Employment expert: stimulus failed to target jobs

Solidarity spoke to Bill Mitchell, from the University of Newcatle’s Centre of Full Employment and Equity, above how Rudd’s stimulus spending could be targeting massive job creation

Kevin Rudd appears to be dishing out money left, right and centre to try to avoid recession. The government has announced over $50 billion in spending since late last year.
But this spending has focussed on providing short term stimulus and bolstering business confidence, rather than defending the living conditions and entitlements of workers.
Bill Mitchell of the University of Newcastle’s Centre of Full Employment and Equity (CofFEE), argues clearly that the spending has failed to target jobs.
“The federal government’s responses have clearly recognised it has a responsibility to run a budget deficit. The magnitude of the events around the world are beyond anything we’ve ever seen in our lifetimes, the speed and depth of contraction is quite extraordinary.”
He credits the $10 billion cash handouts before Christmas with stopping job losses in the retail sector: “If you look at the retail sales figures that clearly made a difference. While some of that stimulus was saved some was spent. Through to February employment in other industries such as manufacturing, construction and finance are falling; retail trade seems to be have been resilient.”
But, he says, the $42 billion stimulus package was misdirected:
“I was very disappointed by that—$42 billion is a lot of money and on the government’s own admission it would protect or underpin only about 90,000 jobs.”
At the same time the government’s own modelling admitted that even after the effect of the stimulus 300,000 jobs will disappear.
Research done at CofFEE shows how many more jobs could be created if the government was serious about targeting job creation: “We conducted a national survey of over 130 local governments around Australia. We asked them to document unmet community needs in community services, community development and environmental care services. We asked them: if the federal government would fund low skill jobs in their area how many jobs could you create in meeting those needs.
“We were able to come up with hundreds of thousands of low skill jobs right across Australia that would be organised locally, funded federally.
“We were able to estimate that around 560,000 jobs, 80 per cent in the public sector and 20 per cent in the private sector because of the stimulus, would cost $8.3 billion for one year.
“When you juxtapose $42 billion for 90,000 jobs against $8.3 billion for 560,000 low skill jobs, targeted at the people who bear the burden of economic downturn—the most disadvantaged workers in our communities—then I can’t believe we would spend $42 billion in the way they’re doing it.”
In early April the government announced further funding for a “Jobs Fund”. According to Bill Mitchell: “It sounds very much like the plan we gave the federal government in December except it’s only $650 million. It won’t generate more that 35,000 or 40,000 minimum wage jobs.”
Added to the impact of the government’s $42 billion stimulus this means the government’s spending will support a maximum of 130,000 jobs over the next year.
Rudd claims that installing the recently announced National Broadband Network will provide another 25,000 jobs a year, but this will not begin until mid-2010.

Government jobs
As Mitchell put it “They now accept the principle that they should be creating jobs—why don’t they do it properly and create enough jobs?
“The best thing it could so for jobs now is basically start hiring people. What we’re arguing is the federal government should introduce a job guarantee where the federal government announces it will employ anybody who hasn’t got a job at a minimum wage. If the private sector doesn’t want the labour the federal government can buy up however much of that labour wants to work.
There is no barrier to further increasing the size of the government deficit to fund this increase of jobs in the public service, he says:
“Limits on the deficit are really determined by the desire of the private sector to save. When the private sector saves they are withdrawing income that’s been produced from being re-spent.And if the money that’s withdrawn is not spent somewhere else then production falls and employment falls.
“What the government should be doing is spending up to the point that it’s filling the spending gap. And until we reach that point the federal government’s budget deficit isn’t big enough.”


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