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  • If You Thought Employers Were Exploiting Workers With Too Many Insecure Jobs Before The Pandemic, Wait Till You See The Figures Now

    If You Thought Employers Were Exploiting Workers With Too Many Insecure Jobs Before The Pandemic, Wait Till You See The Figures Now

    by Dan Nahum

    Dan Nahum

    Economist

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    Australia paid a big price for the over reliance on insecure jobs prior to the pandemic. But as our economy recovers, insecure jobs account for about two out of every three new positions. In this commentary, originally published on New Matilda, Economist Dan Nahum explains why that’s a very bad thing – especially in front-line, human services roles. In the context of COVID-19, the effects of insecure work in these sectors, in particular, reverberate across the whole community with dangerous and tragic consequences.

    COVID-19 has been reintroduced into multiple aged care homes in Victoria, in part via staff who worked in multiple locations. We have been here before, but this time, the Commonwealth government should have prevented this channel of contagion.

    The poorly-managed vaccine rollout, including inexplicable delays in vaccinating aged care residents and staff, has played a key role in the current outbreak. But there is another policy factor at play as well: multi-site, insecure, and precarious work in Australia’s aged care sector.

    There has been a dramatic expansion of insecure work in this sector: including more than doubling the share of part-time jobs in the last generation, a huge shift toward lower-qualified, frequently precarious personal care positions (rather than qualified and registered health workers), and the widespread use of labour hire and agencies to provide short-term labour (rather than creating permanent, stable jobs).

    The recent report of the Royal Commission into Aged Care Quality and Safety identified these precarious staffing practices as a major risk to the quality and safety of care. The Commissioners criticised the over-use of temporary or agency work, and emphasised the inextricable linkage between ‘the quality of care and the quality of jobs.’ They recommended that permanent, more stable jobs are most compatible with ‘developing a skilled, career-based, stable and engaged workforce providing high quality aged care’.

    It’s not just in aged care facilities that insecure work has accelerated the spread, and magnified the consequences, of COVID-19. In fact, insecure work has generally weakened Australia’s resistance to the virus, and undermined both our health and economic responses. In aged care and beyond, precarious work enhances risks that the virus is transmitted.

    Precarious jobs do not provide the training and stability to ensure that rigorous infection control measures are implemented and followed. Workers in those jobs have low and unstable incomes, and generally lack paid sick leave: the resulting economic desperation compels many of them to work, when they should be isolating. Another tragic example of the overlap between insecure work and COVID-19 contagion was the tragic failures in hotel quarantine – where a perfect storm of poor training, low wages, and insecure work clearly contributed to the virus’s escape into the community.

    Precarious work is more than just casual work – it includes part-time (especially with unpredictable hours), casual, labour hire, sham contracting, and gig work. Around half of all Australian jobs embody one or more of those dimensions of insecurity.

    Sick pay is unavailable in most of these roles: casual and self-employed workers have none, while even permanent part-timers accumulate only partial credits. When the pandemic hit, 37% of all employed Australians (including self-employed) had no paid sick leave entitlement. Unwell workers thus faced the economic compulsion to work when they should have stayed home.

    Workers in insecure jobs experienced the lion’s share of initial job loss in the early days of the pandemic, cruelly concentrating the costs of the downturn on those who could least afford it. Casual workers lost employment eight times faster than those in permanent jobs. Part-time workers lost work three times faster than full-time workers, and insecure self-employed workers (those without incorporation or without any employees) lost work four times faster than those in more stable small businesses.

    Now, however, the rebound of employment since the initial lockdowns is being dominated by a surge in insecure jobs. Casual jobs account for almost 60% of all waged jobs created since the trough of the recession. Part-time work accounts for almost two-thirds of all new jobs. And very insecure positions (including own-account contractors and ‘gigs’) account for most of the rebound in self-employment.

    So without measures to improve job stability, the post-COVID labour market will clearly be dominated by insecure work – setting us up for future economic, social, and public health risks in the future.

    Multiple job-holding provides further evidence that the labour market, for many people, provides only fractured, incomplete, precarious opportunity. In the December quarter of 2020, there were over a million ‘secondary jobs’ in Australia (where a person is working that job in addition to another role) – the highest in history. Secondary jobs surged by 27% from June through December 2020 (alongside other types of insecure work).

