“THE AGE OF EMPOWERMENT”

ADDRESS TO THE NUW NATIONAL CONFERENCE

JIM CHALMERS MP

GOLD COAST

28 MARCH 2014

 

Sir Charlie Donnelly, my lords and my ladies, thank you for this first opportunity in the last fortnight to say a few words without the fear of Bronwyn Bishop throwing me out. This past week the Government has discovered time travel. Back we went, to the black and white days of dirt roads clogged by carriages, of bigots and butlers, and knights and dames. We had a lot of fun with this during the week. Julie Collins got thrown out for laughing. It was hard not to.

But the gags mask a more serious point. The country has a lot of challenges. People are right to expect a Prime Minister with the right priorities, making the right choices, with an eye to the future. Instead they’ve got Tony Abbott, sitting under his portrait of the Queen working on a shortlist of knights and dames. What whacky, messed-up priorities. And what a way for Joe Hockey to end the Age of Entitlement.

We’ve got a couple of blokes from the richest real estate in Australia focused on titles, and not jobs. While the economy sheds jobs on their watch they’ve created precisely four new positions a year. But I don’t think knighthoods qualify as what the NUW would call “jobs we can count on”.

I was really pleased when Charlie called me a couple of weeks ago and asked whether I could come and say a few words today. I acknowledge him, Tim, and all the other office bearers. I appreciate what you do to support workers in my community, and I want to thank you for it. I know, for example, that you represent about 700 people at Polar Fresh in Parkinson, a company which warehouses and refrigerates food for Coles. I know you’ve got another 400 or so at the IGA warehouse at the Crestmead industrial estate. Another 300 at liquor warehouses over two sites. 

Their workplaces lie along what many people call the Gold Coast Corridor – another name for the suburbs that dot the freeway from Brisbane through Logan to the Coast. I drove that freeway today – I’ve driven it hundreds if not thousands of times: through Loganholme, past Beenleigh, down past the brewery and the Yatala pie shop and suburbs like Coomera, all the way past the theme parks down this way.

In all those years of driving that freeway, the most noticeable thing is the extent to which that corridor has changed. And it struck me as I was preparing to come here today that there are fairly useful links between the demographic and developmental change that’s occurred along that corridor and the changes we have and are seeing in the workforce, especially in the outer suburbs that dot the freeway, where young families on low to middle incomes go to raise the kids.

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INSECURE WORK

So today I thought I’d take as my theme the changing nature of work, with an emphasis on the outer suburbs. My main point is that instead of ending the Age of Entitlement, as Joe Hockey says, we need to usher in a new Age of Empowerment. This is the best way for the labour movement to stay relevant industrially and politically: to work out where the jobs of the future are going to come from, what industries and locations, how we make them more secure, and how we train and teach people to succeed in them.

I know that the main issue affecting your members is the casualization of the workforce. This includes the use of labour hire agencies, and larger grocery stores making staff redundant, then using third party logistics companies that have a casual workforce. I know that many of your workers are working alongside casual employees doing exactly the same job, but earning a third less and with no conditions. I also know that we, as Labor and as union, have to work out how we can support these people better too.

You call this insecure work. And the truth is that so many other industries beyond your membership are dealing with the same set of issues. I know from the NUW’s submission to the National Policy Forum that there is strong concern from your members that insecure work will contribute to rising inequality. I saw that you estimated that something like 40 percent of the workforce is insecure. The truth is that so much of today’s work is insecure in one way or another, if you consider job security in the broadest sense.

The Australian economy is pretty strong in aggregate yet the labour market is characterised by uncertainty. The brunt of that uncertainty is being felt on the outer suburbs of our major cities and the hinterland economies of our regional cities, where some of our big manufacturers are closing, and the fly-in-fly-out mining construction jobs are in decline.

In the first five months of the Abbott Government a job was lost every three minutes, reversing the gains of the six years before. The last month’s employment data was more encouraging, of course, but really just served to underscore the volatility in the jobs market. And remember that at Qantas, Holden, Toyota, Rio Tinto, Electrolux, Caterpillar and another 22 major Australian employers, a total of 27,300 job losses have been announced since the election.

These announcements are not factored into the current unemployment figures. Have a think about where these jobs will be lost – Holden in suburban Adelaide; Toyota in Altona; Alcoa in Geelong, Rio Tinto in Gove, Electrolux in Orange, Caterpillar in Burnie, Tasmania – all of them in the outer suburbs and our regional centres, where the labour market is already vulnerable.

