Category Archives: Australian Unemployment Union

February 1973: The Moment the Whitlam Government Made the Dole Enough Live On

One of the first legislative acts of the Whitlam government in 1973 was to increase social security benefits.

On February 28, 1973, the Minister for Social Security, Bill Hayden, introduced the Social Services Bill 1973 into the House of Representatives.

The bill sought to increase all pensions and unemployment and sickness benefits by amounts ranging from $1.50 to $14.00 a week. Hayden said the cost of the measures would be $126 million in a full year.


This is Social Security Minister Bill Hayden’s Second Reading Speech on the Social Services Bill 1973.

Mr HAYDEN (Oxley) (Minister for Social Security) – I move:

That the Bill be now read a second time.










The Bill provides for generous increases in all pensions and in unemployment and sickness benefits by amounts ranging from $1.50 a week to $14 a week. Furthermore it provides for payment of the pension increases to be made retrospectively from and including the first pay day for each category of pension occurring after the election of this Government. The cost of these proposals, and others benefiting dependants which I shall outline a little later, will be $126m in a full year and $66.2m for this financial year.

This Bill provides a common benefit rate for all pensions and for unemployment and sickness benefits of $21.50 a week standard rate and $37.50 a week married rate. In doing this it removes several seriously unjust, penalising anomalies. This Bill has promptly honoured the undertaking of the Prime Minister made when he delivered the policy speech of the Australian Labor Party. He said then:

“The basic pension rate will no longer be tied to the financial and political considerations of annual Budgets. All pensions will be immediately raised by $1.50 and thereafter, every Spring and every Autumn, the basic pension rate will be raised by $1.50 until it reaches 25 per cent of average weekly male earnings. It will never be allowed to fall below that level.”

The Bill does more than give effect to the undertaking to increase immediately the basic rate of all pensions by $1.50 a week. In setting common benefit rates for all pensions and for unemployment and sickness benefits we have largely established the principle that common needs deserve common rates of benefit.

We still have some way to go before we fully realise this objective. In the near future I hope to be making further statements on behalf of the Government outlining additional steps which will be undertaken to realise fully this objective. In the meantime the goal already achieved is an extremely important one; it represents a great advance in social values and the appreciation of human worth. Moreover it locks into an ongoing programme whereby benefit rates will be automatically adjusted twice a year until they reach 25 per cent of average weekly earnings. Thereafter there will be regular automatic increases to retain this relationship to average weekly earnings. But more on this later.

It is worth noting some of the more objectionable forms of discrimination which will be eliminated by this Bill. For instance we have removed the long-standing, irritating penalty against the class B and C widows who were deemed eligible for widows pension but paid $2.75 a week less than a class A widows pension. We have ended the punishing meanness with which unemployment and sickness benefits have been paid. A man supporting a wife and 2 children, drawing unemployment benefit and even after allowing for child endowment, has been paid a benefit rate some $17 a week below the updated Melbourne University poverty line. There will be no more of this poor-house, alms-giving mentality which sees merit in official meanness and virtue in suffering, as long as it is in others.

The bulk of the unemployed today are the innocent social casualties of the disastrous economic policies of the last Government and its 1971 Budget. These people and their unhappy families neither sought to be, nor wish to remain, among the ranks of the unemployed. The need they suffer as a result of the meanness of unemployment benefit rates and the humiliation they suffer from unwanted unemployment are the penalty visited on them by the blundering economic policies of the last Government. One of the most objectionable aspects of the practices of the previous Government was the complete denial of any benefit at all for dependent full time student children over 16 years of an unemployment or sickness beneficiary. We have ended this injustice practiced by mean men for too long. Henceforth these student children will attract full benefit rights irrespective of age.

In view of the insignificant cost of this proposal – $600,000 in a full year and $200,000 for the remainder of this year – the dogged persistence with which previous governments have clung to this practice of denying and depriving the dependent student children of the needy unemployed is beyond any reasonable comprehension. Unfortunately some people in the community worry that a modest rate of unemployment benefits, as we propose, will destroy the industry and moral fibre of the nation. Given the fact that the weekly rate of benefit of $21.50 for a full week is much less than a great many business representatives pay for a single meal with a client – largely at taxpayers’ expense, of course – I doubt that anyone drawing benefits will be corrupted by any new found lavishness in his life style. Unemployment benefits do not pander to lazy layabouts. The work test administered by the Department of Labour through its employment offices effectively controls the work-shy.

For those most tragic social casualties – the homeless drifting males (and sometimes females) undermined by an unstable personality and reinforced in their sense of failure and worthlessness by their peer group and the insulation an aspiring middle class society tends to set between itself and these people – we are doing something positive right now. For too long attitudes to these people have been negative and repressive. Society has been prepared to outlay large amounts of money for its police, courts and prisons to repress these people. Considerably less money spent on rehabilitation and social aid programmes will provide greater benefit for society. It is this positive role which we now stress. A working party of top social welfare administrators and other experts has been appointed by this Government to investigate and report on a suitable programme.

