The History of a Job Guarantee in Australia

Job Guarantee

Ted Theodore, former Premier of Queensland and Treasurer in the Scullin government

Source: National Library of Australia

The first job guarantee proposed was in 1919 by the former Queensland Premier Ted Theodore. Theodore advocated a right to work bill that was blocked in the Queensland (Qld) upper house (abolished by Qld Labor). There  was a huge blockade organised by employers in Queensland against the bill; they successfully organised a blockade that lasted four years.

In 1929, Theodore, an instinctive Keynesian, became Treasurer in the Scullin government two days before the Wall Street crash. He had a brilliant mind for economics and finance. Theodore also enunciated the principles of Keynesian economics four years prior to the publication of the General Theory of Money in 1936, according to Dr Victor Quirk.

Unfortunately, Theodore’s brilliant mind and visionary policies were no match for the conservative side of politics in Australia. What the conservatives lacked in ideas, they more than made up for in political machinations and sabotage.

Even a Labor government couldn’t save the country from this sabotage. The Scullin Labor government was dominated by Sir Robert Gibson of the Commonwealth Bank, who worked on behalf of the Bank of England. Gibson bullied others to accept his ideas. In 1930, he and his friends forced Theodore from parliament with a whiff of a scandal.

Theodore was not charged with a criminal offence. A civil jury subsequently found Ted Theodore to be not guilty.

Theodore’s loss to Australian politics was seemingly incalculable ^, and just at the time when Australia needed his brilliance the most. In fact, the country was destined for grim economic times, faring much worse than just about any other during the depression.

When Theodore left Australian politics, Gibson and financial interests really got down to business. They wanted Australia to be a cheap supplier and to have no manufacturing industry. The chance that Australia would escape a devastating depression was nil.

Australia’s chance of escaping the depression was also nil for two other reasons. British financiers (“the same ones that blocked Theodore’s 1919 Right to Work Bill”) demanded that Australia cop austerity during the depression. This involved cuts to pensions, wages as a pre-condition of gaining financial assistance from the UK.

Australia’s other chance of ameliorating the depression was Theodore’s idea to use a fiduciary note issue (money printing) to finance a relief package. This package was aimed at assisting struggling farmers. It also would’ve financed a public works program to boost an ailing economy. Tragically, this initiative was knocked back by the upper house.

It would take until World War II for the economy to recover.

In October 1941, after Artie Fadden’s government lost a confidence motion, John Curtin and Labor formed a government. Two months later Pearl Harbour was bombed, and around that time, the Japanese launched air raids on Northern Australia.

Curtin and Chifley escalated government funding both to fund the war effort and to create a better vision for society after the war. They demonstrated that a government partially unshackled by neoliberal orthodoxy could create quality public-sector jobs.

Ben Chifley, Prime Minister of Australia from 1945–49

Source: National Library of Australia

Known by its bureaucratic title, The White Paper on Full Employment, this policy remained in place for three decades. It was an acknowledgement by the Commonwealth that they played a role in the maintenance of full employment.

At the basis of the full employment policy lay three central pillars : the depression, World War II and the Keynes General Theory on money.

During the depression, many men and women searched for work that simply didn’t exist. Calls to remedy this social tragedy were met with disinterest by governments and central bankers who were more interested in repaying bondholders.

In contrast, World War II showed that fiscal considerations were not considered obstacles. The war also demonstrated to many Australians that the government played a central role in creating jobs.

The third pillar of this policy was Keynes General Theory on money. The main thesis of this policy was that it was ‘fallacy’ that markets will automatically produce full employment and that state intervention is necessary to deal with economic downturns.

The Curtin/ Chifley full employment policy was supported by both sides of Australian politics. Both the ALP  and the Coalition knew this policy was critical to their re-election prospects. Any government or aspiring government didn’t dare to abolish this policy. They knew they’d be wiped off the electoral map, because during the 1930s depression, the community had developed a real distaste for the evils of unemployment.

“Unemployment is an evil from the effects of which no class in the community and no State in the Commonwealth can hope to escape, unless concerted action is taken.”

Source: The Australian Welfare State: key documents and themes

This was the attitude of Australia’s post war politicians and public servants that had developed the policy. This commitment was explained in the Dedman White paper.

This commitment was questioned by Laurel Black, a former academic, who argued that the policy was par excellence in its selective use of Keynesian economic theory. Black also argued that the policy was closer to a public works program than a full-employment policy. She also argued the Full employment policy was dogged by the principles of sound finance. Sound finance is obsessed with balanced budgets. And to top that off, even after the ’30s treasury endorsed orthodoxy over deficit spending.

Nevertheless, support for the full-employment policy continued to grow in the 1960s. This was demonstrated at the 1961 election where Arthur Calwell, the leader of the Labor opposition, promised to increase the deficit to boost employment. He lost to Bob Menzies, but Calwell’s promise won, according to economist Warwick Smith.

