The NT Government lost in neoliberal spin

I’ve been active writing the stronger together campaign blog. The positions our elected representatives take are increasingly more and more to the advantage of capital. When you are so close to elected representatives (as I am here by virtue of my work and a small population in the NT) you can see the sitting members are bereft of an intellect and blindly follow advice given to them by treasury. Even if an elected representative hoped to say increase the deficit, they would be mocked by those within the department and ostracised by cabinet. Why would an elected members do this? Because they have career prospects to think about. Michael Gunner, the previous chief minister resigned from parliament and six months later had a highly paid role with the ‘green arm’ of the fortesque metals group. Apparently they are planning some ammonium export business. The public benefit to such a project is practically nil. Let alone looking at the environmental impact such a project will have.

The legislation in the NT says a retired politician has six months before they can be appointed to a position within the private sector. The federal legislation is 18 months. Not that extending the waiting period would make much of a difference of the movement from sitting member to receiving political favours. You’d put an outright ban on it if it is something you wanted to stop.

You can bet things are similar if not worse when you get to more powerful and larger state and federal government. Worse in terms of the political favours that advance capitalist interest, and the ‘deals’ done with ‘jobs for mates’.

I said in the linked blog post how the Northern Territory Government is essentially a marketing arm for capital. It has the NT News publishing propaganda on achieving a $40billion dollar economy. How it will achieve this is unknown. What it will produce to do this is also unknown. Why has it chosen this number. It was plucked out of the air.

I said this in my linked post but I will repeat it here

Achieving a goal of $40bn GSP doesn’t account for our public well-being. GDP(GSP) is a measure of aggregate production. Producing $15billion in mining, military and other private sector for-profit investments is the same as investing $15bn in education, health and indigenous communities. It is measuring what we output. It is a quantitive and not qualitative. It is a residual number. We shouldn’t target it or look at it without context!

Achieving a goal of $40bn GSP doesn’t account for our public well-being. GDP(GSP) is a measure of aggregate production. Producing $15billion in mining, military and other private sector for-profit investments is the same as investing $15bn in education, health and indigenous communities. It is measuring what we output. It is a quantitive and not qualitative. It is a residual number. We shouldn’t target it or look at it without context!

We need to be targeting fair wages, housing for all, universal public services, (free childcare anyone?), investments in our health and education systems, guaranteed work, the list is endless on what we need to be doing. Things like ensuring our communities are using sustainable energy and developing agricultural systems that are local is a start. Rather than focusing on GDP(GSP) we need to focus on social and ecological indicators.

https://www.strongertogethernt.com.au/blog/towards-a-40bn-economy-what-for

With a bit of time I should be able to delve deeper into the GSP data set and see what is driving GSP and look at detail and provide evidence of neglect within the public sector. That is what I suspect I will find. This is what every state treasury department should be doing and advocating for greater spending on public goods and our communities well-being. Instead we have a nasty ideology that controls the purse strings. An ideology that uses an economic framework that has no evidence to support it and leaves working people worse off in material terms. And that’s before I even start talking about the impacts of climate change!!

That’s all from me.

And that’s a wrap!

Well it has been a busy few weeks and I have managed to launch an MMT informed campaign for a union peak body and commence work on a workers journal. I’ve developed some decent graphic design and website building skills. Canva is unbelievable. I can take ideas and turn them into simple pictures. I’m most proud of the below image describing inflation as a conflict. If someone is paying more, someone else is receiving more.

As much as things change though, things stay the same. I read this in the guardian on an article advocating why we should scrap the stage 3 tax cuts.

Australia is one of the richest countries in the world; we are in the middle of an energy price boom; we have enormous opportunities in renewable energy; but decades of tax cuts have trained us to feel poor, that we can’t have nice things, and that the future is something to fear rather than embrace.

https://www.theguardian.com/australia-news/commentisfree/2022/oct/06/australians-on-120k-are-not-middle-income-earners-we-must-remake-australia-not-spend-243bn-on-the-rich

And I agree we should scrap those cuts from an equity perspective. Though insinuating ‘tax cuts’ have trained us to feel poor is illogical. More dollars in people’s pockets actually makes you wealthier in financial terms. We can argue about how that income has been distributed and I certainly would’ve liked to see more dollars flow to the bottom of the income spectrum. To bring about greater equity we need to be spending at the bottom, delivering universal public services and I’d argue guaranteeing a right to work.