We are genuinely committed to a belief in the supreme importance of human worth, the individual’s entitlement to treatment with dignity and his right to self respect.

I will now outline the main provisions of the Bill before the House. The standard rate of pension for aged persons, invalids and widows with children is to be. increased by $1.50 a week to $21.50 a week. As I have just mentioned, the standard rate will also apply to widow pensioners without children in future, which means that these women will receive increases of $4.25 a week. The married rate of pension is to be increased by $3 a week to $37.50 a week, that is, increased by $1.50 a week to $18.75 a week, for each partner. The age limit of 21 years for the payment of additional age, invalid or widow’s pension for full-time student children as well as the additional guardian’s or mother’s allowance, as appropriate where the standard rate applies, will be removed. Payment of additional pension for full-time students together with mother’s or guardian’s allowance, if applicable, will continue without regard to the child’s age until either eligibility for pension ceases or the child’s studies cease. Unemployment or sickness benefit received by a spouse will be exempt for the purpose of calculating age or invalid pension. Unemployment benefit rates and also sickness benefit rates where payment has not been made for a continuous period of more than 6 weeks are to be increased by $14 a week to $21.50 a week for unmarried persons 16 to 17 years of age, by $10.50 a week to $21.50 a week for unmarried persons 18 to 20 years of age, by $4.50 a week to $21.50 a week for unmarried adults and unmarried minors with no parent living in Australia and by $12.50 a week to $37.50 a week for married beneficiaries whose wives are dependent upon them.

Sickness benefit rates where payment has been made for a continuous period of more than 6 weeks will be increased by $8.50 a week to $21.50 a week for unmarried persons 16 to 20 years of age, by $1.50 a week to $21.50 a week for unmarried adults and unmarried minors with no parent living in Australia and by $9.50 a week to $37.50 a week for married beneficiaries whose wives are dependent upon them. The age limit of 16 years for the payment of additional unemployment or sickness benefit in respect of a child will be removed where the child is engaged in full-time studies. Payment will therefore be continued without regard to the child’s age until either eligibility for benefit ceases or the child’s studies cease. Any age or invalid pension received by a spouse will be exempt for the purpose of calculating the amount of unemployment or sickness benefit payable. I emphasise that these measures represent a first step towards ensuring that social security beneficiaries receive a rightful share of the community’s increasing prosperity.

When defending pension levels in the past, honourable members will recall that the former Government consistently compared increases in the rates of pensions with upward movements in the consumer price index. However, as I have stressed on so many occasions, the relevant comparison to make is to relate pension increases to increases in average weekly earnings; average weekly earnings themselves give a fairly good indication of the average standard of prosperity in the community. I have no wish to draw comparisons between the position as it was over 20 years ago with what it is now but I feel that I should say that, although the Liberal Country Party Government did follow a policy of increasing pensions faster than rises in prices generally and there were some significant increases during their term in office, from about the beginning of the 1950s the pension as a percentage of average weekly earnings dropped quite dramatically and it never fully recovered from that position. This situation will be corrected by this Government. The increase proposed in this Bill lifts the standard rate of pension as a proportion of average weekly earnings to the highest level of any time in the last 6 years. This position will continue to be improved. The following table which I seek leave to incorporate in Hansard gives a comparison of a selection of existing benefit rates and of the rates we are proposing.

AUWU Opening Statement to Senate Committee

Today is the worst time in Australian post-war history to be unemployed. The AUWU have identified three major attacks currently being directed against unemployed workers.

Firstly there is the low rate of Newstart, which is currently $381.10 per fortnight below the poverty line for a single unemployed worker, assuming they are receiving maximum rent assistance. The last time Newstart was increased in real terms was in 1994.

Secondly, there is Australia’s ongoing unemployment crisis. Going by the most recent figures released by the ABS and the Department of Employment, there are 11.25 job seekers competing for each job vacancy. This ratio is at a record high and has led to the average duration of unemployment being in excess of three and a half years –an increase of more than 300% since 1995.

Finally, there is the increasingly punitive array of activities and appointments that are being imposed on unemployed workers by a privatised and largely unregulated Employment Services Industry.

This crisis is an uncomfortable reality for Australian politicians who are at the very least complicit in the shameful manner in which unemployed workers are being treated.

Rather than implementing the job creation programs that are so urgently needed to help the 1.8 million Australians looking for work, these chambers have instead continued to attack and vilify the unemployed creating generations of disadvantage.

I have brought with me today a collection of experiences from 14 unemployed workers and one former Max Employment consultant to clearly illustrate this point. I encourage all Senators present to read it.

The bill before us today represents one of the worst attacks ever launched on the unemployed in this country.

By giving the privately run Employment Service Industry sweeping new powers to impose immediate financial penalties on unemployed workers, this bill will only serve to deepen their disadvantage – ultimately pushing them further away from employment. On this basis, the AUWU recommends that the bill be rejected in its entirety.

