AGAINST ROONISM – COMBATTING THE CULTURE OF DESPAIR

SPEECH NOTES FOR ADDRESS TO SYDNEY INSTITUTE 5.45PM “Around the Boree Log” used to be one of the staples of an Australian Catholic education. Its best-known poem featured a group of bush parishioners lamenting a world where fire, flood, drought, bad seasons or the banks would surely do them in: “’We’ll all be rooned’, said Hanrahan, before the year is out”. The only non-contemporary feature of this 1921 cameo is its characters’ sense of stoicism about the perils of country life. “Roonism”, the conviction that life is bad and getting worse, seems to be a deep strain in the Australian character. “Things are stuffed” pessimism seems to be just as ingrained as “she’ll be right” optimism was once thought to be. It seems particularly allied to another characteristically Australian feeling: that of being in the grip of larger forces beyond our control, such as international markets, the weather and the money power. Roonism is almost as prevalent as the “tall poppy” syndrome (of which it seems to be a mutant sibling) and can be just as destructive because few things are more corrosive of effort and achievement than the nagging sense that it’s all for nothing. Contemporary roonism involves a series of unshakeable convictions: “the bush is buggered”, “politicians are crooks”, “things aren’t what they used to be” and above all the pervasive sense that “someone is ripping me off”. Dissatisfaction is rife among people whose best selves would concede that they live in one of the greatest countries on earth. Only a few years ago, Australia’s self-image was of a rich country getting richer (notwithstanding the mistakes we made). Now, we tend to think of ourselves as a rich country getting poorer. Even among people who are doing well, there is often a sense of loss, the economic equivalent of the “empty nest” syndrome. A visitor familiar with our traditional readiness to offer the benefit of the doubt might wonder why it no longer applies to anyone in authority or why the price of petrol or the quantity of form-filling should excite so much more anti-government indignation here than in other countries with similar difficulties. In fact, Australian roonism gains its current momentum from a strange alliance between the economically vulnerable and a commentariat which would like nothing better than the destruction of the Howard Government. Three forces are now driving a sense of crisis: long-standing popular disquiet about the pace of change and the human cost of economic re-structuring; elite resentment of the Howard Government’s social conservatism; and - 2 - “Calamity Kim” Beazley and his team of economic ghouls seizing on every bit of bad news to talk Australia down. This is the chattering classes’ chance to get square with the Prime Minister by using “Howard’s battlers” against him. The essentially conservative people who have become Labor’s polling booth fodder need to understand that a Beazley Government would betray their values as well as further threaten their economic interests. To the extent that anything can be made out in the hubbub, it seems that a Beazley Government would not just say “sorry” to Aborigines but would also apologise to the Indonesians for East Timor, support an open door policy for immigration queue jumpers, give the green light for heroin injecting rooms and allow the ACTU to dictate economic policy. These, at any rate, are the clearest conclusions to be drawn from the Opposition’s free-wheeling and often mutually inconsistent attacks on every Government policy which has anyone off-side. There is no fundamental community of interest between the battlers whose resentment has been channelled against the Howard Government and the elites barracking for a Beazley victory in the coming federal poll. Government ministers and officials can’t help the fact that they are public sector employees and therefore not subject to some of the economic pressures which buffet people trying to make a living in the real world. Still, no modern Australian government has tried harder to avoid the “god complex” to which senior politicians are prone – and in the past week the Prime Minister has personally doorknocked suburban streets and the entire cabinet turned out for a meet-the-ministers public meeting. The difference between the Government and the Opposition is not that one is arrogant and out-of-touch and the other isn’t. It’s more that John Howard hasn’t adopted Kim Beazley’s habit of agreeing with the last person he spoke to. Politicians in a democracy never set out to “punish” the electorate. If the Government occasionally projects an image of wanting people to “take their medicine”, it’s because the alternative to economic reform is even greater pain. Reform is hard but failing to reform is even harder. The only people who can afford to be complacent or dismissive about wealth creation are those who have already made it. Economic reform now evokes a sense of ennui among opinion formers (which helps explain why 1980s economic rationalists so readily became 1990s constitutional dabblers) even though many Australians still struggle to make ends meet and need further reform if living standards are to be protected. Despite the current economic slowdown (largely focussed on the housing industry and specifically targeted by the Government’s beefed-up first homebuyers scheme), the last five years have seen measurable improvements in most Australians’ living conditions. Since 1996, economic growth has averaged over 4 per cent a year. Interest rates have averaged 5.6 per cent since 1996 – compared to 11.4 per cent under Labor. Inflation has averaged 2 per cent since 1996 – compared to 5 per cent