None of that is possible without breaking the myths we hold around debt and deficits. Deficits are merely an outcome of the saving desires of the non-government sector. Where the government spends is important in terms of the society we’d like to live in. But it never has a revenue constraint.

I listened to some nonsense about needing tax Woodside because it’s profits increased by 44%. Woodside’s profits increased because we have been enduring years of wage suppression. Woodside’s profits increased because we allow the export of things we should be keeping in the ground. I don’t want to tax them. I want that industry to be shut down.

It’s pathetic the alleged progressives in Australia seem to be nothing but. Where is their advocacy of raising the unemployment benefit? Where is the advocacy for raising the aged pension? We’ve one of the highest rates of pensioner poverty in the OECD. Why are they not fighting for a guaranteed right to work? It is what the early labour movements fought for!


Anyway hopefully some of what I am working on will help change the narrative on economics. The message is out there and I feel regular everyday people grasp the basics. We needn’t worry about running out of dollars, inflation is about power. Now we need our collective voices saying that. I am in talks with some other organisations about getting them on board with the stronger together campaign and spreading the message on flawed economic frameworks – and how using a decent lens can have us enact on climate change. Hopefully, that will come to fruition. I’ve got a lot of writing to do between now and the end of the year.

The Mainstream are Trying to Stay Relevant

I’ve read a few articles over the last few days that discuss full employment and how we voluntarily keep hundreds of thousands unemployed. It is a welcome change to the doom and gloom messages we have paraded about debts burdening our grandchild or insolvency if we spend too much. That narrative should be well and truly dead! I recall asking myself questions on what government debt is and why does a government need to borrow if it issues the currency in my senior years of school as I stared outside the window wishing I could be doing something more exciting.

This article from the ABC has Ross Garnaut plugging his latest book. The article details what economist call the Natural Accelerating Inflation Rate of Unemployment (NAIRU) Apart from being completely useless as a metric to measure against because you can never know what it is until you get there, it is still being used as a framework amongst the mainstream.

“Professor Garnaut says Australia’s policymakers have repeatedly miscalculated the NAIRU in recent years, meaning they have often suspected the economy is getting close to full employment when it is far from that point.”

So the fallacy that our economic superiors have just made a horrible mistake and needlessly left hundreds of thousands without jobs is paraded over the more accurate description that Unemployment is a political choice. Currency issuing governments can always purchase what is for sale, including idle labour. When economist think about costs (actual economist, not the frauds you read in the mainstream media) They are refereeing to real resources. People, raw materials, physical infrastructure, social impacts etc…And the cost of unemployment always far outweighs the cost of inflation. There are serious consequences as a result of involuntary unemployment. Loss of income, social exclusion, physical and mental health impacts, relationship breakdowns, poverty.

The mainstream narratives of deficits being a negative continue…

“At current levels of economic activity, having several hundred thousand people unnecessarily unemployed holds annual gross domestic product [GDP] down about $50 billion below what it could be, and, all other things being equal, raises Australia’s public deficits by nearly $20 billion each year.”

The deficit itself is irrelevant in determining a governments ability to spend. It is the residual number and accounts for the savings desires of the non-government sector. As an accounting rule it has to equal the non-government sectors savings. The question we should be asking is whether the fiscal balance is enough in achieving full employment and whether we have organised ourselves in a way that serves a public purpose. That is how much of the labour force do want engaged in public provision, what are the services we want delivered and what do we leave to private enterprise?

The article then continues to describe bond issuance and whether the Government should allow ‘the market’ to ‘fund’ deficits or whether The Reserve Bank should ‘fund’ the deficit spend. I wrote why that thinking was wrong here. I’ll reiterate parts of it below.

The Australian Government spends via an appropriation bill (through the parliament) and the finance minister then approves the transaction and someone within the Department of Treasury uses a computer to mark up the relevant exchange settlement account (ESA). These are accounts that financial institutes hold with the RBA. The smokes and mirrors of issuing bonds is irrelevant to the spending operation.

