MEETING THE POLICY CHALLENGES OF CHANGE
September 18, 2015
International Conference on Welfare Reform, Friday 18 September 2015
I would like to begin by acknowledging the traditional owners of the land on which we are meeting today.
I honour their elders past and present.
I’d like to thank the Australian National University for inviting me to address you all.
In this tumultuous political times its good to see the serious policy thinking continuing.
THE CHANGING NATURE OF WORK
Recently, I had the great pleasure of reading Dennis Glover’s new book An Economy is not a Society.
It is a beautiful portrait of his hometown of Doveton on the outskirts of Melbourne in the 1970s.
It was a place, he writes:
“never wealthy, but where cars and trucks and trains and diesel engines and refrigerators and processed food were made; where mums and dads alike had decent paying jobs; where the schools sent smart children to university even before university education became ubiquitous; where the streets were neat and tidy and the shopping strips pleasant; and where the working class enjoyed perhaps its greatest level of relative prosperity since economic history first began.”
Doveton in the 1970s was the home to both a Heinz Factory and a Holden Factory.
Two institutions that were the source of two fundamentals of a decent life: a job, and a strong sense of community.
Work was plentiful, and once you had a job, you had it for life.
With that job came decent pay, good stable working conditions.
So workers could raise a family and buy a house, take a holiday now and then and retire on a decent income.
Safe in the knowledge that your future, and your children’s future, were secure.
The two factories in Doveton in the 1970s were also the very heart of the local community.
They provided a sense of community that Dennis describes as “the oil that kept the factory running”.
“people who had to suddenly leave work for an hour for an important family or medical reason were covered by their friends; those coming in late were occasionally clocked on and off by others on their shifts. If Fred had to start early, for example, the managers looked the other way while he ducked home in the car to pick up mum, who couldn’t drive, so she could be there when the breakfast shift ended. Family members and friends were given jobs”.
He could have been describing thousands of other suburbs and towns and communities across Australia in the 1970s.
Where people worked hard for decent pay.
And together, had a decent, happy life.
Today in Doveton, the Holden factory is closed.
The Heinz factory too.
And as jobs left Doveton in the 1990s, so too did many members of the community.
Those who could afford it moved.
Those that stayed now have to travel for work, while those that can’t find work at all are relegated to lives on income support.
Unfortunately, there are too many places like Doveton in Australia.
Worse still, they continue to be created; suburbs and towns and communities facing a similar future.
The northern suburbs of Adelaide, for example, risk the same fate as car manufacturing moves offshore.
Mining towns, once the heart of an unprecedented resources boom, will sit empty in the dust.
These are the places where Australia’s unprecedented economic growth has failed to materialise.
Ross Garnaut has described Australia over the last thirty years as having “the longest economic expansion – and the largest rise in incomes over a short period – that a developed country has ever known”.
So how is it, that after all these years of uninterrupted economic growth, places like this still exist?
How is it that in a country with one of the highest median incomes in the world, there are 2.5 million people in Australia living in poverty, according to the Australian Council of Social Services?
How is it in a country that prides itself on egalitarianism, that income and wealth inequality is a real and present problem in our country?
According to the Australian Council of Social Services, over the 25 years to 2010, real wages in Australia increased by 50 per cent on average, but by 14 per cent for those at the bottom compared with 72 per cent for those in the top.
14 per cent at the bottom, 72 per cent at the top.
This is an extraordinary statistic.
One which highlights a reality: whilst Australia is an economic miracle, that miracle has not been a miracle for everyone.
Unemployment, poverty, inequality are a common part of Australian society, even after our extraordinary period of economic growth.
These people, these families, these towns and communities have completely missed out on the benefits of our prosperity.
They have completely fallen through the cracks of reform.
To me, this is unacceptable. It has to change.
We must rebuild communities like Doveton, and ensure that we do not see more towns like it created.
We must ensure that individuals, families and communities have the opportunity to have a decent job, a decent life and to prosper in modern Australia.
Because, my concern is that these problems - these growing inequalities in outcomes and opportunities for people in different places and of different backgrounds - are only going to get worse as our economy continues to change.
And change today is happening faster than ever before.
Recently, the Foundation for Young Australians published a report entitled The New Work Order.
It looks forward, to the labour market of the future, the one that our children and their children will increasingly be working in.
It could not be more different from the world of work described in Doveton in the 1970s.
In the New Work Order, the labour market of the future is dominated by three characteristics: automation, globalisation and flexible work:
“70% of young Australians are getting their first job in roles that will either look very different, or be completely lost in the next 10 to 15 years due to automation.
Nearly 60% of Australian students are currently studying or training in occupations where at least two thirds of jobs will be automated.
Over 50% of jobs will require significant digital skills and yet our young people are not learning in school.”
The Committee for Economic Development of Australia published a report in June of this year which showed the same thing: as many as five million of the jobs we do today – two out of every five jobs – will be replaced by machines by 2030.
Of course, digitisation is not the only thing transforming our labour market.
The ageing of the population is also posing new challenges, and new opportunities.
We know that health, aged care and disability care are the fastest growing parts of our society.
