Social inclusion principles – another failed vision

The Australian Government has now released its so-called Social inclusion principles which are apparently intended “to guide individuals, business and community organisations, and government on how to take a socially inclusive approach to their activities”. I couldn’t find a commitment to full employment among the principles. Pity about that. Another strategy that is rich in rhetoric but squibs the essential nature of the problem. My advice: scrap the plan and start again.

The first “Aspirational Principles” relates to Reducing disadvantage and involves:

Making sure people in need benefit from access to good health, education and other services

Funding and service delivery should promote equitable access to universal benefits and services for Australians in all their diversity, and invest more intensively in those at risk of, or experiencing, social exclusion.

I doubt anyone would have much problem with that. It is too general to be any use though and unless some serious budget allocations are to be made then it will be just vapor.

The second “Aspirational Principles” relates to Increasing social, civil and economic participation and this is clearly where full employment must take central place. You will be disappointed. According to the Government is should involve:

Helping everyone get the skills and support they need so they can work and connect with community, even during hard times.

Maximum participation in economic, social and community life is a defining characteristic of an inclusive society. Achieving this outcome for all Australians means delivering policies and programs which support people to learn and strengthen their ability to participate actively in the labour market and in their communities.

Over time people’s opportunities and capabilities are formed through their experience of family life and their participation in the communities, economies and institutions around them. People with well-established social networks and institutional connections are more likely to deal successfully with personal crisis and economic adversity. Policy design should be mindful of costs and benefits and the evidence about returns for investments. Resources should be weighted towards tailored approaches for those most in need while maintaining universal access and participation in services and community life. Services should be responsive to the diverse attributes, circumstances and aspirations of their clients.

A key aspect of boosting participation is capacity building – supporting individuals’ personal capacity to address the issues that arise over the course of their lives, and supporting people to take independent decisions and to negotiate priorities through participation in their workplaces, their neighbourhoods and their communities. This is especially true for communities struggling with intergenerational disadvantage.

Get the drift – its all fuzzy social network stuff – individual capacity – individual responsibility – individual blame for their own disadvantage. This is the Third Way stuff that the UK Labour Government introduced as “halfway house between free markets and socialism” which actually became the halfway house to nowhere you would want to be.

The fact is that macroeconomic constraints are more powerful than any individual capacities. If the economy is not producing enough jobs then there is very little individuals can do to improve their opportunities. Remember the The parable of 100 dogs and 95 bones.

Consider the following graph which is the Australian official unemployment rate since 1861. The bolded red segment is the period when our federal government took responsibility for ensuring that there were enough jobs – not helping everyone get skills – but providing enough jobs. The periods outside of the red segment were when there was no such commitment and employment levels were essentially determined by the private market. In the most recent period, the federal government has actually been withdrawing as an employer.


My research shows clearly that certain countries were able to avoid the rise in unemployment that beset most OECD countries after the mid-1970s. The economies that avoided the plunge into high unemployment maintained a sector, which Paul Ormerod in The Death of Economics, said:

… effectively functions as an employer of the last resort, which absorbs the shocks which occur from time to time…

The private sector (and career public sector) has never provided enough jobs to full employ the available labour supply. The only reason we enjoyed the full employment period (red segment) was because the Australian public sector maintained a “buffer stock of jobs” which were accessible to the most disadvantaged workers any day of the week they needed to find work.

The effectiveness of this capacity was profound and ensured that the least skilled and troubled workers could still work and earn an income. It ensured they were not socially alienated by unemployment.

This buffer stock capacity forms the conceptual basis of my Job Guarantee proposal. We desperately need to restore this capacity and only the federal government can do that – given it has the fiscal capacity to do so.

This capacity was lost once the neo-liberals started influencing policy and wound back the sections of the public sector that provided these jobs. So the privatisation and out-sourcing that went on in the 1980s and since killed off many opportunities to create public sector work for the disadvantaged. National competition policy throttled the capacity of local governments to provide jobs for their citizens. And the fetish about budget surpluses ensured that governments cut overall public employment in the false belief that this was the path to prosperity.

That is why we now have a buffer of unemployed who are used by the central bank and Treasury in their fight against inflation. Unemployment has become a policy tool rather than a policy target. The neo-liberals then built an industry around unemployment which was filled with all sorts of parasites intent on getting their hands on lucrative government contracts to provide privatised labour market services. But not a job was created by this “supply-side” punishment regime. The unemployment were made to jump through rings and fined and punished if they didn’t scrub up in the way the government expected. But not a job was created.