Intrinsically for a financial institution to purchase a bond the ESA’s have to be marked up first. So the act of issuing a bond changes the portfolio mix within the RBA’s system. ESAs are drained and dollars are added to a securities account. (The latter earns interest)

Now that the RBA is purchasing bonds it effectively owns the ‘debt’ that the Treasury is issuing so the Treasury can pay the RBA (via an appropriation bill) who then pays it to the Treasury. *eye roll* The whole operation is a charade to confuse the masses that all this somehow matters and great minds are at work pondering over these dilemmas to help save humanity.

Garnaut does state “I’d say, let’s take away their free lunch.” Huzzah! stopping the issuance of government debt is sensible. It is an unneeded operation that has its origins under a gold standard and necessary within the Bretton-Woods system. (a discussion for another time)

However Garnaut shoots himself in the foot and shows his interest in maintain the current class structures.

“The circumstances call for an Economic Stability Board, with power to constrain demand by fiscal as well as monetary means — to place a surcharge on major taxes if that serves better than raising interest rates.”

‘Independent boards’ are usually a mechanism to depoliticise a process the minister would rather not be responsible for and take away democratic accountability.

Under Garnaut’s thinking this operates under a NAIRU paradigm. The ‘independent’ board would have the power to raise and lower taxes (as well as interest rates) if it felt the employment rate and wages growth was too high or low and it would force the unemployed onto a substance payment in their pursuit of a desired rate of inflation.

“Professor Garnaut has also thrown his support behind the idea of a guaranteed basic income for practically all adults, paid at the same level as the dole

Basic incomes should not be part of a progressive agenda. (Though we need a welfare system that cares for those in need)

We are more than just consumption units and there is value in contributing within our abilities. We should be aiming to eliminate involuntary unemployment and underemployment.

A Job Guarantee scheme forms a replacement for the NAIRU and replaces it with a Non Accelerating Buffer Employment Ratio (NAIBER). The social policy manifestation of the NAIBER is the JG.

It serves the purpose of disciplining an inflation rate to a politically acceptable rate (Would you be bothered if inflation was 4% and you had less people in a JG over a 3% inflation rate?)- It isn’t ideal but it is a hell of a lot better than using an unemployed buffer stock. It isn’t there to create masses of minimum wage jobs.

It is the role of Government to use their spending capacity to create career public service jobs and act as competition to the private sector; eliminating lousy employers by ensuring enough high paid career positions matching people’s skillset are on offer.


The linked to article above and Garnaut’s mention of an independent fiscal and monetary board reminded be of the 1924 amendments to the Commonwealth Bank Act. A friend told me not everybody reads various pieces of banking legislation and their amendments from a century ago, so I will describe it here.

By 1923 under the Bruce Government (Nationalist), the responsibility for note issuance was transferred to the Commonwealth Bank (previously under Treasury) and maintained in the note issuance department. Changes were made to the Commonwealth Bank Act in respect to note issuance in 1924  ‘(1) The Bank shall be managed by a Board of Directors composed of the Governor and seven other Directors. (2.)   Subject to this Act, the seven other Directors shall consist of— (a) the Secretary to the Treasury ; and (b) six other persons who are or have been actively engaged in agriculture, commerce, finance or industry.’

The Governor of the board was a banker by the name of Sir Robert Gibson. A staunch deflationarist (wage cuts, cut deficits) and was responsible for inviting another banker Sir Otto Niemeyer to Australia over the Great Depression. The Sydney Morning Herald reported regarding the changes to the board ‘ …the board, although permitted to decide all other questions by a majority of votes, will not be allowed to determine questions relating to the note issue unless the determining majority includes two of the following, namely the Governor, the secretary to the Treasury, and the two directors appointed because of their knowledge of the currency’ (SMH, 14/ 6 /1924:15-16) The Governor wasn’t required be answerable to the Government of the day unless legislation compelled them. (Which didn’t exist) And unless the ‘radical’ Labour Party was in Government and controlled both houses this was an improbability. A constraint that we will witness over the depression when the Scullin Government tries to spend and lower the unemployment rate.

At the request of Gibson to observe the current Australian economic situation, Otto Niemyer, an official from the Bank of England along with Professor T.E. Gregory of the London from the School of Economics arrive in Australia on 14 July, 1930. Niemeyer  had tabled the below plan that was rejected by most Australian economists across the political spectrum.   