under Labor. There are now nearly 400,000 additional full-time jobs since 1996 – compared to just 26,000 new full-time jobs in Labor’s last six years. - 3 - Since 1996, the benefits of economic expansion have been more evenly shared. Average weekly earnings have increased 11 per cent in the past five years – after increasing just 5 per cent in the previous 13. Basic award earnings have increased 9 per cent – after falling 5 per cent during the life of the former Labor Government. Economic reform has meant greater workplace flexibility which, in turn, has allowed workers to enjoy higher wages without having their pay eroded through higher inflation, bigger mortgage repayments and higher unemployment. In fact, few of the tenets of roonism can withstand serious scrutiny. After years of decline, the Bureau of Agricultural Economics says that farm prices are up nearly 8 per cent this year and farm incomes up more than 20 per cent. Far from getting wider, the gap between rich and poor has, if anything, slightly narrowed as the wealth of the poorest fifth of the community has increased a little faster than that of the richest fifth, on ABS figures, since 1996. The New Tax System has resulted in a massive transfer of resources from tax collector to taxpayer or from government to people. On July 1 last year, due to the New Tax System, the real disposable income (after tax and social security benefits) of someone earning the minimum federal award wage of $400 a week with a dependent spouse and two children increased from $510 to $566. And (as the Labor Party’s own monitoring revealed) supermarket prices fell after the introduction of the GST. ACTU chief Greg Combet thinks that the economy is strong enough to justify paying every worker at least an extra $28 a week and that Australia has “a cultural richness…of which we can be proud”. Even so, governments cannot be oblivious to the anxieties of the community and expect to survive. Ultimately, in politics as in business, the customer is usually right. This is why the Government has simplified the Business Activity Statement, rescinded the fuel excise indexation price rise and shelved the entity taxation proposals. But it hardly makes sense to condemn a government when it doesn’t listen and damn it when it does. It’s important for governments to listen, learn and change where necessary. But it’s also important for governments to lead as well as follow public opinion and to give voters what they need as well as what they want. If voters are determined to build walls against the world, they’ll eventually have a government which reflects their insecurities. But they cannot subsequently be surprised if Australia starts to traverse the “Argentine road” and becomes collectively incapable of hard but necessary decisions. Only in a fit of absent-mindedness would a discerning electorate ignore the Howard Government’s solid achievements and install as Prime Minister the Employment Minister who presided over 11.2 per cent unemployment, the Defence Minister responsible for the Collins submarines, the Communications Minister who ensured the Telstra-Optus cable duplication and the Finance Minister who ran up a $30 billion deficit in just two years. The electorate is telling the Government to lift its game – not to abdicate to an Opposition Leader turning out to be Keating-lite. - 4 - It is almost a “given” of Australian politics that Coalition governments have a bad press. In part, this is because journalists have a professional interest in change over stability, the new over the old and ferment over order. In part, however, it’s because pragmatic problem solvers usually make bad spin-masters. Fair-minded observers know that the Howard Government hasn’t shirked the big challenges such as guns and East Timor, as well as tax reform. Our task now is to demonstrate that we can handle the moral deficit as well as the budget deficit and to explain how economics serves society rather than the other way round. Countries, no less than individuals, need a sense of purpose and meaning. People need to feel that their national existence, no less than their personal lives, has moral as well as economic value. As a nation, we need tasks which engage our energies and idealism and provide the sense of high purpose once generated by working the land, sacrifice in war, and providing a better life to all who call Australia home. Above all else, the things we do collectively need to be explained and justified in ways which appeal to people’s deeper values and beliefs. We are not so divided about ultimate values that the only appeal left is to the hip-pocket nerve. We should not be embarrassed to invoke national pride. Just recently, Australia put aside a quarter century of hand-wringing to liberate East Timor (with nothing in it for us except a return to self-respect). We have a unique ability to transform people from every country and culture into enthusiastic Australians almost as soon as they get here because we don’t ask them to forget the past. Unfortunately, Australia’s take-no-prisoners political and media culture means that all challenges must be minimised lest they scare voters and all achievements must be shrugged off lest their champions look arrogant. Tax reform, whatever people make of it just now, was right and necessary and, with the wisdom of hindsight, might have been better presented in terms of “blood, sweat and tears”. Over many years, relentless partisanship, culpable over-simplification, wishful thinking, and a tendency to deal in numbing euphemism has debased the public discourse. Perhaps what an unhappy citizenry most wants is no longer to be taken for mugs. For people who have lost their jobs or who are at