As the Labor party have recently indicated that they will oppose 3 of the 5 proposals in this bill, today I will focus my attentions on the other 2 apparently more popular proposals – namely the proposal to subject all unemployed workers to an immediate No Show No Pay penalty if they miss an activity, and the proposal to give Employment Service Providers expanded powers to penalise unemployed workers who fail to provide adequate proof of their job searches.

There are four major issues the Australian Unemployed Workers Union would like to raise about expanding the No Show No Pay penalty to all activities.

Firstly, the immediate No Show No Pay penalty eliminates the small window unemployed workers currently have to appeal against an unfair decision before their payment is reduced. It is worth noting that there is little protection in the act against Providers implementing this penalty arbitrarily and unfairly. These issues apply to all No Show No Pay penalties proposed in the bill.

Secondly, the proposal will lead to more cases of unemployed workers being bullied and intimidated by their Employment Service Provider. This concern is made all the more pressing considering the perverse incentives given to Employment Service Providers to penalise unemployed workers.

Thirdly, if the current average penalty duration of 2.8 days continues, this proposal will result in sanctioned unemployed workers being docked at least 20% of their already insufficient Newstart entitlement. It must be recognised that docking an unemployed workers’ entitlement – even for one day – can result in considerable impoverishment & anxiety, which can lead to a cycle of mental illness, isolation and further penalties, which will inevitably drive unemployed workers away from employment – the opposite of what this bill intends.

Finally, the Australian Unemployed Workers Union is deeply concerned that the time taken to ‘reengage’ with an activity could be even longer given the sporadic and unreliable nature of some activities.

Moving along to the proposal regarding job search penalties, I would like to draw the Committee’s attention to four areas of concern.

Firstly, unemployed workers in regional areas will be disproportionally affected by this proposal.

Secondly, the proposal will lead to job search becoming a box-ticking exercise for many unemployed and prevent them concentrating their efforts on realistic jobs.

Thirdly, there is no evidence to suggest this proposal is necessary. According to the department, since 2013 only 22 unemployed workers were investigated by DHS for poor job search. Out of these cases, DHS found no evidence of improper conduct and did not implement one single penalty.

And finally, as there is no explicit guidance in the Act of how this penalty will be implemented, there are no protections against Employment Service Providers applying this measure arbitrarily and unfairly.

I look forward to addressing any questions the Committee may have.







Henderson Poverty line, Melbourne institute release for June Quarter ($1035.1 per fortnight for a single with housing costs)

Maximum amount of Newstart including rent assistance: $654

ABS Labour Force September (released 15 October)

Job Vacancies (released in September)

Long Term unemployment stats: 2012 statistic qtd. in Disabled, Work and Welfare: Doing the ‘Hard Yakka’: implications of Australia’s workfare policies for disabled people. Alan Morris, Shaun Wilson and Karen Soldatic

Tales From The Darkside: Charlie MUST Surf

By Edward Eastwood, AUWU Media Liaison.

The oval shaped beads are really giving Charlie the shits. The clasp which holds the chain connecting the string is easy enough to remove on the round beads but for some reason the oval shaped beads resist the snip and unwind method and for the hundredth time, rather than coming away clean, the force of the twist has caused the bead to break.


Its also driven tiny slivers of metal into his thumb and forefinger, and at the end of the day he knows his fingers will be sore.

Charlie’s doing a Work for the Dole program supposedly preparing him to be ‘job ready’ in Warehousing and Logistics.

The reality is that he removes the connecting chain between stings of junk jewellery.

In other parts of the site about twenty other WfD ‘volunteers’ repackage items for charity work. Some sort clothing, while others work on repackaging goods for distribution to charity organizations.

Frustration and anger levels simmer just below the surface. No-one’s happy. “It’s just meaningless tasks,” he says.

“When we get here, we’re given different tasks each day. Some of us sort clothing and repackage, while others dismantle junk jewellery.

Everybody hates doing the jewellery.

“There aren’t enough pliers to go around and some of them won’t do the job without breaking or damaging the beads.

Charlie’s bead is thrown in a bin with the other broken beads, while the unbroken beads are collected and sorted into colour, size and shape by other WfD volunteers. The connecting chain is discarded.

At the end of the work period, the sorted beads are collected and tipped into a container, where the next day they will again be sorted into colour, size and shape.

“The game they play with the beads is what really gives everyone here the shits. There’s no point. It’s the same as digging holes and then filling them in. No one here is getting anything like training for work in a warehouse.

“There’s no safety equipment either. We’re all given a one-size-fits-all fluro vest and that’s it! We don’t get safety gloves to protect our hands from the metal on the junk jewellery either.

“If you forget your fluro vest, they make you go home and get it and then come back. They tell you that you have to make up for the time lost so you have to work extra hours.

