(c) Copyright 1998: Graham Strachan
How well has economic rationalism delivered on its promises? For a start, let’s look at the promises. The Hilmer Report: National Competition Policy’ (1993) promised lower prices, improved consumer choice, higher economic growth and ‘increased employment opportunities for the economy as a whole’ [Hilmer Report, p.1]. What is the reality?
Several trends are clear: a widening gap in wealth between rich and poor; increasing unemployment, with an increasing component of long-term unemployed; an increase in part-time employment which lacks the security and flow-on benefits of full-time employment; increasing reliance on the small business sector for whatever job creation there is; escalating social problems as workers are laid off from the big business sector; increasing youth hopelessness, and the fourth highest youth suicide rate in the world; a general community obsession with ‘a job’ and earning a living as the end in life, rather then the means.
All of this has been accompanied by further concentrations of capital: big business is getting bigger, with huge amounts of money being spent on mergers and aquisitions. This has been accompanied by either spectacular profits or spectacular losses and a media obsession with the ‘confidence of investors’, most of whom do not invest in productive enterprise but make a quick buck capitalising on the daily fluctuations in national currencies on the global money market: the big global casino in which the value of the Australian dollar is determined.
What about Professor Hilmer’s ‘increased employment opportunities for the community as a whole’? It was at best wishful thinking. The Australian Bureau of Statistics (ABS) has admitted that the true demand for work is much higher than the official government statistics claim. In 1997 it estimated that against an official unemployment figure of 800,300, the number of Australians unemployed and wanting to work, or employed and wanting more work was almost 2.5 million, which is 25 or 30%, depending on which figure is used for the size of the workforce.
The Sydney Morning Herald (October 20, 1997) reported that in the 12 years 1985-1997 (the era of economic rationalism) 3.3 million Australian workers had been retrenched and had to find replacement jobs, in what it described as a ‘massive downsizing of the nation’s workplace’ [Sydney Morning Herald, Monday, October 20, 1997]. Now of a total of only 8.4 million available jobs, only 6.3 million are full time, the rest (26%) are casual or part-time, and that proportion is increasing. Net growth in full-time employment in the 1990s has been zero, due to job destruction by (now foreign-owned) big business.
Long term unemployment is also increasing. In December 1997 the ABS found that 33.6% of unemployed people had been out of a job for more than 12 months, up from 30% eighteen months previously [‘The Australian’, January 21, 1998].
The fact is that big business, the sole beneficiary of economic rationalism, is a job destroyer. The Sydney Morning Herald, October 20, 1997, reported that between 1990-95 Shell had shed almost 2,000 jobs, Telstra plans to ‘cull’ 22,000 (now 25,500 since ‘privatisation’), the Commonwealth Public Service will be cut by 27,000 permanent positions by the mid-1998, the number of public sector employees in NSW has fallen by 90,000 since May 1991, BHP (now a multinational) will sack 2,500 when it closes its Newcastle plant, and another, 800 at Port Kembla.
The four major banks have eliminated 30,000 full-time jobs since 1991, and are expected to eliminate a further 60,000 by 2005. On December 27, 1997, it was reported that the financial services industry had reduced employment by more than 10 per cent over the past 5 years, despite the sector's burgeoning growth. The finance sector had pared its workforce by 16% since 1991. The insurance workforce had been cut by 35% in this period, despite the managed funds industry's ‘spectacular growth’. On January 21, 1998, it was announced that National Mutual and MLC would merge, targeting cost reductions of $200 million a year over 3 years by ‘removing overlapping functions and through staff cuts’.
Big business and government (soon to be ‘privatised’) are shedding about 300,000 full-time jobs a year - or about 500,000 when part-time work is included.
If challenged about the jobless (rarely by the media which are helping it hide the truth) the federal government invariably points to ‘job creation’ over previous months. But since big business and government are net job destroyers, all this so-called ‘job creation’ (for which the government invariably claims credit) is coming from the small business sector, the very sector economic rationalism forbids the government to help. The Hilmer Report states at p. 79: ‘The Committee does not consider that competition policy should be distorted to provide special protection to any interest group, including small business...’
Small business has to ‘adapt to the modern world’ and ‘become more competitive’, while big business gets taxpayer-funded subsidies and protection (see the Article ‘The Competition Hoax’ in this series), is allowed to take its profits ($200 billion per year) out of the country tax-free (Austand report, also Courier Mail 14 January 1998), while happily destroying jobs for Australians with the tacit approval of the federal government.
Meanwhile, Australia’s ex-Prime Ministers retire multi-millionaires. As Hamlet said, “Something is rotten in the state of Denmark”.