    These jobs now account for 7.2% of all employment in Australia – also the highest in history. As we have tragically been reminded, multiple job holding poses enormous risks: not just on workers forced to juggle multiple positions to make ends meet, but for quality of care and public health.

    Finally, the broader social and familial stresses unleashed by the pandemic have also been exacerbated by insecure work. This problem has a particularly gendered slant: women do most of the unpaid work in our society, and carrying this burden of unpaid work is made even more difficult when paid work is precarious and unreliable. Family demands do not suddenly disappear when there is an opportunity to pick up a casual shift. And for the worker, the consequences of turning down that shift can be damaging and long-term – likely leading to fewer hours subsequently offered by that employer.

    Avoidable outbreaks of COVID-19 provide further proof that Australia needs to roll back precarious work, and ensure all workers have basic security, stability and entitlements.

    Australia has among the highest reliance on insecure work arrangements of any industrial country. That precarity is not natural or inevitable, it is the result of deliberate policy choices. And in the wake of COVID-19, Australia should be making different ones.


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    Dutton’s nuclear push will cost renewable jobs

    by Charlie Joyce

    Dutton’s nuclear push will cost renewable jobs As Australia’s federal election campaign has finally begun, opposition leader Peter Dutton’s proposal to spend hundreds of billions in public money to build seven nuclear power plants across the country has been carefully scrutinized. The technological unfeasibility, staggering cost, and scant detail of the Coalition’s nuclear proposal have

  • A Review of Lapsis

    A Review of Lapsis

    by Dan Nahum

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    The increasing precarity of economic life for many people is being reflected in a growing output of film and TV, including the work of Ken Loach (‘Sorry We Missed You’, ‘I, Daniel Blake’), Steven Bognar and Julia Reichert’s 2019 documentary ‘American Factory’, Bong Joon Ho’s Oscar-winning ‘Parasite’ as well as his ‘Snowpiercer’ film and subsequent TV series, the interplanetary class divisions explored by the Syfy Channel’s ‘The Expanse’, and Chloé Zhao’s Oscar-winning ‘Nomadland’. The Centre for Future Work’s first film review considers a new entry in this recent canon of art imitating life.

    Writer-director Noah Hutton has shrewdly crafted a science-fiction world that closely resembles our own. The premise of the film is that quantum computing has revolutionised the world’s financial markets, further exploding the dominance of the financial industry. The shabby underbelly of this quantum computing revolution is the rise of ‘cabling’ — workers managed by an algorithm, via an app, dragging cables through the woods between one quantum computing node and another.

    Read Economist Dan Nahum’s review of Lapsis.


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    Centre For Future Work to evolve into standalone entity

    The Centre for Future Work was established by the Australia Institute in 2016 to conduct and publish progressive economic research on work, employment, and labour markets. Supported by the Australian Union movement, the centre produced cutting edge research and led the national conversation on economic issues facing working people: including the future of jobs, wages

  • Funding High-Quality Aged Care Services: A Summary

    Public Sector, Procurement & Privatisation

    Funding High-Quality Aged Care Services: A Summary

    by David Richardson and Jim Stanford

    Authors

    David Richardson

    Senior Research Fellow

    Jim Stanford

    The Centre for Future Work has prepared a 4-page summary of our recent detailed report on funding needed improvements in aged care services in Australia, in the wake of recommendations from the Royal Commission into Aged Care Quality and Safety.

    The summary is based on a full 80-page research report, Funding Quality Aged Care Services, published in May and written by David Richardson and Jim Stanford.

    The summary report restates the key recommendations from the Royal Commission (including its emphasis on improving working conditions and job stability for aged care workers), highlights the ample fiscal capacity for the Commonwealth government to move ahead with implementing those recommendations, and then considers five specific revenue tools which could generate sufficient resources to pay for needed reforms. The most obvious (and perhaps fairest) would be for the Commonwealth government to cancel the planned ‘Stage 3’ elimination of the 37% personal income tax bracket: a move (already legislated) which would reduce revenues by at least $16 billion per year, but would deliver the vast majority of its ‘savings’ to the richest fifth of society. Surely, committing to the safe and respectful care of older Australians is a more important priority than further supplementing the take-home incomes of very well-off households.