The Niemeyer plan (Parliamentary Papers 1929-31, vol.2, No. 81, p. 45) called for 1. Budgets to be balanced at any cost in human suffering. 2. Cessation of overseas borrowing until the then short-term  indebtedness had been dealt with. 3. No public works, which would not pay for interest and  sinking funds on loans, to be put in hand. 4. All interest payments to be credited to a special account  in the Commonwealth Bank, to be used only in favor of  the bond-holders. 5. Monthly accounts to be published in Australia and overseas, showing summaries of revenue and expenditure, also state of short-term debt and loan account.  

As the Labour Government of Scullin was wrestling with The Depression the note issuance board was denying the Government additional expenditure. In March of 1931, the Treasurer presented to The House a bill relating to the issue of a fiduciary currency. 

These fiduciary notes were to be called Treasury Notes as opposed to an Australian Note (notes issued under the Commonwealth bank act 1920 in pursuance of the Australian Notes Act 1910-1914) and differed in that there was no need to hold gold reserves in relation to their note issue. The Bill specially stated ‘Treasury Notes shall not be deemed to be Bank notes within the meaning of the Bank Notes Tax Act 1910’

The bill also made provision for Treasury Note issuance of £18million, six million of which was for the purposes of the Wheat Act 1931 and the remaining twelve million on providing employment for reproductive works.  These ‘reproductive works’ would be made by appropriations of any Acts or by means of loans to the States, local governments or other corporations approved by the Governor General.

During the second reading of the bill Australian Labor Party member for Bendigo, Richard Keane stated ‘This Government has made endeavours to obtain money, but has been thwarted in its attempt by the Commonwealth Bank and other authorities’ (House of Representative Hansard, No.13, p.577, 1931)

The Commonwealth Bank Act in 1924, as described above, had put in place approval of note issuance (and thus the ability for Treasury to spend without borrowing) to a seven member board.

With The Depression and many unemployed the Labor Government was looking for a means to directly decrease unemployment.

‘In this country we have an army of unemployed totalling about 300,000; loan expenditure has been reduced from £43,000,000 to £14,000,000, and the Government last year made a grant of £1,000,000 for the relief of unemployment.’ (House of Representative Hansard, No.13, p.578, 1931)  Keane makes mention ‘We on this side of the House take the view that, orthodox methods having failed, it is necessary to adopt what may be regarded as unorthodox proposals.’ and points to ‘…the fact that for many years Great Britain has had Fiduciary issue of £260,000,000’ (House of Representative Hansard, No.13, p.577, 1931) 

Theodore’s efforts on a Fiduciary Note failed in the Senate. Economist in Australia, despite the rejection of the Niemeyer Plan still necessitated wage cuts were necessary. Yet at the February 1931 Premier’s conference there was such disagreement amongst economist who were in charge of tabling a report it was never released to the public.

The Treasurer E. G. Theodore and Scullin repudiated the report: they would not have it signed by their public servants. Gibson then refused to sign it. The report was never issued. (Coleman, 1959, p.119) [Gibson was an economist within the Australian Government that would come round to the emerging Keynesian consensus rested by his collegaues]

With Theodore’s Fiduciary Notes bill thwarted, The Copland Plan was devised.  The Plan though proved unpopular with the electorate. 

It recommended a reduction in the deficit from £39m to £11m, to be secured by a £13m reduction in outlays, £12m increase in taxes, and £3m from reduced interest. There was to be a 20 per cent cut in expenditure, and a 15 per cent reduction in interest payments.….

…a deal specifying how the pain would be shared out; it sought to establish agreement by observing measures of equality of sacrifice. Australian bond holders, public servants and pensioners were all to take a cut. (Bond holders experienced the heaviest proportionate contraction in incomes: legislative fiat reduced interest on government debt by 22.5 per cent.) This universal sharing of the pain made it universally unpopular. (Coleman, 1959 p.120)

Figures within the ALP such as Curtin argued Labor should surrender Government rather than implement The Copland Plan. Though the plan was adopted. The Labor Party split and delivered a majority Government to Joseph Lyons United Australia Party (UAP), a key figure responsible for orchestrating the failed bills, leaking information to London financial interests, and leaving the ALP to assist in forming the UAP. 

