During the 2020 shutdown there has been an extensive debate about national strategy for what should happen next. This current disaster is of Depression and wartime severity and compels imaginative responses. The pressure to aim simply for automatic restoration of recent past structures is strong, but this will be impossible because of the innumerable closures and adaptive changes caused by the antiviral regulation.
Moreover, a return to past structures might suit the wealthy, but it would be irresponsible. Australia and the world before COVID-19 were plagued by shattering unemployment, dangerous climate change, impoverishment, accelerating inequality and hunger, and untreated disease and ignorance. To reject well-judged transformative policies would destroy the hope that has sustained millions of people whose livelihoods have been severely eroded. As in World War II, most want a better world to emerge from the crisis.
A host of different voices are articulating possibilities. This must be encouraged, because there are manifold complex—and even wicked—problems, solutions to which are hard to discern and require shared imagination. Therefore, a major question is what processes can be used to narrow the choices to reach towards consensus.
It is essential to attempt to reach agreement about the principal goals and highest priorities towards which Australia should seek to move and the processes through which that discussion could occur. The political processes of elections and parliamentary debate are fundamentally important, but there are more participatory mechanisms that could also contribute. The examples of the Prices and Incomes Accord and the 1983 National Economic Summit have lessons that may be useful.
High and rising unemployment was the principal problem that Labor had to address in 1979-82 when preparing its election strategy. The question was how to simultaneously reduce unemployment and inflation. The conventional wisdom was to use austere economic policies to reduce inflation and expect that employment would recover as the economy grew. But that didn’t work, and unemployment reached over 11 per cent. Instead, Labor’s parliamentary leadership decided to ask the Australian Council of Trade Unions (ACTU) whether it would be prepared to negotiate an agreement to restrain growth of wages in return for expansionary budgets that would substantially grow the social wage through improving health, education and infrastructure services. This daring proposal involved asking the union movement whether it would voluntarily sacrifice a portion of potential wage increases so that the rate of economic and employment growth would increase.
Negotiations led to agreement on the framework of the medium-term strategy. This agreement was presented to both the Labor Party National Conference and the ACTU annual conference: there was debate at both, but each agreed to the strategy. After Labor’s election victory in 1983, negotiations were held between the Hawke Government and the ACTU each time during the next six years when a wage claim was being considered, and the trade-offs were settled. Later, income tax cuts became part of the agreements. The full Accord lasted until 1989, by which time authoritative economists concluded that ‘on average the changed environment implied higher employment at the end of 1989 of the order of 300,000 jobs, and an unemployment rate in 1989 which was 2.2 per cent lower than would have been achieved otherwise’.1
Key factors in the Accord’s success were Bob Hawke’s determined leadership, his long-term centrality in ACTU advocacy along with Ralph Willis, and their outstanding professional excellence as spokespeople and negotiators. In later years, Treasurer Paul Keating’s evolving friendship with ACTU secretary Bill Kelty assisted. However, Hawke’s centrality also constrained the process, because when John Stone, secretary of the Treasury, convinced him that the previous Fraser Government had irresponsibly promised excessive spending, leaving Labor with a claimed budget deficit forecast of $9.6 billion, he limited additional spending, reducing the stimulus to job creation.
The Accord dissolved in 1989-90 when Keating initiated and oversaw ‘the recession we had to have’, and all the gains to employment from the stimulus to growth and restraint of wages were destroyed by cuts to public services and excessively tight monetary policy that drove interest rates up to 17 per cent.
The National Economic Summit
A second factor in the Accord’s initial success was the impact of the National Economic Summit. Hawke conceived, led the planning of and chaired the summit. As the treasurer’s economic adviser, I was at Kirribilli House on the Monday evening after the election when there was a meeting to decide on the size of a necessary devaluation. Following the meeting and dinner, Bob asked me to stay and discuss the summit. We talked until midnight about its aims, its agenda, who should be invited to attend and how they would be selected, where and when it would be held, how the preparations would be made, and what the outcome should aim to include. After sleeping at Kirribilli House, I flew back to Canberra with the prime minister-designate and, while he announced the 10 per cent devaluation, I briefed Sir Geoffrey Yeend, secretary of the prime minister’s department, about the plans. A secretariat was quickly formed, and preparation of government submissions commenced. I reported daily to the prime minister on progress and passed on his instructions. A trilateral conference steering committee was appointed to oversee planning.
After much discussion and consultation, ninety-seven participants and seventeen official observers were selected. The participants included Commonwealth ministers; state premiers and ministers; twenty-five union leaders; forty representatives of business; and six people from professional groups, local government and the Australian Council of Social Service. The official observers were from other financial organisations, leaders of national church councils, and environmental, Aboriginal, ethnic, women’s and youth organisations.
