Andrew Leigh

A PROPER COVID-19 RECOVERY MUST START WITH BIG THINKING IN PARLIAMENT

The Canberra Times, 29 October 2020 

At the end of World War II, my grandparents Jean and Roly Stebbins built their own beachside house near the Melbourne suburb of Altona, making the bricks by hand. As a teacher and a railway worker, they raised four children into a society built on the promise that the 1950s would be better than the 1930s.

My mother's family were among the millions of Australians who benefited from the foresighted policies of that era. As the fight against fascism drew to a close, prime minister John Curtin commissioned H. C. "Nugget" Coombs to lead a team to write a white paper on full employment. The two men had gotten to know each other watching Aussie rules matches in Canberra, and Coombs was known for his breadth and boldness.

Produced in 1945, the white paper noted that from 1919 to 1939, "more than one-tenth of the men and women desiring work were unemployed", and it committed the nation to full employment as "a fundamental aim of the Commonwealth government". The white paper emphasised the need for high-skill jobs, harnessing the "spirit of enterprise". It focused on ways of raising productivity, and the importance of ensuring that workers received "a fair share of increased output flowing from the growing productivity of labour".

These weren't just words. For the next two decades, unemployment remained below 2 per cent. A housing construction boom helped raise the home ownership rate from 53 percent in 1947 to 63 percent in 1954 - a remarkable 10-percentage-point increase in just seven years. Australia helped resettle thousands of European migrants: the moral equivalent of America's Marshall Plan, but a program focused on helping people rather than rebuilding cities.

The ambition of Curtin and Chifley in 1945 contrasts with the timidity of the Coalition in 2020. At the end of World War II, there was a recognition that the crisis had been preceded by a period of stagnation. Now, there's a pretence that things were hunky-dory before the pandemic hit.

They weren't. In the pre-COVID era, one survey found 19 per cent of Australians were unable to raise $2000 for something important within a week, while 5 per cent reported their household could not raise $500 in a week. That's 1.25 million people living in households that couldn't raise $500 in a week.

Since the mid-1970s, earnings have risen three times as fast for the top decile of earners as for the bottom decile. The labour share of the economy has fallen, while the profit share has risen. Any way you cut it, income inequality is considerably higher today than a generation ago. Australia is a less socially mobile country than many European nations - meaning that parental income is more likely to determine a child's outcomes.

The coronavirus crisis has had especially pernicious effects on inequality. Australian-born Harvard researcher James Stratton has found that two-fifths of jobs in Australia are able to be done from home. But there is a gulf between the lowest-paid and highest-paid occupations. Less than one-fifth of jobs paying under $800 a week permit telework, compared with more than three-fifths of jobs paying over $1600 a week.

The shutdown also hit employees harder than capital owners. The labour market hasn't been this bad in decades, but the sharemarket has only dropped to where it was in May 2019, and house prices have actually risen in most cities. With the home ownership rate at its lowest level in 60 years, it's becoming even harder for young people of modest means to buy a house.

How could Australia reduce inequality in the rebuild? One answer is to improve access to university. Rather than doubling the prices of humanities degrees, as the Morrison government is doing, why not boost university funding and expand the number of places? If young people can't be earning, let's create the chance for them to be learning.

At the same time, it's essential to improve the quality of the schooling system. On international tests, year 9 students of today perform at about the same level as the year 8 students of two decades ago. Turning this around requires a strong focus on teacher quality - ensuring that Australian schools are able to attract and retain the most talented people into the teaching profession. At present, Australia recruits teachers who performed at about the 60th percentile of their grade. Finnish teachers performed at the 90th percentile or above. Raising salaries, reducing paperwork, improving status, and learning from successful programs such as "Teach for Australia" are all critical to ensuring teaching is a top career choice among young people.

Instead of settling for a long period of elevated unemployment, Australia should aim for full employment. Before the crisis, Germany, Britain, New Zealand and the United States had unemployment rates around 4 per cent - a full percentage point lower than Australia. Four per cent unemployment doesn't just mean more jobs, it also places upward pressure on wages. The lower the unemployment rate, the harder it is for employers to discriminate against women, people with disabilities, older Australians, Indigenous Australians, migrants, and people with unusual personalities.

Finally, Australia could use this crisis to take serious action on climate change - the great equity issue of our century. Plenty of nations are already doing just that. China will aim to hit peak emissions before 2030 and carbon neutrality by 2060. Europe seeks to become the first carbon-neutral continent in 2050. If Joe Biden wins next month's presidential election, he will aim for zero carbon pollution in the US electricity sector by 2035. There's no reason we can't be a rapidly growing economy with rapidly falling carbon emissions. Instead of bringing lumps of coal into Parliament, Scott Morrison could choose to lead Australia down a clean energy path.

Seventy-five years ago, Australia's leaders planned for a post-crisis world by thinking big. Today, the same national ambition can help us build a smarter, fairer, reconnected Australia.

Andrew Leigh is the federal member for Fenner. The above is an edited extract of an article originally published in What Happens Next? Reconstructing Australia after COVID-19 (edited by Emma Dawson and Janet McCalman).

ENDS

Authorised by Paul Erickson, ALP, Canberra.