And as I read this Principle – not a job will be created by policies that may emerge from it. More supply-side waste. When are we going to learn that this is not the way to solve a systemic shortage of jobs.

The third “aspirational principle” is A greater voice, combined with greater responsibility and requires:

Governments and other organisations giving people a say in what services they need and how they work, and people taking responsibility to make the best use of the opportunities available

Achieving social inclusion depends on the active involvement of the entire community. Providing opportunities for citizens and communities to identify their needs and give feedback about the design and delivery of policies and programs will be important. Individuals and service users must have a say in shaping their own futures and the benefits and services that are offered to them. Detailed feedback from users and community members and genuine and inclusive consultation are important sources of information to improve policy settings and service delivery.

Where people are part of a democratic community and able to access opportunities, benefits and services, they also have an obligation to use their best efforts and take personal responsibility for taking part and making progress. Organisations – both government and non-government – also have responsibilities to listen and respond, and to make sure their policies, programs and services help to build social inclusion.

Fine. I suppose this means they will relax Freedom of Information rules significantly so we can get hold of the information we need to make sensible decisions about the conduct of government.

I assume it will mean that the Australian Bureau of Statistics will receive increased funding to ensure that publicly-available data is expanded and freely distributed to all.

I assume this will mean that community groups will be funded to set up and sustain rival newspapers and electronic networks (TV and radio stations etc) to combat the conservative press that the rich own.

I also would expect the national government to set politicians pay outcomes against a “full employment index” and any departure from a state of 2 per cent official unemployment and zero underemployment and hidden unemployment would involve grave pay cuts. Resignation would be required if total labour underutilisation rose above 3 per cent – this would mean they were running the Job Guarantee poorly.

The document then moves on to their Principles of Approach and the first listed is Building on individual and community strengths. Accordingly, this involves:

Making the most of people’s strengths, including the strengths of Aboriginal and Torres Strait Islander peoples and people from other cultures.

Taking a strength-based, rather than a deficit-based, approach means respecting, supporting and building on the strengths of individuals, families, communities and cultures. Assuming, promoting and supporting a strong and positive view of Aboriginal and Torres Strait Islander identity and culture will be particularly important ways to reduce social exclusion for Indigenous Australians, working in parallel with specific initiatives to improve their health, education, housing and employment prospects. Recognising the varied and positive contributions of people from culturally and linguistically diverse backgrounds will also be an important feature of the social inclusion approach.

Okay, politically correct as we would expect. But the most significant way in which we maximise individual capacity is to: (a) ensure public schools are well funded; (b) ensure public hospitals are sound; (c) ensure there is a proper training system operating in a paid-work context; and (d) ensuring everyone who wants to work has a job.

So are they going to renounce the hideous education funding scheme they inherited and kept from the previous regime? Are they going to stop giving millions of dollars to the wealthiest schools in the land and simultaneously starve the public education system? Are they going to ensure higher education institutions are not forced to compromise educational standards chasing competitive bucks? Are they going to make sure the research community is adequately funded? That will all take a lot of public spending and our debt-phobic government doesn’t look at present that it has the ticker for these strategic investments or the political flack that they would get from the rich if they restored equity to educational funding.

Are they going to seriously ensure everyone who wants a job is going to be able to get it? To ensure that they will have to take responsibility for an on-going Job Guarantee system (that is, the provision of a buffer stock capacity). If they are serious about this why didn’t they make it Principle 1: A guarantee of Full Employment.

You can answer all these questions yourselves.

The next Principle of Approach is Building partnerships with key stakeholders which will require:

Governments, organisations and communities working together to get the best results for people in need.

All sectors have a role to play in building a more socially inclusive Australia and the approach will rely on encouraging and supporting the diverse contribution of all. Strong relationships between government and these other stakeholders are key to achieving the joined up approach required for sustainable outcomes and to sharing expertise to produce innovative solutions.

Building effective partnerships to tackle shared priorities is essential to improving social inclusion over time. Whether in forming city wide plans to reduce homelessness, or strengthening service provision in parts of the community sector, or jointly investing in new social innovations, policy on social inclusion needs to advance work through a diverse range of cross sector partnerships.