The lack of a government plan is one part of the problem. Combined with other factors like a high dollar, the economic transition underway in Australia is destroying jobs and ruining livelihoods. It’s clear that the Government would rather play politics with industrial relations than come up any ideas at all about the jobs of the future. Like Vladimir Putin, our own Prime Minister is stuck in the ideological time warp of the Cold War.

I’m not someone who believes in command and control when it comes to government intervention in the economy. I’d rather think that our success depends on the quality of management decisions, on decisions about innovation and new products, and on what happens in markets like China's. But most of all, on the quality of our workforce and the decisions people make about their careers. Whether they have the tools they need to succeed when conditions change and uncertainty reigns.

This is where governments can have some influence. And yet it is the area where the current government has devoted the least intellectual effort or policy attention. Unfortunately for Australia, they’re just not concerned with the intersection of rapid technological advance, the globalisation of the workforce and the rise of intergenerational disadvantage. They have no idea where the jobs of the future might come from.

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GET SMARTER, OR GET POORER 

So it was timely that former Canadian politician Michael Ignatieff wrote recently that at each stage of dramatic techno-historical development, it has taken inspired democratic leadership to ensure that the benefits of change are dispersed and not concentrated in fewer hands.

My point today is that we cannot let the rise of technology benefit only a small part of our workforce. In the words of Bill Shorten, at the National Press Club this week, “we can either get smarter, or we can get poorer”. We can’t let others choose our workers’ place in the global value chains of the future. We can’t be at the very back of the queue when the best jobs are handed out, left to compete on wages and conditions. That’s a race we can’t win and shouldn’t enter.

We can’t allow a new divide of technological haves and have-nots, a new frontier in inequality. Or to endure a situation that international research now proves clearly: that, without action, inequality in one generation breeds inequality in the next.

The task falls to us, to look to the future as the Party of working people. And as the party of working people, Labor is also necessarily the party of the outer suburbs – the Party of electorates like mine in Rankin south of Brisbane and others that ring the major cities. The Party of commuter corridors I just described but not just that one, right around Australia. And our employment policies need to be driven with these areas in mind, not just with an eye to the more prosperous inner-cities.

We begin with a brutal truth: that a great deal of the full time jobs lost or announced to be lost in recent months are likely gone forever, at least in their recent form. The task is not just to work out where the replacement jobs will come from in the short term, but to do better than Tony Abbott’s glossy brochure promising a million jobs and ask ourselves how and where Australia will actually create jobs into the future.

My view is that our best chance is to empower as many Australians as possible to be self-sustaining actors in a modern, market economy. That means providing suburban workers the tools of success necessary to find a place in a globalised economy characterised by cross-border value chains, so that they have the ability to satisfy their own aspirations in the labour market and beyond.

Recent research from the UN Conference on Trade and Development reveals that Australia’s participation rate in Global Value Chains is lower than that of 22 of the 25 largest exporting economies. This means that Australia is missing out on a lot of opportunities to value add as we trade increasingly in raw materials, instead of using our human capital to its greatest advantage. That has implications right across the economy, and certainly for your workers in warehousing and distribution.

To better integrate Australia’s human capital into our markets, we need a more inclusive model of economic growth, where more people have the chance to gain the necessarily dynamic technical and vocational skills and opportunities to prosper. This is the only way to ensure that in an ageing, borderless society, we aren’t dependent on a diminishing pool of people to deliver growth and fund a growing welfare bill. This is why I like to say that social inclusion and economic growth are complementary and not at odds.

It’s also why Jenny Macklin’s social policy review is so important to the task of reconsidering the ways that we support people through different stages of life and work. A more modern safety net which responds to the diversities and difficulties of modern Australia is crucial to ensuring we broaden and deepen the pool of potential success stories.

Beyond that we need to rethink all of our policy settings to ensure we are creating the right kind of jobs of the future in the right parts of Australia. Social policy gets people to the starting line; economic and industrial policy invests in their aspirations. The very best of these policies are those which anticipate the future. Because the only jobs we can count on, to adapt the slogan for your conference, are those which find for Australian workers the best parts of elaborate global value chains which will characterise the globalised workforce of the years ahead.

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THE ONCOMING WAVE

I know that your own industries have been impacted heavily by workplace changes and also by technology, especially in the form of automation and robotics. Around the world, there has been 5 percent annual growth in the number of industrial robots installed this year. By 2015, it is estimated that 200,000 industrial robots will be installed each year in manufacturing, displacing an even larger number of traditional workers.