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  • Why is Job Quality Worsening?

    Why is Job Quality Worsening?

    by Alison Pennington

    Alison Pennington

    Senior Economist

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    Over time, insecure work has become more prevalent in the Australian economy. Key drivers of worsening job quality include: decades of economic policies which constructed unemployment “buffers”; insufficient paid work available for all who need it; reductions in the level of unemployment benefits to below-poverty levels, collapse in collective bargaining coverage, and failure to regulate insecure work.

    In this update on job insecurity in Australia, Alison Pennington reviews the ongoing erosion of full-time, traditional “good” jobs, growth in COVID-era “gig” work, and outlines how business trends and labour market policies have facilitated both lower worker bargaining power and a dramatic rise in insecure work.

    For more on reducing the incidence and consequences of insecure work, see our recent submission to the Select Committee on Job Insecurity, by Dan Nahum.


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    Dutton’s nuclear push will cost renewable jobs

    by Charlie Joyce

    Dutton’s nuclear push will cost renewable jobs As Australia’s federal election campaign has finally begun, opposition leader Peter Dutton’s proposal to spend hundreds of billions in public money to build seven nuclear power plants across the country has been carefully scrutinized. The technological unfeasibility, staggering cost, and scant detail of the Coalition’s nuclear proposal have

  • Industrial Policy-Making After COVID-19: Manufacturing, Innovation and Sustainability

    COVID-19, Industry & Sector Policies

    Industrial Policy-Making After COVID-19: Manufacturing, Innovation and Sustainability

    by Mark Dean, Al Rainnie, Jim Stanford and Dan Nahum

    Authors

    Mark Dean

    Laurie Carmichael Distinguished Research Fellow

    Al Rainnie

    Jim Stanford

    Dan Nahum

    Economist

    As Treasurer during the 1980s, Paul Keating lamented that Australian governments had for decades been allowing the country’s sophisticated industrial base to fall apart as unsophisticated raw materials came to dominate the nation’s exports and as a result, its economy slipped into developing-world status. Keating’s famous warning of Australia’s looming ‘banana republic’ status spurred the Hawke and subsequent Keating Labor governments into action on economic restructuring, which included considering a range of industry policy intervention options to put Australia on a track to advanced, industrial status, as had been the aim of post-war nation-building that helped to institute an advanced manufacturing industrial base in Australia.

    But since the 1990s, the ‘default’ economic and industry policy setting of government has ultimately been to favour resource extraction as our national strength. Even despite the growing threat of climate change and global economic crises that make a shift to ‘green’ industrial transformation a pathway pursued by many other nations, current Coalition government policy continues to reflect deliberate, calculated emphasis on the extraction and export of raw materials. Australia risks cementing its developing-world economic status if we do not consider important industry policy challenges.

    The COVID-19 pandemic has drawn attention to opportunities for Australia to not only rebuild, but reconstruct our economy in a way that capitalises on our national manufacturing potential and their ability to contribute to a sustainable recovery from the economic and social crisis that has culminated in lockdowns and recession. The future development of Australia’s manufacturing industry must focus on the opportunities presented by renewable energy to drive innovation, industrial transformation and a green future shaped by a skilled manufacturing workforce.

    Researchers from the Centre for Future Work, Mark Dean, Al Rainnie (Centre for Future Work Associate), Jim Stanford and Dan Nahum, have co-authored a new scholarly paper which will be published in the academic journal, the Economic and Labour Relations Review and is currently available as an online-first publication at their website.

    The article analyses Australia’s opportunities to revitalise its strategically important manufacturing secor in the wake of the COVID-19 pandemic, considering Australia’s industry policy options with reference to both advances in the theory of industrial policy and recent policy proposals in the Australian context.

    To examine the prospects for the renewal of Australian manufacturing in a post-pandemic economy, the article draws on recent work from The Australia Institute’s Centre for Future Work – specifically, Dan Nahum’s research into manufacturing and sustainability in Powering Onwards and Jim Stanford’s research on post-COVID-19 manufacturing renewal and Australia’s record on robotics adoption, in synthesis with analyses from published and forthcoming research from Al Rainnie and Mark Dean relating to critical evaluations of the Fourth Industrial Revolution and its implications for the Australian economy.