He looks around at his fellow WfD’s and says that the kind of work people are doing here is the same kind of work that they give you in prison or a community service order. “It’s like Game of Thrones, the same as being a serf,” he shrugs.

There are several large notices posted around the site warning that the use of mobile phones is strictly forbidden and any infringement carries “penalties including reporting any breach of the rules to your Employment Service Provider.”

Charlie usually works on dismantling jewellery but has been assigned to repackaging on three separate occasions.

On the first occasion he repackaged a discount priced confectionary, the type found on sale at local markets or school fetes. The second item repacked was a brand of cosmetic products found in major retail chains.

“They got everybody together on these occasions. Nobody had to dismantle jewellery or resort beads, but they stepped up the pace of repackaging and they watched us like hawks,” he says.

On each occasion, Charlie and his fellow WfD’s were again warned that the use of mobile phones in the repackaging area was strictly forbidden and infringement of the rules carried ‘heavy penalties’.

Heavy penalties most certainly would apply, but not to Charlie.  There are strict rules against the use of WfD labour to replace employees, and the AUWU has stated that it will pursue the allegations with the Department of Employment and the Commonwealth Ombudsman.

Charlie’s story is just one of many, and indicative of a system failing to deal with the victims of neo-liberal economic policies. Rather than address the problem of rising unemployment, the LNP are quietly continuing to  push forward with their plans to privatize all welfare.

Multi-nationals such as Max Solutions and Mission Providence have had their eye on privatized welfare including medical insurance and pensions in Australia for over a decade, and on November 9 at theLong Term Unemployed Conference held in Melbourne, they’ll get their chance to advance their cause one step further.

Significantly, the price of attendance is $550 (concession rate) which puts the cost well out of reach for anyone on the dole.

Representatives from the  government and private sector can rest safe in the knowledge that the fate of the great unwashed will be picked over without the distasteful requirement of having them in their presence.

The findings and outcomes of the conference are easy to predict;

‘The system is in need of reform administered by the private sector.’

As a spokesperson told Fairfax media in 2002; “Long-term, [Maximus’s future] is very much driven by the government direction in outsourcing. Ultimately, if Centrelink is privatised, Maximus would be very well-suited to help.”

Meanwhile, every week hundreds of complaints, comments and stories flood the inbox at the AUWU’s website.

ESP ‘clients’ have their benefits cancelled through no fault of their own, the new Kapo’s demand that the client always be on time for an appointment – notification of which may or may not have been issued – or be breached for being 5 minutes late and then kept waiting 40 minutes while their case officer lets them cool their heels to show them who’s boss…

The bullying and demonisation goes on. The MSM does its bit through a Current Affair; “Australia’s Welfare suburbs – are they unlucky or just lazy?” The usual idiotic prejudices are wheeled out and the mayor of Liverpool tells the audience that; “I left school at Year 10 and I’ve got a Certificate IV in Small Business! Ya gotta stay positive”, he beams.

Ironically, he also puts his finger on the heart of the problem admitting that while there’s been a steady increase in people are moving to Liverpool, “The big problem is that the work’s just not here.”


Charlie must Serf for his hamburger Momma!

If you have any experiences from Work For the Dole you would like to tell us, contact Edward at

Restore full employment in Australia to shift the balance of power back toward working people


By Dr. Victor Quirk

Australian working people have been cruelly betrayed over the past forty years by those elements of the ALP and union leadership who have countenanced the use of unemployment and under-employment as a socio-economic weapon. These people have treacherously dishonoured the historic achievement of Curtin and Chifley who during and after WW2 showed Australians that the federal government can keep the unemployment rate under two per cent if it wishes. They proved that by adjusting public sector employment and expenditure in response to shifts in private sector activity they could keep aggregate demand at a sufficiently high level to ensure the nation’s productive resources were reasonably fully utilised, particularly its willing labour resources.

Chifley lost the 1949 election, but nevertheless forced Robert Menzies and the Liberals to swear their commitment to the policy they had vehemently opposed during the war. During their next 23 years in opposition the ALP and the union movement raised the alarm whenever the Liberals looked like they were attempting to ease unemployment above two per cent, provoking an immediate collapse of government electoral support, and immediate protestations by ministers that they would never think of such a thing. As a result, they were forced to maintain a consistent unemployment rate under two per cent for over thirty years (1942 – 74), which gave working people unprecedented security and bargaining power in day-to-day negotiations over the sale of their labour.

This underpinned the rising standard of living Australian workers experienced throughout this period: narrowing disparities of poverty and wealth, labour market decasualisation, high levels of private savings and home ownership, healthier work / life balances. While recognising the enduring social injustices that persisted for many groups, this was nevertheless a period of broad economic and social improvement. The large public sector delivered a high degree of free public utility, and delivered many benefits to industry and the economy, supporting the manufacturing expansion of the period. For example, public utilities and enterprises deliberately trained more graduate professionals and trades apprentices than they required, serving as net suppliers of skilled workers to the private sector. Then, as now, the private sector has never trained enough skilled workers to meet its own skill needs. The public sector cuts that began in the late 1970s triggered the enduring skills shortages that the business community have complained of ever since.