The events of the economic malpractice continued and the Australian population was forced to endure the 1930’s with unnecassary levels of unemployment. As economist argued over how much to cut spending and wages by or whether to increase public expenditure masses of people needlessly suffered.

The ‘independent’ board under Gibson responsible for the note issuance desired real wage cuts and had no concern for the well being of the population! That is very well articulated in the Niemeyer Plan and we needn’t experience anything that atrocious again!

Read Chapter 6 of Giblin’s Platoon by Coleman et al., for an account of the economic disagreements that ensured over the 1930’s

Conclusion

So as the mainstream economist try to stay relevant by saying ‘Oh hey turns out there isn’t a need to issue debt’ despite the messages they’ve been pushing on balanced budget nonsense for decades. They’re trying to maintain current pools of unemployment and using them in a fight against inflation by offering them meagre subsistence living instead of what we desire, a job that is meaningful and allows us to contribute to society. All while attempting to ensure we have depoliticised technocratic bodies instead of democratic accountability. That doesn’t work for the EU and it won’t work here.

This article was on edited on 29/03/21 to fix a grammatical error.

Let’s have a rational debate on government spending.

Twitter is full of comments around MMT being something you do – rather than something that is, We have articles like ‘Don’t let the Reserve Bank just give the Government money’ and articles that the leader of the opposition tells shadow cabinet to find cuts and spending offsets ahead of campaign.

The foundations of MMT are quite simple. Currency issuing governments spend via appropriation bills, the spending is authorised and the relevant account at the central bank is marked up. That bank then credits the appropriate customer. Irrespective of past fiscal positions or the balance the government runs or the bonds they choose to issue, this process doesn’t change. There should be nothing controversial about that. That is the way government spending operates.

The idea that somehow our treasury departments are at the mercy of central bankers or bond market traders is ridiculous. We have seen the Australian government spend some $200bn over covid and central banks around the world have been purchasing debt on what is called the secondary market. (referred to as Quantitative Easing)

I won’t walk through the whole process here you can read this post and this post. The crux of it is the Australian government creates the dollars via appropriation bills. The finance.gov.au website says there are two types of appropriations:

annual appropriations—a provision within an annual appropriation Act or a supply Act, that provides annual funding to entities and Commonwealth companies to undertake ongoing government activities and programs

special appropriations—a provision within an Act (that is not an annual appropriation Act or a supply Act) that provides authority to spend money for particular purposes (e.g. to finance a particular project or to make social security payments). Special accounts are a subset of special appropriations.

And continues with ‘While appropriation Acts authorise the drawing of money from the CRF [consolidated revenue fund]*, they do not authorise the spending of that money. Legislative authority is required for the Commonwealth to enter into arrangements to spend relevant money for a particular purpose.’

*The CRF is a ‘conceptual’ account created under the Australian constitution. All ‘money’ irrespective of where it is, exists within the CRF. A group of accounts the Australian government holds at the Reserve Bank are known as the offical public accounts (OPA) The numbers in these accounts do not form part of the money supply.

Think of the CRF as a transactional account that records what has been spent and what has been taxed. The numbers in it aren’t what can be spent. The authorisation of spending that comes after the appropriation is found in the Public Governance, Performance and Accountability Act 2013. It has its genesis in the Audit Act 1901. I am working through understanding and detailing the changes. Today the PGPA Act of 2013 under section 51 says

(1) If an amount is appropriated by the Parliament in relation to a Commonwealth entity, then the Finance Minister may, on behalf of the Commonwealth, make the appropriated amount available to the entity in such instalments, and at such times, as the Finance Minister considers appropriate.
(2)  However, the Finance Minister must make an amount available if:
(a)  a law requires the payment of the amount; and
(b)  the Finance Minister is satisfied that there is an available appropriation.

The UK for example has its origins in the Exchequer and Audit Departments Act 1866 where the first three subsections state:

(1) This section applies in respect of sums which Parliament has authorised, by Act or resolution of the House of Commons, to be issued out of the Consolidated Fund.
(2) The Comptroller and Auditor General shall, on receipt of a requisition from the Treasury, grant the Treasury a credit on the Exchequer account at the Bank of England (or on its growing balance).
(3)Where a credit has been granted under subsection (2) issues shall be made to principal accountants from time to time on orders given to the Bank by the Treasury.

