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  • An Investment in Productivity and Inclusion

    Education & Training

    An Investment in Productivity and Inclusion

    The Economic and Social Benefits of the TAFE System
    by Alison Pennington

    Author

    Alison Pennington

    Senior Economist

    Media release



    TAFE system supports $92.5 billion in annual economic benefits

    The COVID-19 pandemic has ushered in an era of unprecedented disruption and transition. Increased public investment in the skills and earning capabilities of Australians will be critical to our post-pandemic recovery.

    This report from the Centre for Future Work finds despite chronic underfunding and failed market-led VET policies, Australia’s historic investment in the TAFE system continues to generate an enormous and ongoing dividend to the Australian economy. The TAFE system supports $92.5 billion in annual economic benefits through the direct operation of TAFE institutes, higher incomes and productivity generated by the TAFE-credentialed workforce, and reduced social benefits costs.

    “The Australian economy is reaping an enormous flow of economic benefits from a VET ‘house’ built by the TAFE system. But the ‘house’ that TAFE institutes built is crumbling. If Australia wants to secure the benefits of a superior, productive TAFE-trained workforce as we prepare for post-COVID reconstruction, the damage must be repaired quickly,” said Alison Pennington, Senior Economist with the Centre for Future Work and author of the report.

    The report adopts a multidimensional approach to measuring the wide economic and social benefits of the TAFE system resulting from Australia’s historic investments in public vocational education. Over $6 billion in economic activity and 48,000 jobs are supported by the direct operation of TAFE institutes and the TAFE supply-chain. Through its accumulated contribution to the employability and skills of Australians, the TAFE system generates another flow of benefits worth $84.9 billion per year in higher incomes and productivity. Those benefits are shared by workers in higher incomes, firms in higher profits, and federal and state governments – which receive $25 billion per year in extra tax revenues. Finally, another $1.5 billion in fiscal savings are enjoyed by governments through reduced costs for health and welfare benefits for TAFE graduates. Altogether, the TAFE system drives $92.5 billion in benefits per year – equal to almost 5% of Australia’s GDP.

    “Australia will squander the demonstrated economic benefits generated by our investments in the TAFE system, and unnecessarily limit our post-COVID recovery if we don’t act quickly to reinstate the critical role that TAFE plays in the VET system.”

    Key Findings:

    • Australia’s historic investments in quality TAFE education supports a combined and ongoing flow of total economic benefits worth $92.5 billion to the Australian economy in 2019 — 16 times greater than the annual ‘maintenance’ costs Australia currently reinvests in the TAFE system.
    • The presence and activity of TAFE institutes ‘anchors’ over $6 billion per year in economic activity and 48,000 jobs from the direct operation of the TAFE system and its supply chain, and ‘downstream’ consumer spending impacts.
    • The TAFE-trained workforce generates $84.9 billion per year in higher incomes and business productivity. $49.3 billion is paid in additional earnings to TAFE-credentialed workers (relative to earnings of workers without post-school training); businesses receive $35.6 billion in increased profits from a more productive TAFE-trained workforce.
    • The costs of delivering TAFE are modest – only $5.7 billion per year, or 0.3% GDP. Extra tax revenues received by governments thanks to the superior productivity and incomes of TAFE-trained workers alone are worth $25 billion per year: 4.4 times more than the total costs of running the TAFE system.
    • The TAFE system increases employability and lowers unemployment. TAFE graduates enter the labour force with better employment prospects and skills. The increased labour force participation and employability of TAFE graduates corresponds to additional employment of 486,000.
    • The TAFE system promotes wider social benefits critical to addressing inequality. TAFE helps ‘bridge’ access to further education and jobs pathways in regional areas and for special and at-risk youth groups. TAFE students are more likely to come from low-income households and identify as Aboriginal compared with private VET providers.

    “Major public skills investments will be best coordinated by TAFE institutes as the longest-standing and most reliable ‘anchors’ of vocational training and must be at the centre of an economic reconstruction process.”