Yet despite its numerous social and economic advantages, big business leaders have historically despised full employment, known since the mid 19th century as the ‘right to work’, denouncing it as unfeasible and ‘communistic’ whenever it was seriously proposed. They saw that though they may well make more money from the increased demand of a fully employed economy, they would lose the sense of authority they derive from the fear of unemployment that had kept waged workers in their place for centuries. The issue was eloquently explained in a Times editorial of 1943, during wartime debates over full employment in the UK:

Unemployment is not a mere accidental blemish in a private enterprise economy. On the contrary, it is part of the essential mechanism of the system, and has a definite function to fulfil. The first function of unemployment (which has always existed in open or disguised form) is that it maintains the authority of master over man. The master has normally been in a position to say: ‘If you do not want the job, there are plenty of others who do’. When the man can say: ‘If you do not want to employ me, there are plenty of others who will,’ the situation is radically altered’ (Korpi 2002: 6).

By the late 1960s, multinational corporations were frustrated that workers had so much bargaining power in countries where full employment had prevailed for decades, but governments feared the electoral backlash that would come from abandoning the policy. The new Nixon administration evidently sought to address the issue by instigating a new policy unit within the OECD in 1970 whose first publication , ‘Inflation the Present Problem’ suggested higher unemployment was the solution to ‘profit squeeze’, which acknowledged the political problem in countries which had maintained full employment since the war:

People’s reaction to going bankrupt or being thrown out of a job may have been different in the 1930s when it could be thought this was the result of a natural disaster. But today a serious recession would be clearly recognised to be the result of a deliberate policy being followed by the government (OECD 1970: 37).

The report speculated that governments might minimise the backlash for increasing unemployment if there were some exogenous shock to the world economy that the public believed was beyond their control, which they could claim to be the cause. With such a smokescreen, they could get away with driving up unemployment by slashing public expenditure. The OPEC oil shock of 1973 where oil prices quadrupled, triggering double digit inflation around the world, suited the purpose nicely. A strategic contraction in oil production sharply increased its price, and the prices of goods and services reliant on oil for their production and distribution. It is now thought to have been engineered by Henry Kissinger to enrich his oil industry patrons and increase demand for the US dollar to enhance its value, since global oil transactions were conducted in US currency (Engdahl, 2004). Despite the fact that the world-wide inflation was not caused by excessive demand, governments around the world responded simultaneously by cutting their public expenditure, and the increase in unemployment around the world looked like an uncontrollable global phenomenon.

But by this time Labor was back in office in Australia for the first time in 23 years, and determined to maintain full employment, so it fell to conservative elements in the Treasury bureaucracy to take advantage of the oil shock by covertly inducing a recession in 1974, to produce a surge of unemployment by mid 1975. An argument was underway within Whitlam’s ministry, that both labour and capital had to fairly absorb the cut in real income (caused by the oil-driven increase in prices across the board), but because full employment so empowered the union movement they could not be dissuaded from seeking nominal wage increases to maintain their real incomes, nor employers dissuaded from passing these on as higher prices. To stop the wage-price spiral, some members of the caucus argued for a temporary rise in unemployment to reduce union bargaining confidence, while others denounced the suggestion as a total betrayal of Labor principle. The action by Treasury and Reserve bank officials in defiance of the government settled the matter.

The predictable electoral backlash was thus visited upon Whitlam when Fraser and Kerr forced his government to an early election in December of that year after unemployment had passed 4 per cent. The 1975 Liberal campaign played to public anger over the rise in unemployment, with Fraser promising to restore full employment as a priority, even to use public sector job creation to do so. However, on winning office he infamously declared he would ‘fight inflation first’, immediately launched a crack-down on ‘dole bludgers’ and ‘welfare cheats’, and set about pushing unemployment up to ten per cent over the next seven years with the assistance of his second Treasurer, John Howard.

A crucial role was played by commercial media organisations during and after 1975 in conditioning the public to accept higher levels of unemployment by their fabrication of stories of unemployed young people rorting the welfare system to live in idle luxury (Windschuttle, 1980). Canadian experience reported in 1973 by an Australian economist (Heinz Arndt) on his return from a six month placement with the new OECD policy unit (mentioned above), indicated that the public were more likely not to punish governments for higher unemployment the more they believed it to be the fault of the unemployed themselves. The later seventies are infamous for the recurring ‘dole-bludger’ stories in the Murdoch and Packer media.