If you want further evidence that bond issuance or taxes are irrelevant to government spending the UK Government used what they call the Ways and Means facility. They describe it ‘as the government’s overdraft account with the Bank of England (the Bank), i.e. the facility which enables sterling cash advances from the Bank to the government.’

The UK Treasury scrapped the issuance of bonds entirely.

“HM Treasury and the Bank of England (the Bank) have agreed to extend temporarily the use of the government’s long-established Ways and Means (W&M) facility.”

As a temporary measure, this will provide a short-term source of additional liquidity to the government if needed to smooth its cashflows and support the orderly functioning of markets, through the period of disruption from Covid-19.

It is coaxed in language to give readers the idea bonds are used to fund spending in ‘normal’ circumstances.

‘The government will continue to use the markets as its primary source of financing, and its response to Covid-19 will be fully funded by additional borrowing through normal debt management operations.’

The markets never ‘fund’ treasury operations. The appropriation bills do that. The authorisation of the spending marks up an account at the central bank and this is what gives the banks the ability to purchase bonds. It doesn’t matter what the past fiscal positions are. What matters is spending today and whether there are available real resources.

What has been happening with QE is that the debt management departments of treasury have been issuing bonds, having financial institutes buy them and the central banks have been buying them a week or so later. The UK stopped with this whole charade for a while on April 9 2020

So when stuff.co.nz writes

Purchasing debt (issued in the form of bonds) on the primary market means that instead of purchasing bonds from third parties like banks and investors, the Reserve Bank would buy the bonds directly from Treasury itself. One part of the Government would buy bonds issued by another part of the Government, cutting out the middleman. It’s a big move.

They have no clue what they’re talking about. Bond issuance funds nothing. Bond issuance switches currency in reserves to securities accounts. The latter is interest bearing. Though now the interest is paid from the treasury arm to the central banking arm of the government and the central banking arm then credits the treasury. Apparently ending this will be a great cause of concern.

But Treasury’s biggest concern was that skipping the secondary market would give New Zealand a bad reputation as it would look like the Reserve Bank was simply printing money for the Government to spend.

What is so difficult for financial journalist Thomas Coughlan to grasp. Financial institutes in New Zealand obtain NZD in their reserve accounts at the Bank of New Zealand via the NZ Treasury marking up the account. The dollars come from the appropriation bills. There are no printers, just keystrokes.

All this reminds me of when the Australian Government introduced its own notes.

In 1910 when the Australian Government banned private bank note issuance and issued its own via treasury there were objections. The hansards record the member for Wentworth, Mr Kelly ‘We ought further to be informed what guarantees the public will have that this particular method is not being adopted for the purpose of raising money without paying interest thereon by a Government which refuses to borrow. (House of Representative Hansard No.30, p.690, 1910)

There you have it, the same old arguments because some capitalist lose their free lunch. They’d rather keep the way spending works in the dark to demonise public expenditure, collect their interest bearing assets (bonds), watch governments cut public expenditure, privatise public assets, and maintain a desperate pool of workers that work for desperate wages.

And Australia’s opposition party plays into the narrative. The second article quotes that “Two shadow cabinet members, speaking on the condition of anonymity, told The Age and the Herald emphasising budget repair at a time when the Coalition government was prepared to spend billions sent “mixed messages” and “lacked imagination”.

And whoever those mysterious shadow ministers are, are correct. We have witnessed the largest government spending since World War Two and much of the arguments that demonise public spending are the same now as they were for the last century. It is getting tiresome.

But the status quo in the ALP remains. Richard Marles writes

“As Anthony has made clear, all policy proposals should consider options to minimise the fiscal impact and/or be fully offset by savings within respective portfolios,”

That is all from me!

Jobless still out number Job Vacancies

Below is an article I wrote in attempts to get published in various media outlets. Obviously that has been unsuccessful. Most journalist look at the incorrect indicators in assessing ‘economic’ performance. Things like the underlying inflation rate (which harps back to fight inflation first over unemployment), the decreasing or less than expected government spending (as if the government is like a household and can run out) and perhaps the improving employment data/job vacancies. Yet almost always there isn’t discussion on the overall un and unemployed. This is one aspect of what causes wage suppression, poverty and an individuals physical and mental well-being.