Hawke’s letter of invitation to participants said that the purpose of the summit was:
to create a climate for common understanding of the scale and scope of Australia’s present crisis, to explore the policy options, and to ensure that the relevant parties—governments, business and unions—clearly appreciate the role that each of them will play in pulling the country out of the present crisis … As my Government … begins the task of translating its mandate into a practical program for national reconciliation, national recovery and national reconstruction, we are deeply conscious of the extent to which its effectiveness must depend on co-operation, understanding and commitment from all sections of the community.
Participants were also invited to prepare written submissions.
The conference convened in the House of Representatives in Canberra at 9.45 a.m. on 11 April 1983 and concluded at 9.25 p.m. on 14 April. The agenda had four parts: basic directions and objectives; economic conditions; strategy for recovery, divided into (a) prices and incomes policy, (b) supportive policies and (c) industry development; and the conference conclusion. A Hansard-style verbatim record was kept of the proceedings. The conference appointed a tripartite committee to prepare a draft communiqué, the settlement of the conclusions of which drew substantially on Hawke’s capacities as a reconciling chair.
When held, the summit was unique in Australian history. Its purpose was to ‘provide a forum for the expression of views and possibility of gaining consensus on issues important to the current and future well-being of this nation’. The holding of the summit had been one of Labor’s planned initiatives announced in its election policy, and so had been endorsed by the electorate. The summit communiqué said that ‘Participants … are conscious of the need to work together to meet the challenge of Australia’s gravest economic crisis for 50 years’.
The 55-paragraph communiqué summarised important positions articulated by the groups, and agreements they had reached through public debate and private negotiation, including ‘generating high growth rates for long periods’. It also noted that ‘To ensure that such generated growth is equitably and efficiently distributed requires a community prepared to place a priority on employment and a restraint on self-interest.’ Neville Wran, the premier of New South Wales, contributed to setting the tone of the summit in his opening speech when he said that there were three overriding objectives of the conference: ‘jobs, jobs, jobs’. The summit agreed ‘that to achieve the necessary rates of growth in activity and employment will require the maximum fiscal stimulus consistent with the need to reduce inflation and to avoid upward pressure on interest rates’. Only the premier of Queensland, Joh Bjelke-Petersen, declined to endorse the communiqué.
The equity of this process and the virtual unanimity of the conference outcome gave legitimacy to the process, and authority to the implementation of the substantial range of decisions in the communiqué. It was a very different type of summit from that convened by Prime Minister Kevin Rudd in 2007, the ‘Australia 2020 Summit’. Every person invited to participate by Prime Minister Hawke had significant influence within Australian society, mostly in the economy. All had the capacity to influence whether the decisions were implemented. This enabled the Hawke summit to lead the way towards significant improvements in employment and price stability, and to greater economic efficiency and equity.
Do these precedents of the Accord and the National Economic Summit have lessons for planning a strategy for Australia after the COVID-19 pandemic? I believe they do.
Lessons for any future summit are the necessity for:
•clarity of goals
•a manageable agenda that could address major issues within a defined frame and in modest time
• strong, determined, skilful, visionary leadership
• modest, workable attendance
• carefully selected, equitable and inclusive participation
• high-quality, detailed planning and efficient organisation
• clear demonstration of national significance and government commitment
• provision of rigorous, analytical background information in time to allow absorption by serious participants
• selection of an equitably representative, capable drafting committee.
A summit for our post-COVID-19 world would have to include representatives from First Nations people, farmers, universities and research.
A healthy, environmental accord?
The benefit of the Prices and Incomes Accord was that it directly identified and embodied a mechanism for addressing the principal factor damaging Australian society: unemployment. This has again become a central factor damaging Australian society, but the causes are entirely different and there are now four existential threats that are of central importance: the pandemic, unemployment, climate change and inequality. Addressing each of those issues requires sustained national and international transformative action.
One constructive influence available to the world now is that for the first time in human history, comprehensive global goals—the Sustainable Development Goals (SDGs)—have been agreed. These seventeen goals are the result of over three years of negotiation that culminated in their adoption in the United Nations General Assembly on 25 September 2015. They are an ambitious framework for Australian domestic and international policy. Pressure to maintain implementation is sustained through reporting procedures and follow-up conferences that aim to strengthen the goals.
The SDGs give prominence to each of the four priority issues facing Australia. Most developing countries are embedding the goals within their national planning, as are many wealthier countries. Australia and the United States have so far been less attentive than most. The issues provoked by the current crisis are a challenge and an opportunity to adopt the goals and participate with most of the rest of the world in attempting to implement policies for moving towards them. Such interlocking action would strengthen every participating nation’s capacity to achieve them.