The ALP changes course

Whitlam may be partly excused as the victim of covert treachery by hostile elements in the bureaucracy, and the lack of cooperation he received from ACTU and ALP President Hawke in handling the global inflation crisis, but his final budget (1975) reflected the ascendance of people in his party who were willing to use unemployment as an industrial relations weapon, over those who never would. His successor, and the author of that budget, (Hayden)proved willing to sell out the one policy above all others that empowered working people, in order to better market the ALP to corporate donors in the late 1970s. Having fought four federal elections in five years, (1972, 1974, 1975, 1977) the campaign coffers were bare and the party on the verge of bankruptcy, while throughout the Whitlam years the Liberals had been receiving enormous funds from foreign (U.S.) sources desperately intent on regime change (Aitcheson, 1974). Labor’s protests over the abandonment of full employment fell away.

The failure of Hawke to commit to the re-establishment of full employment in the 1980s, and more reprehensibly, Keating’s deliberate use of mass unemployment to casualise the labour market in the early 1990s, stand among the darkest moments of betrayal in Australian Labor history. They abandoned the Community Employment Program after only three years, and introduced activity test breaching in 1988 to get around the difficulties of work-testing people when jobs are scarce. They selectively expanded ‘compliance’ programs that produced the most ‘breaches’, after deliberately inducing a recession that left one million people unemployed, leaving a decade of social wreckage in its wake. This record reflects a shocking contempt for working people on the part of the ALP elite.

When Howard led the Liberals back to office in 1996, he correctly justified much of his agenda as merely an extension of what Labor had already been doing. Consider, for example, the deep cynicism revealed in the ALP’s strident opposition to the 1998 marketisation of the public employment service (The Job Network) by the Howard government in its first term. Howard simply implemented the final stage of a plan the ALP had secretly commissioned from McKinsey consultant Paul Twomey in 1993, of which the contracted case management element of the 1994 ‘Working Nation’ programs was but the first stage. In fact, following Labor’s hypocritical obstructionism in the Senate, the Liberals dropped their Bill and implemented the whole system using Labor’s 1994 legislation, just as the ALP had intended.

In addition to establishing the appalling Centrelink, the outsourcing was designed to overcome the resistance of CES public servants to applying the activity test during ‘the recession we had to have’, after they failed to cut enough people off income support to meet revenue savings targets in 1990 and 1991. Employment services jobs were made precarious, and employment service staff thus made more compliant, by outsourcing them to contracted providers, and progressively weeding out the agencies that failed to cut enough people off their benefits in successive tender rounds. By this means Liberal and Labor governments have produced the notoriously greed-driven, incompetent and oppressive employment services system we have today. Almost unbelievably, one recent Labor leader (Kevin Rudd) owes much of his considerable wealth to his wife’s contracted employment services empire.

Perhaps the most astonishing hypocrisy of all was that of the Gillard Government when it sought to establish its Labor credentials by celebrating the anniversary of Chifley’s 1949 ‘Light on the Hill’ speeches. Chifley referred to the ‘Light on the Hill’ in two speeches in 1949, the second was in his federal election campaign launch, at which he declared the preservation of full employment the central issue of the election:

“You cannot have discipline and efficiency – so critics say – unless you have a degree of unemployment. Not too much unemployment of course – that would be bad for business. Just a nice six or eight per cent of unemployment, just a quarter million or so out of work to keep the fear of the sack in the hearts of all the rest. The Labor government rejects this barbarous and intolerant view and dismisses as absurd the arguments used to support it (Chifley, 1949).

At the time Gillard was claiming continuity with Chifley’s mission, she was presiding over a pool of 670,400 officially unemployed, another 918,000 who wanted work but were not counted as unemployed, while 1.2 million employed people were telling the ABS they needed more hours of work. 

Restoring full employment today: The Job Guarantee


At this point in the discussion we need to consider a specific policy proposal that was developed by a group of economists in the mid 1990s, which has continued to gain support around the globe as a method for achieving full employment with price stability, currently known as the ‘Job Guarantee’. Its leading Australian advocate and developer is my former PhD supervisor, Professor Bill Mitchell of the University of Newcastle. The basic idea is that instead of using unemployment as the holding pen for spare workers in the economy, which is the current practice, the Commonwealth Government is made responsible for maintaining a pool of minimum wage jobs that people may freely access whenever they are otherwise unemployed. So whereas the unemployed are presently forced to survive on a below poverty-line income, and threatened with its withdrawal to ‘motivate’ them to seek jobs that are not there, they are instead paid a full adult wage, with leave and all other award entitlements, to perform work that addresses unmet community and environmental need. While doing so, they are assisted to access private and mainstream public sector employment, and TAFE standard training, by the public employment service that runs the Job Guarantee system.

Over the past twenty years a growing army of academic and finance sector economists, labour market practitioners, and others, have researched and debated refinements to the economics and design principles of such a scheme, motivated by an understanding of its potential to deliver real economic, social and environmental benefits. It is an obvious solution to most forms of intractable social and economic disadvantage and inequity, low national skill formation capacity, uneven regional economic development, and would deliver a more flexible, strategically responsive, skilful, humane, equitable and efficient labour market.