    The aim of the article is to contribute to and further develop the debate about the future of government intervention in manufacturing and industry policy in Australia. Crucially, the argument links the future development of Australian manufacturing with a focus on renewable energy. The purpose of this article has been to interpret the decline of manufacturing in Australia over the last generation and to identify the core principles and policy levers that would facilitate a revitalisation of our domestic manufacturing capabilities. The paper considers the history of half-hearted attempts by Australian governments and industry to spark a recovery: these attempts have largely lacked any critical consideration of the structural factors that inhibit a full-scale transformation of Australian industry. Such a transformation would in fact require consistent and systematic policy settings.

    The Coalition government’s evolving policy framework – focused on tax cuts for high-income households and companies, subsidies for further fossil fuel use, and further interventions to weaken industrial relations practices – reflects its attempt to use the pandemic as an opportunity to reinforce its previous commitment to a business-dominated economic strategy. But Australia can, and must, do better than this. The article analyses the possibilities and the challenges of developing a new industrial policy that is informed by modern understandings of technology, sustainability and social cohesion.

    A modern, sustainable industry policy is not a catch-all solution to addressing climate change, economic crisis and pandemic recovery – but it does hold great potential to help redirect Australia’s lurch further towards the banana republic status first identified nearly forty years ago.

    You can access a pre-publication version of this article below and those with access can read the article publication on the Economic and Labour Relations Review website.



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  • Video: Myth & Reality About Technology, Skills & Jobs

    Video: Myth & Reality About Technology, Skills & Jobs

    by Jim Stanford

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    We are constantly told that the world of work is being turned upside down by ‘technology’: some faceless, anonymous, uncontrollable force that is somehow beyond human control. There’s no point resisting this exogenous, omnipresent force. The best thing to do is get with the program… and learn how to program! Acquiring the right skills (usually assumed to be STEM or computer skills) is the best way to protect yourself in this brave new high-tech future.

    But what if technology isn’t all it’s cracked up to be? And what if you invest in learning the current hot coding language, only to see it replaced by something totally different as soon as you graduate?

    In this 30-minute video, Centre for Future Work Economist and Director Dr. Jim Stanford takes on several myths related to technology and jobs.

    He argues that technology is neither exogenous nor neutral: innovation reflects the priorities (and the power) of those who have the resources to pay for it. By some indicators, jobs are becoming less technology-intensive — and this is undermining job security and living standards. Finally, we need a more holistic and democratic approach to skills and training: one that respects the all-round interests of workers as human beings (not just ‘producers’), and accepts that skills alone are no guarantee of decent, fair jobs in the future.

    The video is an excellent, free resource for adult education workshops, career development courses, and union meetings.


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    Dutton’s nuclear push will cost renewable jobs

    by Charlie Joyce

    Dutton’s nuclear push will cost renewable jobs As Australia’s federal election campaign has finally begun, opposition leader Peter Dutton’s proposal to spend hundreds of billions in public money to build seven nuclear power plants across the country has been carefully scrutinized. The technological unfeasibility, staggering cost, and scant detail of the Coalition’s nuclear proposal have

  • Investing in Better Mental Health in Australian Workplaces

    Labour Standards & Workers’ Rights

    Investing in Better Mental Health in Australian Workplaces

    by Liam Carter and Jim Stanford

    Authors

    Liam Carter

    Anne Kantor Fellow

    Jim Stanford

    Australian society is experiencing an epidemic of mental illness that imposes enormous costs on individuals with poor mental health, their families, and the broader economy. There is no doubt that the stress, isolation and disruption caused by the COVID-19 pandemic has made this crisis even worse.

    Unsafe workplaces contribute significantly to the incidence of mental illness and injury. Workplace factors which contribute to mental health problems include unreasonable job demands, exposure to violence and trauma, long or irregular working hours, an absence of worker voice and control, and bullying and harassment.

    New research from the Centre for Future Work suggests that by requiring stronger monitoring and prevention measures in Australian workplaces, a significant share of mental illness and injury could be avoided. In addition to reducing the toll of mental illness for workers and their families, these measures would also generate substantial economic and fiscal benefits.

    Even before the COVID-19 pandemic, one in five Australians reported mental health challenges of some sort. And the total costs of poor mental health on Australia’s economy, government, and society were estimated by the Productivity Commission (2020) at a staggering $200-220 billion per year.

