion papers to spark dialogue over key issues that will be discussed at the event. The first of these papers, on the failures of past macroeconomic policy and the need for better approaches, was prepared with input from Jim Stanford, Director of the Centre for Future Work. 

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The Economics of Paid Leave for Domestic and Family Violence

As one of its first legislative acts, the new Commonwealth government is proposing to provide 10 days of paid leave for victims of family and domestic violence, as a right enshrined in Australia's National Employment Standards. This will provide victims of FDV with important economic security as they work to address or escape their situations. Access to such leave has been shown to be effective in reducing the subsequent incidence of violence, and assisting victims and their families in rebuilding their lives.

The legislation comes on the heels of an initial decision by the Fair Work Commission to enshrine 10 days paid FDV leave as a provision in Modern Awards.

Our Director, Dr Jim Stanford, appeared as an expert witness last year before the FWC inquiry on this matter. He presented testimony estimating the ultimate impact of 10 days paid FDV leave on total labour costs in the Australian economy. He found that the final impact of this provision on total labour costs was almost too small to be measured (equivalent to an increase in labour costs of one-sixtieth of one percent -- not enough to be visible in aggregate economic data). These costs are easily outweighed by the economic benefits of reducing the incidence of FDV.

Dr Stanford's full expert report is available here (as originally published by the FWC as part of its Family and domestic violence leave review 2021).

Wages, Prices and the Federal Election

The recent federal election featured important debate regarding the rising cost of living in Australia, and whether and how wages should be boosted to keep up with higher prices. One exchange, late in the campaign, occurred when ALP leader Anthony Albanese stated his belief that wages should keep up with prices -- but then was strongly criticised for that view by Coalition leaders and some business commentators.

New exit poll results from the Australia Institute indicate that a very strong majority of voters (83%) in fact support the idea that wages should at least keep up with prices. This opinion was shared broadly across the political spectrum. Even 79% of Coalition voters supported lifting wages to at least keep up with inflation.

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Inadequate Sick Pay Contributes to Too Many Australians Working With COVID

Almost one in five Australians (and a higher proportion of young workers) acknowledge working with potential COVID symptoms over the course of the pandemic, according to new opinion research published by the Centre for Future Work.

The research confirms the public health dangers of Australia’s existing patchwork system of sick leave and related entitlements.

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Wages Crisis Will Continue Without Active Wage-Boosting Policies: Report

A comprehensive review of Australian wage trends indicates that wage growth is likely to remain stuck at historically weak levels despite the dramatic disruptions experienced by the Australian labour market through the COVID-19 pandemic. The report finds that targeted policies to deliberately lift wages are needed to break free of the low-wage trajectory that has become locked in over the past nine years.

The report, The Wages Crisis: Revisited, authored by three of Australia’s leading labour policy experts: Professor Andrew Stewart from Adelaide Law School, Dr Jim Stanford from the Centre for Future Work, and Associate Professor Tess Hardy from Melbourne Law School, updates analysis and recommendations from their 2018 edited book, The Wages Crisis in Australia.

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Meeting Skills Shortages in an Expanding ECEC Industry

This report from the Carmichael Centre argues that Early Childhood Education and Care (ECEC) services should be treated as a strategic industry of national importance – not just a ‘market’, and not just a ‘cost’ item on government budgets.

Building a stronger, more accessible, and high-quality ECEC system is not just a top-ranking social priority for several reasons:

  • The ECEC sector supports hundreds of thousands of jobs.
  • It directly creates billions of dollars of value-added in the Australian economy.
  • It generates further demand for other sectors – both upstream, in its own supply chain, and downstream in consumer goods and services industries that depend on the buying power of ECEC workers.
  • It facilitates work and production throughout the rest of Australia’s economy, by allowing parents to work – although that goal would be much better achieved if Australia had a more comprehensive, universal, and public ECEC system.
  • ECEC enhances the long-term potential of Australia’s economy, and all of society, by providing young children with high-quality education opportunities – that are proven to expand their lifetime learning, employment, and income outcomes, and enrich their families and communities.