Sure enough, poverty and alienation is a community problem. The pursuit of individual profit and the denial that a thing called “society” exists has undermined out sense of collective will and solidarism. I applaud efforts to restore that way of communicating and interacting with each other.

But I read too much in this that looks like social entrepreneurship (I will write a separate blog about why this approach is not the answer). Essentially, while partnerships between government and non-government bodies are fine and essential we cannot escape the elephant in the room! Which in this case is the fiscal might of the Commonwealth.

You can stimulate private groups to engage in all sorts of innovative behaviours which might help a few people here and there. But these sorts of endeavours however valuable cannot create 1 million or more secure jobs which deliver a living wage. It is a fallacy of composition to think that individual groups can remove an aggregate demand constraint that is imposed by a budget surplus. The only way the economy can grow (barring the Norway exception) when the government is running surpluses is if the non-government sector is becoming increasingly indebted.

So following the principle that guarantees Full Employment, the next principle should be Principle 2: Budget deficits will be the norm. That is, to ensure there are enough jobs available for anyone who wants one and cannot currently find one. Whatever it takes!

The remaining principles of approach include: (a) Developing tailored services – Services working together in new and flexible ways to meet each person’s different needs; (b) Giving a high priority to early intervention and prevention – Heading off problems by understanding the root causes and intervening early; (c) Building joined-up services and whole of government(s) solutions – Getting different parts and different levels of government to work together in new and flexible ways to get better outcomes and services for people in need; (d) Using evidence and integrated data to inform policy – Finding out what programs and services work well and understanding why, so you can share good ideas, keep making improvements and put your effort into the things that work; (e) Using Locational approaches – Working in places where there is a lot of disadvantage, to get to people most in need and to understand how different problems are connected; and (f) Planning for sustainability – Doing things that will help people and communities deal better with problems in the future, as well as solving the problems they face now.

All fine but essentially dodging around the point. Take the evidence-based claim. This has been used a lot by the current government to distinguish it from the previous government which denied, suppressed and destroyed evidence.

There is an overwhelming body of research evidence drawn from studies from across the world that the major source of disadvantage – poverty, social alienation, crime, mental illness etc – is … unemployment.

We do not need further research on that. We know it. Why wasn’t there a principle like Principle 3: Zero waste of Australians – No unemployment? Here I mean only frictional unemployment – people moving between jobs.

If they had have started from the obvious chain of government responsibility – Full employment -> Guaranteed jobs for all -> 2 per cent unemployment -> Fiscal policy priority … then what other problems will remain to solve?

Most of the problems addressed by these principles are, according the research evidence, derivative problems of unemployment. Create a fully employed economy with living wages and you eliminate many of the issues that the principles aim to address.

We won’t eliminate all social disadvantage by full employment, clearly. But at least then you will have smaller set of problems to focus on which are not complicated by the vicissitudes of joblessness. My bet is that the residual set of issues would be relatively small and more easily solved.

As long as you are running macroeconomic policies which prevent the economy from reaching true full employment you will have a mountain of problems to address – such as those that are hinted at in these principles. It doesn’t make sense not to go for the jugular.

I suppose these principles will be rehearsed in the months to come at countless workshops and meetings. Lunches will be served and registration fees paid. Slick PowerPoint slideshows will be created. People will feel good that they are making progress on these thorny issues. But you know what!

There will still be 100 dogs and 95 bones!

By the Government’s own admissions in the Budget Estimates there will be over 1 million people without jobs and rising underemployment. So in fact, there will be even less bones than there are today. And that many is way too few!

Digression: Public Policy Lectures

The final Public Policy Lecture in the 2009 series will be presented at the University of Newcastle this evening. The lectures are free and open to the general public. The speakers will be myself and Professor Randy Wray. You can find full details from here. Tonight’s slideshow is now available from HERE. A video podcast will be available later this week.

You will see the approach we take to reducing social disadvantage is considerably different from that espoused in the above principles.

This Post Has One Comment

  1. Dear Bill,

    Excellent article Bill.

    As far as I am concerned any government that refuses to become an employer of last resort has absolutely no interest in social inclusion.

    Pathetic is the word that best describes the governments attitude to social inclusion.

    Cheers, Alan

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