    Studies indicate 15% to 45% of mental health problems experienced by employed people are attributable to conditions in their workplaces. This suggests that the costs of workplace-related mental illness and injury are enormous.

    Our new report surveys the range of different costs arising from workplace-associated mental ill health: including reduced labour force participation, absenteeism, reduced productivity, high employee turnover, workers compensation costs, and others. Total costs to society from workplace-associated mental illness (including direct costs to victims and their families, as well as economic and fiscal costs) are estimated at $15.8 billion to $17.4 billion per year.

    Preventing mental health problems caused by work-related factors and stressors would expand Australian GDP by $3.5 billion per year, and reduce government expenses (for health care and other services) by $2 billion per year.

    Unfortunately, Australia’s system of work health and safety laws does not treat workplace mental injuries with the same rigour and oversight as physical injuries. The current regulatory system does not specify explicit, enforceable requirements compelling employers to take mental health risks equally seriously – nor does it equip workers, their representatives, and regulators with the tools needed to ensure employers live up to those responsibilities.

    It is past time for Australia’s WHS policy-makers to address the mental health crisis in Australia’s workplaces head-on. Upcoming state-Commonwealth policy dialogues regarding reforms to Australia’s Model WHS Laws are a crucial opportunity to modernise Australia’s practices, and catch up with other industrial countries.

    The economic and fiscal benefits of preventing workplace-associated mental illness and injury are substantial – and would be shared by employers, governments and workers alike. But the human benefits of preventing needless mental health illness and injuries, for affected workers and their families, are priceless.



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  • Funding High-Quality Aged Care Services

    Public Sector, Procurement & Privatisation

    Funding High-Quality Aged Care Services

    by David Richardson and Jim Stanford

    Authors

    David Richardson

    Senior Research Fellow

    Jim Stanford

    Media release



    New Research: Commonwealth Can Afford $10b for Aged Care Recommendations

    Implementing the recommendations of the Royal Commission into Aged Care Quality and Safety will require additional Commonwealth funding of at least $10 billion per year, and there are several revenue tools which the government could use to raise those funds.

    While the Royal Commission’s 148 recommendations were not explicitly costed, the Centre’s report shows that $10 billion per year (or around 0.5% of Australia’s GDP) would be the minimum required to move forward with the urgent reforms in regulation, employment practices, and quality benchmarks advised by the Commission.

    The report notes Australia’s public spending on aged care is much lower than other industrial countries with better records of aged care service. It also notes that Australia’s overall tax collections are also much smaller (by about 5% of GDP) than the OECD average, and have declined relative to Australia’s GDP in recent years.

    The Centre recommends that initial improvements in aged care funding should proceed immediately, even before new revenue measures are implemented. With the Commonwealth budget projected to incur major deficits for many years (due to the COVVID-19 pandemic and recession), it is neither necessary nor appropriate to fully ‘fund’ incremental aged care spending in the initial years of reform.

    Eventually, however, as economic and fiscal conditions stabilise, additional revenue sources will be important in underpinning high-quality aged care. The Centre’s report highlights five specific options for raising new funds – two of which were proposed by the respective Royal Commissioners:

    A 1 percentage-point medicare-style flat-rate levy (proposed by Royal Commissioner Briggs).
    A set of modest adjustments to personal income tax rates, preserving the existing progressivity of the system (similar to the proposal of Commissioner Pagone).
    Cancelling the legislated Stage Three income tax cuts scheduled to begin in 2024 (which deliver most savings to high-income households).
    Reforms in the treatment of capital gains and dividend income in the personal income tax system.
    Reforms to company taxes to eliminate loopholes and raise additional revenues.
    The government could use any one of these measures (or a combination of them) to support the implementation of the Royal Commission’s recommendations.