Australia’s current market-based system for ECEC funding and service provision is incapable of meeting the needs of parents, families, and the broader economy. A drift to the market-based provision of ECEC services has undermined public provision in Australia and diminished the quality of service and the conditions under which it is delivered.

From this crisis-ridden starting point, the staff recruitment and retention challenge in ECEC will become much worse, if in fact Australia were to make a long-term commitment to expand ECEC provision to adequately meet the needs of working parents (and the entire economy).

Much public debate over the viability of expanded ECEC, putting Australia on a par with other leading industrial nations, has focused on the fiscal dimensions of that undertaking: how would we pay for it?

If Australia is going to expand its ECEC system in line with the needs of working parents and employers, increasing funding to the Nordic-level average for ECEC must be considered, and ramping up high-quality vocational education for ECEC workers must be an immediate and highest-order priority to meet the workforce needs of expanded ECEC coverage.

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Free Education Can Rebuild Australia’s Public Universities

If the federal government lifts annual higher education spending to 1% of GDP, it could repair the destruction inflicted by the COVID pandemic and make universities more accessible and affordable for all Australians, according to new research from the Centre for Future Work at the Australia Institute.

The report analyses the current worrying state of Australia’s higher education sector based on current funding and policy trends, and provides an ambitious national vision for higher education that re-aligns the sector with its public service mission.

At the Crossroads, authored by Eliza Littleton, identifies seven key policy initiatives including free higher education for domestic students, that if implemented, would put Australia’s public universities on a path toward full revitalisation.

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High-Quality Public ECEC Would Lift GDP, Government Revenues

Australia’s economy would get a powerful boost from stronger public early child education and care services, according to new research from the Centre for Future Work at the Australia Institute.

Accessible and affordable child care services would support improved labour force participation and more full time work by women – converging with trends in other industrial countries (especially the Nordic countries, where women’s labour supply is much stronger than in Australia).

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Budget 2022-23 Wastes Fiscal Windfall on Election Gimmicks

The Commonwealth Government has tabled its budget for the 2022-23 financial year. As the nation emerges from two years of lockdowns and border closures, with less than two months until a federal election, this budget is focused on getting the government re-elected -- rather than addressing the challenges of public health, stagnant wages, and sustainability facing Australia.

This failure is all the more regrettable given the enormous discretionary fiscal resources which the government has at its disposal: the budget projects $133 billion in extra tax revenues over the next five years, compared to its MYEFO projections just three months ago, thanks to strong economic growth and rising nominal GDP. But instead of ploughing those revenues into reforming human services (like health, aged care, early child education, or disability services), undertaking a genuine policy to revitalise domestic manufacturing, or accelerating the energy transition, the government has prioritised one-time cash handouts to entice voters in the upcoming election.

In this comprehensive budget overview, the Centre for Future Work's team of economists unpacks the budget, considers its effects, and suggests alternatives.

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Australia’s Skills System Continues to Crumble After COVID

A new report by Centre for Future Work offers a comprehensive review of vocational education and training (VET) in Australia, confirming Australia’s VET system shows growing signs of erosion, fragmentation and dysfunction. Several high-profile government announcements during the pandemic designed to address skilled labour shortages have not altered the VET system’s worrying trajectory.

Fragmentation & Photo-Ops: The Failures of Australian Skills Policy Through COVID by Senior Economist Alison Pennington reviews official data on VET funding, enrolments, and apprenticeships. The statistics paint a grim picture of a VET system starved of consistent funding or focus, fragmenting into scattered offerings of non-accredited and ‘micro-credential’ courses, mostly provided by private for-profit training companies.

“Continued decline in enrolments and eight years of declining apprenticeship completions make it very clear: Australia’s domestic skills pipeline is in disarray,” said Alison Pennington, Senior Economist at Centre for Future Work and the report's author.

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