Anyway it would be a shame to waste the simple articles I’ve written so I’ll just post it here.

Unsuccessfully published article – that is better than the crap you read on most Australian media sites.

Towards the end of the month the Australian Bureau of Statics releases their Labour Force Survey. This is the data that shows us the unemployment statics. It isn’t an indicator of where we are headed as it is similar to looking at a distance star light years away. The data you are observing has already taken place. Nevertheless, it is a useful guide that shows policy makers trends and should help decide fiscal policy (Government spending) 

This year as a result of COVID-19 we have had some rather drastic swings in the employment data for obvious reasons.  The health measures took precedence as the Australian Government implemented a range of income support measures to protect those that would’ve otherwise lost incomes.  Notwithstanding some issues of the support measures flowing to some senior executives, the JobKeeper program delivered $750 per week to eligible employees and the rate of our unemployment benefit, which hadn’t risen in real terms since the nineties increased $550 a fortnight to reach a total at the poverty line.   

The last available data for job advertisements saw a 23.4 per cent increase between August to November of 2020 for a total of 254,400 jobs advertised. The unemployment rate continues to drop from its peak of 7.5 percent. The underemployment rate decreased as well from a high of 13.8% to its current level of 8.5%. The monthly change in hours worked was 2million hours. These are all positive developments.

However, when we compare the data from a similar period last year we can see the yearly change in hours worked fall by 26 million hours or a drop of 1.5%. When we look at the total number of people seeking work, that numbers 912,000 competing for around 254,400 jobs.  This doesn’t factor in the underemployed who desire more hours of work. The numbers don’t look so rosy when you compare them from this perspective. 

The question we should be asking is can we do better? Can we as a society ensure enough employment for all? Not only should we be seeking more jobs advertised than demanded but can we also ensure matching peoples skills sets with employment. 

This isn’t some ‘radical’ idea. It was Australian Government policy between 1945-1975 that was maintained by both sides of politics. In a similar sense to the United States ‘New Deal’ and Britain’s ‘Full Employment in a Free Society’, Australia had the rather blandly titled 1945 Tax White Paper on Full Employment.  The policy itself stated;

This policy for full employment will maintain such a pressure of demand on resources that for the economy as a whole there will be a tendency towards a shortage of men instead of a shortage of jobs.

It was understood that unemployment was a systemic issue and the collective will of our society ensured unemployment remained below 2 percent. In the same way the pressure on our political class ensured we had lockdowns and prioritised health over profits, despite some business interests to the contrary, with enough collective will we have the power to ensure that the number of job vacancies exceed the number of job seekers. 

The covid pandemic has highlighted one thing very clearly. That is the Australian Government always has the financial resources to deal with spending collapses.  The questions we need to be asking aren’t how to fund public expenditure but questions about available real resources.  The shortage of masks at the beginning of the pandemic being a good example.  There was something we needed and didn’t produce so we organised the labour and the factories to manufacture what we needed.  

This same concept can apply to organising our labour and tackling the dual crisis we face, climate change and systemic inequality.  Last year we experienced one of the hottest years on record which resulted in the catastrophic bushfires that lined the east coast.  We have so much work to do in terms of constructing alternate forms of energy, other than fossil fuels and in rehabilitating ecological ecosystems that have been destroyed because of our land management practices.

We have an idle labour force of hundreds of thousands of people. Millions when you include the underemployed and hidden unemployed.  During the ‘full employment era’ the Commonwealth Employment Service would match those seeking work to relevant roles.

Modern Monetary Theory has been mentioned in numerous articles over the past year. At its most elemental level it says a currency is a social and legal construct. Currency issuers spend via an appropriation bill and are not financially constrained, though they are constrained by real resources. A monopolist of a currency can purchase whatever is for sale in the currency it issues, including idle labour. Thus unemployment is a political choice. 

We have witnessed the Australian Government spend some $200 billion and we observed a deflationary period. The numbers of those that desire more work indicate we can be spending a lot more and putting people to work on socially useful projects.  It is a question on what we want society to be working towards.  Which certainly puts a different perspective on the unemployment figures.