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  • Missing a Stitch in Time:

    Electricity Markets & the Grid, Environment & Jobs, Industry & Sector Policies

    Missing a Stitch in Time:

    The Consequences of Underinvestment in Proper Upkeep of Australia’s Electricity Transmission and Distribution System
    by Alia Armistead, David Richardson and Jim Stanford

    Authors

    Alia Armistead

    Researcher

    David Richardson

    Senior Research Fellow

    Jim Stanford

    Media release



    Australia’s Electricity Infrastructure Undermined by $1 Billion Per Year Under Investment

    Australia’s electricity industry constitutes a large and critical component of our national economic infrastructure. The industry produces $25 billion per year in value- added. It employs around 50,000 Australians, paying out $6 billion per year in wages and salaries. It makes $45 billion in annual purchases from a diverse and far-reaching supply chain, that provides the sector with inputs ranging from resources to equipment to construction to services.

    Most important, of course, the industry literally keeps the lights on: it provides an essential input, electric energy, without which no other industry could function and the safety and comfort of Australians would be immediatel jeopardised. In this regard, electricity is clearly an essential service: a utility vital to virtually everything else that occurs in the economy and society.

    Given that critical importance, we would assume that investing in the proper capitalisation, modernisation, upgrading and maintenance of this system would be a top priority of economic policy and corporate decision-making. Unfortunately, however, irrational and unintended consequences arising from the business-friendly, market-driven regulatory regime presently governing Australia’s electricity sector have produced exactly the opposite result. A structural pattern of sustained underinvestment in the upkeep and quality of the transmission and distribution grid is jeopardising the safety and reliability of the network – and harming both the people who work in this industry and the customers they serve.

    The present system was established on the assumption that profit-seeking behaviour of private businesses, with appropriate regulatory supervision, will best ensure an efficient allocation of resources, top quality service, and lowest possible prices for consumers. On every one of these grounds, however, the system has failed. Alongside chronic underinvestment in the system’s equipment and reliability, there is abundant evidence of an enormous waste of resources by self-dealing, rent-seeking corporate entities – diverting billions of dollars of expenditure away from necessary upkeep, redirected to ultimately unproductive activities (including overlapping corporate bureaucracies, frenetic selling and re-selling within the industry, and intense financialisation) that have nothing to do with the production and delivery of reliable, affordable energy. The national grid is unable to meet several challenges to its safety and reliability: including its ability to safely withstand extreme heat and severe weather events, and its capacity to adjust to the accelerating roll-out of variable and distributed renewable generation investments. The workforce in the industry has lost jobs and real incomes. And consumers (both residential and industrial) have faced an unprecedented and unjustified inflation of electricity prices.

    To be sure, this privatised, fragmented, and badly regulated industry has been consistently and increasingly profitable for its owners. Given the monopoly power these energy businesses have been granted over a critical piece of public infrastructure, these profits are hardly a surprise. What is surprising (and disappointing), however, is how Australia’s regulatory regime has failed to recognise and respond to these perverse outcomes. Despite growing evidence of deteriorating efficiency and reliability, and the inflation of both prices and profits, regulators continue with a business-as-usual approach to managing the industry. This approach routinely turns back legitimate requests for needed upgrades, modernisation, and maintenance on the system’s real capital base – while turning a blind eye to the rampant waste of resources on unproductive and self-serving corporate functions. Given the increasing pressures associated with climate change, more severe and frequent bushfires, population growth, and the shift to renewable generation, this business-as-usual approach cannot continue.

    A timeless adage reminds us that ‘a stitch in time saves nine.’ Prudent attention to maintaining productive assets in top quality condition, and upgrading capital in line with new technology and evolving best practices, is a hallmark of efficient and successful management. Australia’s electricity industry is controlled by self-seeking private businesses, and a few state-owned corporations directed to act just like them. They are governed by a regulatory system which places far too much faith in the inherent efficiency of private sector actors. Hence the industry is failing to make that stitch in time. Australians will pay the price for the chronic neglect of proper maintenance and upkeep of our electricity system in many ways: through a system that is inefficient, unreliable, cannot meet the challenges of the coming energy revolution, is unduly expensive to consumers, and which in many cases is unsafe for both workers and the public at large.