Massive new workforces will be needed, drawn from sectors of the economy, with radically different sets of skills.
These are as much the jobs of the future as high-tech start-ups will be.
All these changes are radically transforming our jobs.
And with it our lives, our families, our communities.
Of course, this transformation presents us with great opportunity.
It is not something which we should fear.
New technologies are lending themselves to new types of entrepreneurship.
Innovative start-ups are popping up every day, in every sector of our economy.
Globalisation is exposing us to a world of new ideas, and a new marketplace of unimaginable proportions.
And flexibility can be good; helping workers to manage work and families.
All this can be good for society.
But in this new world of work there are also great risks.
The greatest risk that some get left behind.
That individuals and communities will find themselves in the same position as Doveton is now, missing out of the fruits of our modern economy.
For me, that is the fundamental challenge of these changes.
The task to which we must all turn our minds; policy-makers, academics and service providers alike.
Because the social policies we have today are largely based around a world of work that doesn’t exist anymore, and certainly won’t exist in the future.
It is built around the type of job that existed in Doveton in the 1970s.
Where all of the fundamentals of a decent life were delivered by one thing: stable, secure work, usually in large organisations.
Australian social policy was designed with a simple purpose; to provide a safety net for those who couldn’t work because of sickness, disability, unemployment or old age.
SOCIAL PROTECTION IN THE NEW WORLD OF WORK
Of course, protection against poverty for these reasons remains critical to any well designed social policies.
This is fundamental to the role of government.
To me, there are two main components to a proper system of social protection.
The first – and most fundamental protection - is a job.
That is why industrial relations is so important.
The minimum wage and legislated pay and conditions have always been critical components of ensuring that everyone can live a decent life.
Ensuring everyone gets a decent days pay for a decent days work.
Ensuring we have sick leave.
Flexible working hours and holiday leave so people can spend time with their family.
The second protection is our payments system.
The Age Pension.
The Disability Support Pension.
The Carers Payment.
Unemployment and Sickness Benefits.
These are the primary mechanisms by which we have ensured that Australians are protected from poverty if ever they should fall on hard times and find themselves unable to get to work.
Or the jobs they have don’t pay enough to make sure that children aren’t living in poverty.
The challenge is to ensure they protect people in our modern work environment.
Fundamentally, I believe that the system of social protection in Australia is a good one.
Yes, it can be improved.
Yes it can be too complex.
Some payments are undoubtedly in need of reform.
However, our social protection system also needs to keep up with the changes taking place in the labour market, and in families.
We simply cannot pretend that the same system that served the employees of Holden will serve the employees of Uber or contractors for disability and health service providers, meeting the changing daily needs of people.
It is also the case that social protection is not enough to ensure Australians will be able to have a decent life in our modern labour market.
As a nation, we simply do not have the capabilities to compete in the new work order described by the Foundation for Young Australians.
PREPARING AUSTRALIANS FOR THE NEW WORLD OF WORK
If Australians are going to get ahead in a highly digitised, global, knowledge economy - fill the jobs of the future whatever they may be - we need to invest.
Invest in the capabilities of every Australian so they can master our new economy.
Build a secure and decent life.
Build safe communities.
Right now – as a nation – we lack those capabilities.
A 2013 report by the Australian Workplace and Productivity Agency found that by 2025, “Australia could be 2.8 million short of the number of higher skilled qualifications that industry will demand.
What’s worse the report found that “only just over half – around 54 per cent – of Australians aged 15 to 74 years have been assessed as having the prose literacy and numeracy skills to meet the complex demands of everyday life and work.
These are very real threats to our future success.
Social Investment should be just as much a part of our modern suite of social policies as social protection.
This is how we meet the challenge of change.
Investment in Early Education.
Entrepreneurship and social enterprise.
In some of these areas we have good policies, a strong record.
In others – like adult learning – we have a lot more work to do.
We need investment in the capabilities of every Australian to ensure that the sort of prosperity working people experienced in Doveton in the 1970s can exist in a world so different from the one that back then.
Building employment with decent conditions at the centre of our policy making.
BALANCING PROTECTION AND INVESTMENT
Of course, the best social policies provide both: protection and also investment.
This week I – along with thousands of people with disability – celebrated the announcement of the timetables for the full rollout of the NDIS in NSW and Victoria.
I believe the NDIS is the manifestation of good social policy: a balance between social protection and social investment.
Yes, it will ensure that people with disability are not forced into a life of poverty, as far too many have.
But it will do more than that.
It will lift the horizons of literally hundreds of thousands of Australians by investing in their capabilities.
It will ensure people with disability can go to child care.
It will help them get a job.
It will help build the capabilities of people with disability in ways that we are only starting to imagine.
Giving them the opportunity they need to be productive, contributing members of our society.
And let me tell you, with this investment will come great reward.
For our nation as much as the individuals directly involved.
Not only are lives being transformed.
But our entire nation will change as well.
People with disability will no longer be left out of our national prosperity.
No longer get left behind.
It’s a symbol of the power of social protection and social investment.
The key components of a society where nobody gets left behind.
Where we can all live decent, happy lives.
Secure in our future, and that of our children.
A society where we are truly growing together.