risk of losing their jobs (as well as those called upon to support them) there is hardly a more important part of the national dialogue than employment and unemployment. Unfortunately, out of respect for people’s sensitivities (and a desire to avoid disquieting facts), almost no subject attracts so many well-intended fibs. Sustained high unemployment has done as much as anything to entrench the roonism syndrome. Two decades of high unemployment with government policy chopping and changing to little perceived effect has sapped national morale. Many people have concluded that governments aren’t serious or can’t cope. Unemployed people resent being on benefits which are never enough. Struggling taxpayers resent people on welfare getting almost as much as those in work. This all-round resentment is probably the most important factor behind the rise of populist political parties. Boosting the economy in ways which put more BMWs on the road without actually reducing unemployment doesn’t help – but neither does spending more on employment programmes which service the problem rather than tackle it. To keep - 5 - faith with the electorate, governments need to explain the real nature of the problem, the long-term impact of their policies and, most importantly, how those policies reflect community values. When it pretends that higher wages and lower unemployment are sustainable without commensurate productivity increases; that more training will give jobs to people who left school early to avoid being taught; that higher welfare benefits will help unemployed people even though paid work becomes less attractive; that, in fact, the only help which unemployed people don’t need is self-help, the Beazley Opposition stands in the tradition of government by magic wand. By contrast, a government which understands that workers can’t earn a wage unless bosses make a profit, which tries to make workers more productive and therefore more employable, which is determined to be unsentimental about the problem and to avoid patronising the unemployed seems fated to a mixed reception. People who expect to be conned often find a “no frills” approach hard to handle. One of the side-effects of roonism is to demand painless one-dimensional solutions to complex cultural problems and to be unreasonably angry when policy-makers have too much integrity to offer them. When ex-Treasury Secretary Ted Evans said a few years ago that Australia could choose its unemployment level, he revealed one aspect of the unfashionable truth about unemployment: namely, the relationship between higher pay and higher unemployment. The way one man’s pay rise can cost another man’s job is invariably glossed over by those seeking golden reputations as friends of the underdog. For those who wish to make a name with the other end of town, it has to be said that wage restraint alone will not deal with unemployment either, because at some point low-paid workers will be better off on social security. The welfare state did not exist when the great economic texts were written and most analysts still haven’t taken its consequences fully into account. The creation of new jobs might make little difference to the unemployment rate if working is more trouble than it’s worth. Tackling unemployment the old way could produce the paradox of unfilled jobs coexisting with high numbers of unemployed unless we also ensure that Australia’s income support structures reward work over the alternative. In June last year, before the introduction of the New Tax System, moving from total welfare dependency to earning the full-time federal minimum award wage of $400 a week boosted the after-tax-and-benefit income of a household comprising an adult, a dependent spouse and two children from $410 a week to just $510 a week. In other words, a full time, minimum wage job meant this family was just $100 a week (or about $2-50 an hour) better off – and that was before the added expense of going to work and losing “pensioner discounts”. What’s surprising under these circumstances is not that Australia has an unemployment problem but that it isn’t worse. All too often, people on benefit with an opportunity to work face an invidious choice: working full-time for little extra money; doing “unofficial odd jobs”; or waiting for a better offer. The fact that so many people do the right thing suggests that the Australian work ethic is far from dead and that people still have a strong sense of the inherent dignity of work regardless of what it pays. - 6 - Even so, the depression era paradigm of unemployment as too many people chasing too few jobs can be just as misleading as the “dole bludger” stereotype. Unemployed people want work but not necessarily the entry level jobs they’re likely to find – which are often part-time and, to start with, modestly paid. As unemployment becomes “inter-generational”, persuading people to take the “long view” about “McJobs” becomes harder and harder. The challenge is to boost incentives to work without raising entry level wages (because that would destroy jobs in small business) and without cutting welfare benefits (because that would impose an unconscionable burden on people doing it tough already). An electorate which is impatient for solutions needs to understand that job seekers’ motivations are just as important as economic conditions and rather harder to shift. Research for the McClure Committee showed that 40 per cent of people on unemployment benefit in September 1995 were again on benefit in June 1999. For people without a strong work record and readily marketable skills, regular, structured activity is the most humane and compassionate way to make employment more attractive than unemployment. My