    This report provides evidence of a pattern of systematic underinvestment in the upkeep and capability of Australia’s electricity grid, drawing on three major sources of data:

    • A project to gather original qualitative data from dozens of power industry workers employed on the front lines of maintaining Australia’s transmission and distribution network. Their personal and professional experience attests to a widespread and sustained pattern of underinvestment and neglect, and provides worrisome details regarding the consequences of that underinvestment for the well-being of workers, communities, and the environment.
    • A review of other research and findings in the public domain (including several government commissions and inquries) regarding the importance of a top-quality, well-maintained electricity grid for our economy and society. These previous studies have also warned that the current system is falling behind in safe and efficient upkeep of its capital assets.
    • A review of available quantitative data – from the Australian Energy Regulator, from the Australian Bureau of Statistics, and from individual companies. This review confirms the steady decline in allocations of real resources to the capitalisation and good operating condition of the transmission and distribution grid. And it documents the erosion of real maintenance and upkeep according to several indicators, alongside evidence of unprecedented inflation in both electricity prices and industry profits.

    The main findings of this comprehensive qualitative and quantitative analysis include the following:

    • First-hand accounts from dozens of electricity sector workers in various roles and all parts of the country confirm the ongoing failure of the current system to allocate adequate resources to pro-active maintenance, upgrades, and safety, with serious consequences for workers, community safety, and the environment.
    • Real spending by the transmission and distribution sectors on operations and maintenance of the grid has been reduced by at least $1 billion per year since 2012.
    • Adjusted for inflation and the expanded base of customers in the network, real operating expenditures per customer have declined by 28-33 per cent since 2006.
    • Even within that contracting overall envelope of spending on maintenance and operations, several indicators confirm a reallocation of resources away from concrete system operation and maintenance, in favour of corporate overhead functions, re-selling, and financial activities.
    • The transmission and distribution system now employs 40 per cent more managers and office-based professionals than electricians.
    • Capital investment, spending on materials and equipment, capitalised own-use activity, and employment of electricians, linespersons, and related specialists have all declined markedly in the past several years.
    • Fundamental measures of efficiency in the industry (including total factor and average labour productivity) have also deteriorated, dragged down by misallocation of resources to corporate and overhead functions.
    • The squeeze on maintenance and upgrading expenses resulting from a combination of AER pressure and corporate profit-seeking has not produced savings for consumers. To the contrary, prices for both residential and industrial users have soared dramatically (almost doubling in real terms) since 2000.
    • High electricity prices have boosted revenues and profits in the industry – which have doubled in nominal terms since 2006, and grown substantially as a share of the industry’s total value-added. The AER’s superficial and ineffective oversight processes have not prevented private energy businesses from profiting through underinvestment in the industry’s asset base, and exploitation of consumers andworkers alike.

    After reviewing this worrisome evidence of systematic underinvestment in the quality and capability of Australia’s electricity grid, the report concludes with seven concrete recommendations to begin repairing and reversing these irrational and destructive outcomes. These include:

    1. AER determinations of allowable capital, upgrading and maintenance investments by regulated businesses should be ascertained on the basis of concrete bottom-up auditing of system capability, reliability and performance, undertaken by independent arms-length technical experts. Regulation of capital and maintenance expenditures needs to be ‘grounded’ in analysis of real-world challenges and constraints facing the system – including assessments of additional requirements arising from climate change and severe weather, risk mitigation (including bushfire prevention and vegetation management), and challenges related to the growth of distributed renewable generation. A broader economic benefit test should be applied to ensure the interests of workers and the community are factored into decision-making around capital investments and upkeep.
    2. Once appropriate levels of system capital and maintenance expenditures have been identified, explicit mechanisms must be established to reflect and recover those costs in regulated electricity prices.
    3. When adverse events (such as severe weather, bushfires, or other occurrences) necessitate capital or repair expenditures above and beyond previously approved regulated levels, provisions for additional cost recovery must also be accessible.
    4. Costing of capital installation, upgrading, and maintenance expenditure must take explicit account of the need for high-quality skilled, certified labour to perform that work – including appropriate wages, entitlements and working conditions in line with industry best practices.
    5. The accelerating transition to renewable energy sources, through both utility- scale projects and distributed sources, poses a unique and historic challenge to the capabilities of the national transmission and distribution grid. The AER, in conjunction with the AEMO and other industry bodies, should undertake a thorough assessment of the investments and system changes that will be required to meet the new requirements of an increasingly renewables-focused power system. This assessment must incorporate a broader economic and social cost-benefit lens, rather than the current narrowly-defined conception of economic costs. The findings of this assessment must then inform the AER’s subsequent determinations regarding allowable capital and maintenance expenditures by regulated businesses.
    6. Businesses which underspend allowed capital and maintenance budgets should be issued financial penalties which offset the impact of this underspending on their operating margins. This would eliminate the current perverse incentive for private transmitters and distributors to artificially suppress needed maintenance and upgrades in the interests of a short-term bonus over and above their already-substantial profit margins.
    7. The AER must undertake more detailed reviews of the submitted overhead, marketing, and financial activities of regulated energy businesses. Instead of providing blanket approval for whatever operating expenses companies deem to be in their interests, within an overall ceiling that is not differentiated with respect to specific cost activities, the regulator should focus on reducing the deadweight costs of duplicated, self-serving corporate bureaucracies.