By the late 1960s, many employers complained about the cost of labour. They wanted the full employment policy dumped. The fact was that they hated having to compete against the government for staff. The Liberal government of Menzies shared this distaste. The days of the job guarantee were numbered.

In 1970, the Gorton government was advised that a major external shock to the economy would be required, so Australia’s full employment policy could be dumped.

That opportunity arrived abruptly in 1973 with the OPEC oil shocks that saw a surge in inflation in the 1970s. This is why policymakers deemphasised unemployment to get inflation under control. However, the change in policy had other implications; it triggered a rise in unemployment and, particularly, underemployment.

In 1974, the Whitlam government ended the full employment policy. In 1975, the newly elected government of Malcolm Fraser took a harsher line on Social Security. Perhaps the best-known hardliner was John Hodges MP. He compared unemployment payments to theft.

This attitude was continued by successive governments. But it was John Howard’s government, gaining power in a landslide in 1996, which took the vilification of the unemployed to new heights.

Under Howard, bullying the unemployed became an institutionalised sport. Media, commentators and politicians were quick to lecture the unemployed or insecure workers about their character failings. Their inability to find work didn’t have anything to do with the economy they were told; it was solely an individual failure.

A particularly egregious example of bullying and vilification emerged about a month before Howard’s election in March 1996. A group of unemployed young people living in Melbourne were persuaded to speak with a news crew about being out of work. The news report misrepresented their circumstances and painted them as bludgers. What followed was a campaign of national vilification.

After the election of Howard, many of these unemployed young were abused, accused of individual failure and herded into a Work for the Dole. This involved working for low rates of pay to supposedly build skills.

While the program sounded great in theory, it didn’t generally lead to employment. It merely enhanced some facets of employability—hard work, punctuality and attitude—but the significant ones, such as the need for specialist skills and lack of jobs were ignored.

What government didn’t ignore was the program’s huge electoral appeal. The political optics behind it was fantastic, making the government look decisive in the eyes of many voters. Yet, these same voters seemed unaware that reviews of the Work for the Dole program showed only 2–6% of participants found gainful employment through it.

Meanwhile, employment prospects for many Australians grew more insecure. Despite the great PR, many Australians became more fearful about their own prospects as old economic certainties fell away. They had reason to feel insecure; Australia had the highest number of casual or temporary jobs in the OECD along with Spain.

In addition, unemployment made a major comeback, with the official figures peaking around 13%. Actually, they were even higher because many laid off spouses were ineligible for assistance and, therefore, weren’t counted in the numbers. Add to that, those people who were supported financially by their family, and you had a clearer picture of how many Australians were out of work.

Re definition of the unemployment rate

By 1997, the unemployment snapshot became even fuzzier. On the surface, the late 1990s saw a sharp drop in the unemployment rate. Sadly, this was due to a reconfigured unemployment rate.

Prior to 1997, if someone worked 16 hours or week or less, they were included in the unemployment figures. Beginning that year, if someone worked for one hour per week or not at all, they were included in the figures. And if they had given up searching for work, they were also not counted.

This definitional change was great for commentators and politicians who splashed fantastic headlines on the front pages of newspapers like: Our most golden of days. But buried beneath the snowstorm of fantastic headlines lay an increasing number of workers stuck in casual employment or unemployed.

In the years that followed, it was still common for commentators to say that Australia was near full employment. We weren’t—we weren’t even close.

 But some media outlets, politicians and businesspeople weren’t interested in analysing the data; they had other objectives. For example, in 1997, a newspaper published a story about a group of unemployed people who had secured work after one day’s search. The facts were subsequently revealed by the ABC’s Media Watch program. Those beaming, confident young people splashed on the front of the newspaper weren’t unemployed; they all worked at the newspaper.

What made the story so outrageous was not only the misrepresentation; the false narrative was also at odds with market reality for many young people. Yet, despite this grim reality, many commentators and older people believed the young were casually employed or unemployed due to character defects.

What this focus on character and choices missed was that the economic changes of the 1990s and beyond hit many workers hard, including older workers.

By 2019, it was clear the economy was in trouble. With low consumer confidence and more small businesses hitting the wall, the question was: Where were the jobs going to come from? This problem was partially addressed by the Morrison government, which increased public sector employment. But Australia’s hollowed-out manufacturing industry left Australia exposed in the event of a supply shock.

By March 2020, the world and Australia were waking up to the reality of the COVID-19 pandemic. Millions of Australians have lost their jobs due to the crisis, and even if the crisis passes, it’s unlikely the livelihoods of those millions of people who’ve lost their jobs will ever recover.

That’s why we need a Green New Deal (including a Jobs Guarantee) and the expansion of the Clean Energy Finance Corporation (Australia’s only government-owned bank). We also need to finance public housing projects and start engaging in high-end manufacturing.

Public investment is crucial to re-starting our economy. As history has shown, it’s our best hope.

 ^ Source is Ross Fitzgerald, E. G. (Red Ted) Theodore, The Clem Lack Oration, 1994.

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