Department’s latest research seems to confirm that structured activity acts a powerful incentive to seek work. Three months after completing Job Search Training, a three week full-time course on how to find work, just over 40 per cent of participants have found jobs. But the “before effect” of referring people to Job Search Training has turned out to be just as important as the “after-effect”. Simply referring people to the programme makes a significant difference to job seekers’ motivation. Of the 132,000 people referred last year, 34,000 went off benefit before starting the course and it’s estimated that nearly 40 per cent did so simply as a result of referral. Keeping long-term unemployed people active is a very important part of maintaining their morale. A departmental study of Intensive Assistance participants (which is the main Job Network programme for long-term job seekers) showed that just under half have reduced motivation levels and are not particularly active in seeking work. The study showed that 16 per cent have almost withdrawn from looking for work and that a further 11 per cent have adapted to unemployment and don’t believe they would be better off working. Policy making which assumes that all job seekers are eager to accept any reasonable offer is doomed to fail and to reinforce roonist assumptions that governments don’t know what they’re doing. Just before Christmas, Senator Jocelyn Newman foreshadowed the first instalment of the Government’s response to the McClure Report on welfare reform. As the then-Minister for Family and Community Services explained, the Government wants to ensure that it’s impossible for people to claim unemployment benefit and disappear into the system. Except for very vulnerable people immediately referred to the Intensive Assistance programme, all job seekers will receive Job Search Training after just three months on benefit. Job seekers under 40 on benefit for six months will receive structured work experience under the Work for the Dole programme to rebuild their work culture and renew connections with the wider world (unless they are in formal education, one day a week paid work, two days a week volunteer work or another mutual obligation activity). - 7 - For people on unemployment benefit, this will mark a further decisive shift from a passive to an active welfare system. It underscores the Government’s determination to change the culture of employment and unemployment. The Government is not proposing American-style time-limited welfare payments but is determined to eliminate open-ended, few-questions-asked, long-term dependency on unemployment benefits. This move to a “participation” focus certainly won’t mean American-style “work-fare” for single mums but will mean a form of work-fare for long-term job seekers based on the clear understanding that the best preparation for work is work itself. There are nearly 300,000 people under 40 who have been on unemployment benefit for six months or more. Ensuring that activity-tested beneficiaries really are active will be an extraordinary challenge for Centrelink to monitor and for Job Network members and Community Work Coordinators to implement. Experience so far suggests that this mix of government, private sector, community-based and charitable agencies produces the compassion and creativity to address the complex human dimensions behind the unemployment statistics. Work for the Dole is by no means the Howard Government’s largest employment programme but has become a “signature” policy symbolising its determination to end the era of “something for nothing”. A departmental study released last year showed 90 per cent support for Work for the Dole – including 70 per cent support among people on unemployment benefit. A 1999 survey showed that a modest increase in the size of the Work for the Dole programme was by far the most popular item in that year’s federal budget. Work for the Dole accords with the common sense position that it’s usually better to be doing something rather than nothing and has been more popular with the community than with welfare activists – or, for that matter with economists who don’t like the expense. Work for the Dole is a robust application of community values to policy making. The Government gives people a “fair go” by paying them a benefit if they haven’t got a job. But it also expects them to “have a go” by participating in useful community projects. It provides the community with reassurance that their values still underpin government policy. And while the ALP says it will keep Work for the Dole, it wants to redesign the programme and change its name. With “Claytons” work for the dole, Labor would perpetuate the one-sided mutual obligation on the taxpayer to just keep paying which risks undermining the consensus on which a welfare system must rest. On its own, Work for the Dole will not end unemployment and will not defeat roonism. But it will end some of the consternation unemployment causes by re-assuring job seekers and taxpayers that they are still part of the same team. Because of big increases in participation, it’s probably impossible to reproduce Menzies era unemployment rates. Still, at any given level of economic activity, it should be possible to reduce the level of structural unemployment by changing the culture of job seeking. If it’s impossible to guarantee that job seekers find paid work, governments can at least ensure that they eventually have something useful to do. If the alternative to working for a wage is working for the dole, unemployment will start to come down but only if governments continue to hold their nerve and voters resist the blandishments of the soft-option and the quick-fix.