    It is past time for those in charge of Australia’s electricity system – both private owners and government regulators – to acknowledge the widening tears in the fabric of this vital public service. And it is well past time for them to begin making the necessary repairs.



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  • Rage & Optimism as an Activist Economist

    Rage & Optimism as an Activist Economist

    by Alison Pennington in Crikey

    Alison Pennington

    Senior Economist

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    Originally published in Crikey on April 23, 2021

    Crikey is reclaiming the “angry woman” trope in a new column about what women achieve through rage, passion and determination. In this inspiring and poetic feature with our Senior Economist Alison Pennington, Alison explains how rage about how the economy works (or doesn’t work) powers her forceful work as an activist economist.

    We are pleased to share the article by Amber Schultz, with kind permission from Crikey media.

    Belittled for being angry, Alison Pennington is breaking the mould of boring economists

    Centre for Future Work senior economist Alison Pennington makes no apologies for harnessed rage.

    By Amber Schultz

    April 23, 2021

    Alison Pennington

    Anger is an emotion we’re rarely told to express. Passionate women and people of colour are often framed as overly outspoken, enraged, shrill or resentful. Their fights are discredited the second they raise their voice.

    But regardless of how it’s framed, anger gets results. When directed in the right way, rage can inspire change. It pulls people out of their homes, it causes them to rally outside Parliament, call out bullshit and fight for what they believe in.

    This week Crikey spoke with Alison Pennington, a senior economist with the Centre for Future Work, about what’s got her riled up this week — and how anger has worked in her favour.

    Crikey: When has rage worked in your favour?

    Alison Pennington: My analysis has force because I feel plenty of rage, and the immediacy of every moment. Being passionate is about giving a shit. “Giving a shit” suggests you have a moral code. I make no apologies for harnessed rage.

    My rage is harnessed as a slow-burning force. I want to dismantle the logic of those creating harm and inequality and establish better systems and processes. That requires equal parts rage and optimism.

    Crikey: Have you ever been called out for being angry?

    I have had years of experience of being belittled or seen as not serious, or as capable, because I give a shit.

    I worked in budget at the Department of Finance. When policies hit my desk for review, I could envision how they impacted working Australia on the ground. I’d suggest additional assessments of clearly damaging, non-transparent government proposals. I was routinely told that caring was getting in the way of efficient rubber-stamping. “Just let it wash over you.” I was also told I was “a bit of a bogan”!

    Crikey: Do you fit the mould of a typical economist?

    Most economists are men in corporate jobs who are actually paid to maintain this air of authority, objectivity and distance from emotion. Bringing your humanity to the table every day is much harder than hiding silos of self-congratulatory authority, which is the way that economics is consistently being taught.

    People don’t want to see impersonal suits wearing economists as authorities and people telling them what their life is like and what it should be like. They want to see someone who talks like them, and thinks like them, or is as angry as them and as concerned as them.

    Crikey: What’s got you riled up this week?

    There was an agricultural worker of 15 years. She provides 14 years of blemish free loyal service as a mushroom picker and then gets injured, and then suddenly, in the six months after that, there’s four disciplinary warnings against her. Finally, the employer finds “the evidence” that she can be sacked because she put her mushroom picking knife on the wrong hook.

    The Morison government has gone about increasing the power of employers in our industrial nations laws to screw over workers in the workplace, and that was just a story that really highlighted the difference between rhetoric and reality.

    Prime Minister Scott Morrison and the government can say that they care about women’s work opportunities and making sure women have opportunities to work and close the gender pay gap and all that but like this is what it looks like on the ground.


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