To understand its design requires an understanding of the practical issues it seeks to address. Such a system needs to supplement aggregate demand no more than is needed to eliminate unemployment, because to overshoot that point causes wage inflation. It needs to be tightly directed at unutilised labour, and not displace existing private or public sector employment. It must be capable of accurate targeting and be sensitive to the geographic unevenness of unemployment across the economy, so that it doesn’t cause an overheating of a city labour market before it eliminates unemployment in a remote rural location. The pool of jobs needs to expand rapidly during economic downturns, and readily shed workers during upturns. The work performed must be subject to accountable, democratic and local-community control, while being funded by the Commonwealth Government. One example of a suggested design for Australia that meets these conditions was developed by my colleagues and I at the University of Newcastle Centre of Full Employment & Equity (CofFEE) and is free to download from the centre’s website (Quirk et al,2006).

In exploring the monetary economics that could underpin the financing of such a system, the proponents of this program have built a detailed technical argument that refutes several key assertions used to justify what passes today as mainstream macroeconomic policy orthodoxy. Alex Carey (1995) and Sharon Beder (2006) have documented the multi-million dollar corporate funded US ‘economic education’ campaign that began in Australia in 1976, establishing the mantra of ‘small government’, ‘deregulation’, ‘private sector good – public sector bad’ that corporate-funded politicians, think tanks and media commentators have been chanting ever since. It is what most people now understand to be ‘economics’, and is in fact the recipe for permanent chronic labour under-utilisation.

Proponents of the Job Guarantee point to key characteristics of modern monetary systems currently in place in countries like the USA, UK, Australia, Canada, Japan, Brazil – in fact nearly all developed countries apart from those who use the Euro – which mean they do not behave, nor impose the constraints on more socially progressive policies, as the prevailing voices of economic orthodoxy claim they do. The pertinent characteristics of the monetary systems of such countries are that their central governments are the sole sovereign issuers of the currencies used by their citizens, their currencies have floating exchange rates, and are not pegged in their value to a quantity of gold or similar precious metal. As a consequence of these characteristics these central governments (eg., the Australian Commonwealth Government) can never run out of money, unlike the households, firms, state governments, local governments, and all other economic actors who use their currencies.

Such central governments could buy everything in an economy before they could ever run out of money, though in outbidding other people that want those same things they would obviously generate a massive inflation. But when productive resources are left unutilised, with no other offers from other buyers, as in the case of the unutilised labour of unemployed people, a government with a modern monetary system can buy as much of it as they want, at the lowest legal price (eg. the federal minimum award), without exerting upward pressure on its price.

So governments with a modern monetary system like ours can fund a fully-fledged Job Guarantee system for the same reason that, when they feel like it, they can find trillions at a moment’s notice to bail out sociopathic financial institutions to avert global financial crises, or fund the Second World War. Millions of extra hours of work can be performed every day, rather than wasted as they have been for the past forty years, to produce real social and environmental benefits for everyone. A Job Guarantee would cost a fraction of what our government has demonstrated it has the financial capacity to do, not the least because of the savings it would generate by remedying the social misery and dysfunction that stems from poverty and unemployment.

The work of the ‘modern monetary’ economists also exposes the lie of presenting a budget surplus as being somehow equivalent to a household’s savings. What household that could legally issue the national currency would consider it necessary to put aside money for a rainy day? This basic insight demolishes the bogus story neoliberal class warriors have used to justify their austerity attacks on Australia’s working people for the past forty years. These lies are about maintaining labour underutilisation, to control the balance of power in the labour market, and hence society.

The Commonwealth is a unique economic actor, and its budget is nothing like a household budget. There is not a finite amount of money at its disposal, only a finite supply of real things to buy. A budget surplus is nothing like a household’s savings. Just as the revelation of the war time escalation of public spending proved the suffering of the depression had been totally avoidable, the austerity and failure to provide public sector employment for the past forty years has been solely about disempowering wage and salary earners to maintain the social domination of the rich.

The challenge

Since the 1970s, Australians have been conditioned to view unemployment as something beyond the capacity of governments to control, something akin to an act of god, like a tsunami or an earthquake. In truth it more closely resembles a deliberately lit bushfire. Despite justifying every attack they make on worker’s rights and conditions, every cut to welfare and public provision, every sell-off of a public asset or defilement of a pristine environment with spurious claims that in doing so they will generate much needed jobs, the Commonwealth in fact has complete control over the level of unemployment and exercises that control by deliberately keeping people under-employed and unemployed. Every recession and sustained rise in unemployment since the 1940s has been completely intentional.

A full employment policy like the Job Guarantee will be resisted by big business and their paid mouthpieces in the major parties, the press, think tanks, and so forth, using every means at their disposal. That is because such a policy removes the key weapon in their arsenal that keeps the sellers in the labour market politically and socially subordinate to them. Our nation and those with similar monetary systems have the power to permanently eradicate all but frictional labour underutilisation, and to use the hundreds of millions of hours of work that will otherwise be foregone, to build more equitable and environmentally sustainable communities. We need to demand in large enough numbers through the ballot box that the Commonwealth re-establishes and maintains full employment, by once again using public sector job creation to directly provide jobs and thereby supplement aggregate demand.

