Even if the trillions being injected into the bloodstream of the world financial system manage to restore its heartbeat, growth rates will fall and unemployment will rise. A whole generation of workers, who since 1991 have only known economic growth, will find out what it means to lose a job and not find another.
Areas where unemployment rates are higher than the national average will be worse hit. And it won’t be just blue collar workers in traditional manufacturing, like the several hundreds at Ford Geelong. Victoria University in Melbourne’s West recently announced the biggest job cuts in Australian university history: 250 staff (19% of teaching and general staff).
You can tell how serious the threat is by the speed with which the government dropped its May budget fight-inflation-first line and decided to inject $10.4 billion into economy via one-off payments to pensioners and parents.
But how much we will spend and save out of the pre-Christmas handout is just a guess by Treasury: what if most people use their payments to reduce debt instead of blowing them in Harvey Norman and Bunnings?
Then the economy will continue its nosedive into recession as consumption stagnates. What if — as seems probable — the capitalists become pessimistic and reduce their investments? Recession will come faster and be deeper.
The stakes for our living standards are so serious that the unions simply can’t afford to entrust everything to the Labor government and twiddle their thumbs on the sidelines, hoping that things don’t turn out as badly as everyone fears.
Prime Minister Kevin Rudd and treasurer Wayne Swan show no signs of wanting to tackle those responsible for the mess: the corporate (especially financial) elite. Rudd has unveiled a line of rhetoric against “extreme capitalism” and “excessive executive compensation”, but where is Labor’s action?
After just a couple of grumbles from senior bankers about Rudd’s idea of linking senior finance sector salaries to the security level of their financial institutions, the PM backed off. This was after the Reserve Bank had already sent billions the way of the financial institutions and the government accepted the banks keeping 20% of the last interest rate cut.
Some of Rudd’s emergency package is just plain counterproductive. Home buyers get a doubling or tripling of their grant, but building companies will no doubt use the extra rebate to temporarily keep up house prices that are already seriously inflated. The International Monetary Fund warned this year that Australia’s house prices are overvalued by at least 25%.
University of Western Sydney associate professor of economics and finance, Steve Keen, says Labor’s move will suck new home buyers into borrowing $70,000 more than their homes will soon be worth!
So what should the union movement be fighting for? A serious union policy against the crisis has four key points:
1. Give pensioners and the unemployed a living wage now, at the very least 35% of average weekly earnings. That’s the only way to ensure a sustained boost to consumption.
2. Speed up public spending on sorely needed infrastructure, particularly that which underpins the transition to environmental sustainability. Invest the Infrastructure Australia and Future Fund money, and the federal budget surplus, in rail, renewable energy, and decent public housing, health and education;
3. Nationalise the banks and run them in the community interest, beginning with the re-nationalisation of the Commonwealth Bank. This might seem an “extreme” policy to some, but let’s remember that the US and UK governments have already conducted crisis nationalisations and that the ALP has supported this policy in the past.
4. Really tear up Work Choices and all other anti-union laws. The coming recession will drive employers to sack workers and try to cut wages and conditions.
Under the present industrial regime the union movement is fighting with one-and-a-half arms tied behind its back. If working people and their communities — the vast majority of the Australian population — are to defeat the dragon of recession, they will need their unions to be as strong and as organised as possible.
Tim Gooden is the secretary of the Geelong and Region Trades and Labour Council.