The implication of this approach for Australia is that we should be actively engaged with the global multilateral forums that debate, reach agreements, assess progress and propose further action. This orientation is as important for reducing, and attempting to eliminate, COVID-19 as it is for reducing greenhouse gas emissions. International collaboration is a necessary requirement for achieving the goals.
The national strategy for addressing the pandemic is receiving enormous and highly expert national attention. Part of a complete solution will not be available until an effective vaccine has been identified and sufficient doses produced to treat all Australians who are not protected by immunity from having recovered from the infection (if that is proven to be effective). A major deficiency of the Morrison Government’s policies is that it has failed to provide the full attention and funding that is required for research on a vaccine in Australia, or to which our wealthy nation should contribute internationally. It has also continued with the perversity of its own negligent and mean-spirited cuts in aid to impoverished countries whose health services are inadequate for coping with the pandemic. Yet Australians will not be safe from infection or free to travel and trade while COVID-19 is rampant in the countries around us.
Policies to address each of the four priority areas, which would contribute towards achievement of the others, can be chosen. The most important requirement for achieving full employment is adoption of that goal by the Commonwealth government. This happened in Australia in 1945 when the Curtin Government tabled the Full Employment white paper, legislated to mandate that goal and adopted policies towards its achievement.
As then, and as in 1983, a strategy for employment growth is centrally important. It must be based on recognition of the actual number of people who are unable to find the amount of work they want. Our unemployment statistic is utterly misleading, because it defines those who have a job as including everyone who works for an hour a week. Yet approximately another 10 per cent of the labour force wanted more paid work before the pandemic began: the Australian Bureau of Statistics defines them as underemployed. This means that even before the loss of jobs due to the shutdown, nearly 15 per cent of the total workforce was unemployed or underemployed—collectively, ‘underutilised’. Labour force statistics at the end of the 2019-20 financial year put that underutilisation rate at around a quarter of the workforce, and predictions are that it will further increase dramatically by the end of the calendar year without urgent government intervention.
Full employment requires a new national strategy combining domestic and international action. SDG Goal 8 is to ‘Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all’. A comprehensive employment-growth strategy must begin with a stimulatory macro-economic strategy. The Morrison Government rightly introduced the JobKeeper and JobSeeker programs at the height of the economic shutdown, but so far they are merely short-term emergency innovations rather than comprehensive, medium-term plans.
A commitment to medium-term fiscal stimulus is essential. Several areas of expenditure desperately need additional funding, and if they receive it, they will have a strong multiplier effect. Four of the most obvious are: a large and sustained increase in funding for social housing; further improvement in public transport infrastructure; substantial improvements in the funding and organisation of technical education; and increased support for public schools and health services—notably for mental health, dentistry, rural services, and research. The Reserve Bank had, even before the pandemic, reduced interest rates as low as is responsibly possible, so that a reliance on monetary rather than fiscal policy to manage the economy is an option unavailable to boost aggregate demand.
Unemployment is the principal cause of inequality. There has been a major growth of inequality for young adults, who have greater difficulties in finding work than previous generations, and must deal with high and perversely inequitable university fees and rapid growth of house prices. The absurdities of executive pay grate with everyone. Abolition of inheritance tax, severely regressive cuts in income tax, excessive concessions to shareholders and housing investors, and ineffectual action on international tax evasion have all heightened rising inequality. And if wages have stagnated, the cost of housing and property, either for purchase or rent, has not. High business rents squeeze wages and profits, and squeezed wages and profits sap consumer demand. Rent-seeking through property investment is an albatross around the neck of both homemakers and business. It is time for a royal commission into the distribution of income and wealth.
Addressing climate change could have a major impact on reducing unemployment, particularly in areas away from the big cities, when there is determination to take major, sustained action and invest in new jobs and industries powered by renewable solar and wind energy. This is fully discussed in Ross Garnaut’s book Superpower. One of the three central themes of the SDGs is reducing greenhouse gas emissions. The wellbeing of future generations depends on effective implementation of policies for stopping net greenhouse gas emissions.
Would negotiation, adoption and implementation of a healthy environmental accord be a feasible, useful, possible and sustainable mechanism for effective action on ending the pandemic, achieving full employment and greater equality in the distribution of income and wealth, and stopping net greenhouse gas emissions? It would be an ambitious undertaking, yet the intensity of the crisis caused by the pandemic might motivate majority support for bold action, particularly if there is significant representative participation in the decisions.
The key factors in the success of the 1983 Economic Summit were listed earlier. All were important. It is too early to know yet whether a similar national strategy and conference could be achieved, but given the importance of the goals, there are strong motivations for working towards them.