As a personal witness to the misery borne by thousands of ordinary Australians when their lives have been plunged into crisis and despair through being unemployed and left to the tender mercies of Centrelink and the ‘marketised’ employment services, I urge the current leadership of the labour movement to denounce these practices, and recommit to the establishment of full employment in Australia. To understand how this can be done, and without causing inflation, familiarise yourselves with the work of the ‘modern monetary theory’ economists, and their policy proposal the ‘Job Guarantee’.

Dr Victor Quirk is a labour market political sociologist, specialist employment counsellor, and Research Associate with the Centre of Full Employment and Equity (CofFEE), University of Newcastle.

Several of Victor’s academic papers on the history of unemployment in Britain and Australia are freely available on the CofFEE website. Information on modern monetary economics and the Job Guarantee are available on CofFEE Director Professor Bill Mitchell’s daily ‘Billyblog’, including ‘Guest blogs’ by Victor Quirk.

This article first appeared in Australian Socialist, Volume 21 No 1, May 2015.


Abridged Bibliography

Aitchison, Ray (ed) (1974) Looking at the Liberals, Cheshire Publishing, Melbourne.

Beder, S. (2006) Free Market Missionaries: The corporate manipulation of community values, Earthscan, London

Engdahl, W. (2004) A Century of War: Anglo American Oil Politics and the New World Order, Pluto Press, London.

Korpi, W. (2002) The Great Trough in Unemployment: A long Term View of Unemployment, Inflation, Strikes and the Profit / Wage Ratio, Swedish Institute for Social Research, Stockholm University.

OECD(1970) Inflation the Present Problem, Organisation for Economic Co-operation and Development, Paris.

Quirk, V. Allen, E, Andresen, T., Bill, A., Cook, B., Goldsmith, B., Juniper, J., La Jeunesse, R., Mitchell, W.F., Myers, J., Watts, M., Welters, R., and Wrightson, G. (2006) ‘The Job Guarantee in practice’, Working Paper No. 06-15, Centre of Full Employment and Equity, University of Newcastle, Australia.

Quirk V,(2008) ’Britain and the right to work: 1886-1912’, International Journal of Environment, Workplace and Employment, 3 266-284

Windschuttle, K. (1980) Unemployment: A social and political analysis of the Economic Crisis in Australia, Revised Edition.


Treasury releases false figures

Recently, News Limited published Treasury figures showing in some instances people who received welfare payments were better off than singles earning $80,000 a year. This report was then reported by many media outlets, including the Guardian.

The figures released by Treasury show that people receiving the single parent benefit have a disposable income of $66,000, giving them a higher disposable income than a single taxpayer who earns $80,000.

This is completely false and is a deliberate attempt by the Federal Government to vilify income support recipients, particularly single mothers.

The Treasury figures completely ignore that Childcare benefits are paid directly to childcare centres, not parents, and do not even come close to the full cost of childcare. All families have the same entitlements under childcare rebates and using childcare is essential for working parents.

After taking into account this portion of the Single Parent Benefit which is paid directly to Child Care centres, the correct disposable income figure for people on the Single Parent Benefit is $41,000-$42,000 (not $66,000), depending upon the exact cost of child care, which varies. This is the same as the poverty line for a one-parent family with two children in December 2014, which is $41,345.

This is second year that Joe Hockey has made this fraudulent claim.

He cannot see that people who receive large superannuation subsidies from government are an equivalent “drain” on taxpayers, despite a wealth of evidence. Rorts in the taxation system cost Australia more than $20 billion per year.

cost of super annuation comapred with aged pension

The Government does not worry about increasing child poverty (now 18%) and soaring homelessness and deprivation as services and incomes are cut.

This is another attempt to divide Australians in fear and suspicion. It further alienates and unfairly stigmatises those receiving income support. The Government owes them not only an apology about these false claims, but immediate action to address the issue of the low rate of payment.





Calculations of Gross, Net and Disposable Income for a one-parent family earning $30,000 per annum

Earned income (32 hours per week?)          1154  pf                  30000  pa

*Part pension                                                   347                         9022

Family Payments:

Family Tax Benefit A                                       354                          9204

Family Tax Benefit  B                                      150                          3900


SUBTOTAL                                                     2005  pf                  52130

(taxable income 39022)


less tax payable                                          190                                    4940

less child care          including

child care gap fees                                150 – 300 (use 200 figure)

[Subtotal]                                                    [390]                        5200


Disposable Income                                 1615  pf                  41,990



*Income Test Free Area

184.6 + 24.6  = 209

1154 – 209 = 945 x 40 cents in dollar = 37800

= 37800 div 100 =              378

Parenting Payment Rate      725.40 – 378 = pp payable = 347.40 pf  [9022 pa]