The Economist has described this rapid technological advance as The Oncoming Wave. Based on the important work by Erik Brynjolfsson, they argue that the combination of big data and smart machines will fully overtake some occupations and allow other firms to do the same job with fewer workers.

This is one reason why American Professor Alan Krueger once found that ‘skill-biased technological change’ was the dominant driver of inequality, dwarfing other very important factors like declining unionisation or changes in the minimum wage – a trend likely magnified now since he first observed it almost twenty years ago. To give you an example, the average farm in the United States makes about $125,000 in revenue for every employee on the books. In comparison, Google earns $1 million per employee. It’s easy to see how the global technological divide could widen into the future.

The UK thinker Patrick Diamond links this divide to a second important fact, from the OECD, which predicts a 20 percent rise in jobs requiring highly educated workers in the future, corresponding to a 10 percent fall in jobs for the low-skilled.

This reminds us of the chilling warnings of Tyler Cowen, of people divided into two groups: those who are good at working with intelligent machines and those who are replaced by them. And also the Financial Times’ columnist Gillian Tett, who wrote about entrenched “economic divisions between kids who are electronically literate and thus being trained to cope with an increasingly digitised economy – and those who are not”.

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AN OUTER SUBURBAN FOCUS

Now I know that these are difficult issues, especially for a Friday afternoon on the Gold Coast. But they are the types of issues I believe we should be focusing on as we enter this unwelcome (and ideally brief) period in opposition federally.

And in this task we are greatly assisted by the work that began with Jacob Hacker at Yale and which has been adopted with gusto by those guiding Labour policy-making under Ed Miliband in the United Kingdom, which emphasises the ‘predistribution’ of economic power in the market even before the redistributive impact of taxes and spending kicks in. This approach points us towards a combination of dramatic improvements in human capital with digital inclusion and a specific focus on intergenerational economic mobility.

As I said before, we need to ensure technology works for more people in Australia, not against them. This means dramatically rearranging our priorities so that we can afford bolder investments in human capital and digital inclusion, and innovation clusters catalysing new ideas, funded by fairer tax arrangements for multinationals and the elimination of tax breaks and other advantages for those who need them least.

Our universities have a big role to play here, when it comes to innovation, and not just the inner-city ones. We need to make every suburban and regional university a research centre of excellence, linking outer-city human capital with our best and brightest academic minds. The Innovation Campus at the University of Wollongong is one shining example, but we need this kind of inventive, research-focused, outcome-driven institute at every suburban university across Australia.

Achieving a network of outer-suburban and regional research hubs will take investment in infrastructure, purpose-built for the outer-city. It is good that our commuter corridors are dotted with warehouses and factories, but these should be joined by futuristic workplaces fully utilising Australia’s research potential.

This requires a high-quality national broadband network to effectively connect Australians to each other and to the rest of the world. It means a renewed focus on public transport infrastructure, not just linking the outer suburbs to the inner-city, but also outer-suburban research and innovation hubs to each other. It means understanding the stunning growth of high-end services which will dominate our future, and preparing people for the intuitive jobs this will create.

By restoring Labor’s focus to the parts of Australia outside of our prosperous inner-cities, working people have a lot to gain. With quality jobs and businesses closer to people’s homes, a shortened commute would return a lot more time to families. There should be no impediment for any Australian to work during the day at an outer-suburban, globally-connected business, but be at home early enough for some quality time with their kids.

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THE AGE OF EMPOWERMENT

So if you take one thing away from this today, it’s a call for us to start thinking differently about the jobs of the future and how we can usher in The Age of Empowerment. While we can’t perfectly predict the nature of job creation and labour market evolution, a dynamic and nimble workforce is needed to position Australia at the smart end of the global service economy. By empowering people with the skills to creatively, dynamically and innovatively interact with new machines and technology, we can rebalance the labour share of growth so that more workers can benefit from the prosperity achieved through technological advancement.

This approach to building economic mobility is the best way of ensuring the entrenched disadvantage bedevilling other nations, and threatening our own, can be avoided. More than that, it is our best chance to empower a new generation of more inclusive, more rewarding economic growth in a future beyond today’s job shedding economic transition.

So the way forward for the labour movement is to begin a new Age of Empowerment. A time where people have the skills to not just survive an uncertain labour market, but to prosper in an economy characterised by change. Because after all, the only jobs we can truly count on are the ones which anticipate the future and which our people are taught and trained, and re-trained, to fill. Thank you.