    “By providing bridges to further education and jobs for regional, low-income and at-risk youth groups, the TAFE system is critically important to addressing systemic inequality in Australia’s economy and society.”



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  • A Fair Share for Australian Manufacturing

    COVID-19, Industry & Sector Policies

    A Fair Share for Australian Manufacturing

    Manufacturing Renewal for the Post-COVID Economy
    by Jim Stanford

    Author

    Jim Stanford

    Media release



    Post-COVID Manufacturing Renewal Represents Potential $50 Billion Boost to Economy

    New research from the Centre for Future Work reveals that Australia ranks last among all OECD countries for manufacturing self-sufficiency. The COVID-19 pandemic has reminded Australians of the importance of being able to manufacture a full range of essential equipment and supplies; and the COVID recession has created a large economic void that a revitalised manufacturing sector could help to fill in coming years.

    This report, A Fair Share for Australian Manufacturing, describes the strategic importance of the manufacturing sector to Australia’s future prosperity, and provides an inventory of policy tools that could help rebuild the sector to a size proportional to our domestic needs for manufactured products.

    While the report documents the decline of domestic manufacturing in recent years, it also reveals the enormous potential benefits that would be generated by rebuilding manufacturing back to a size  proportional to our national needs: including $180 billion in new sales, $50 billion in additional GDP, and over 400,000 new jobs.

    Key Findings:

    • Australia ranks last in manufacturing self-sufficiency among all OECD countries. Australians use $565 billion worth of manufactures each year, however, we only produce $380 billion. Therefore, Australia produces only 68% (just over two-thirds) of what we use: less than any other OECD economy.
    • The COVID-19 pandemic has highlighted the strategic importance of domestic manufacturing capacity. Disruptions in global supply chains and protectionist trade policies by foreign governments have increased risks we might not be able to access essential products (like health equipment and supplies) when we need them.
    • Manufacturing is not just ‘another’ sector of the economy. For several concrete reasons, manufacturing carries a strategic importance to broader national prosperity and security.
      • Australians purchase and use more manufactured goods over time; and manufacturing output is growing around the world. Allowing domestic manufacturing to decline, while our use of manufactured products grows, undermines national economic performance.
      • Manufacturing is the most innovation-intensive sector in the whole economy. No country can be an innovation leader without a strong manufacturing base.
      • Manufactured goods account for over two-thirds of world merchandise trade. A country that cannot successfully export manufactures will be shut out of most trade.
      • Manufacturing anchors hundreds of thousands of other jobs throughout the economy, thanks to its long and complex supply chain. Billions of dollars’ worth of supplies and inputs are purchased by manufacturing facilities, supporting many other sectors of the economy.
      • Manufacturing offers high-quality jobs, full-time hours and above-average incomes. And thanks to strong productivity growth and the capacity to apply modern technology, manufacturing offers the prospect of rising incomes in the future.

    If we rebuilt a manufacturing sector that was broadly proportionate to our needs, our manufacturing industry would grow by almost 50% – generating enormous benefits in jobs, incomes, innovation and exports.



    Report summary



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  • Victorian Inquiry Offers Novel Routes to Regulating Gig Work

    Victorian Inquiry Offers Novel Routes to Regulating Gig Work

    by Alison Pennington

    Alison Pennington

    Senior Economist

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    Findings from a landmark inquiry commissioned by the Andrews Victorian government into the work conditions in the “on demand” (gig) economy have been released. The report’s findings are timely with COVID-era unemployment surging and an expanding pool of vulnerable workers relying on “gig” work to meet living costs.

    This commentary outlines the key findings of the On-Demand Inquiry.

    Victorian Inquiry Offers Novel Routes to Regulating Gig Work

    Findings from a landmark inquiry commissioned by the Victorian government into the work conditions in the “on demand” (gig) economy have been released. The Inquiry confirms workplace laws have failed to keep pace with economic change.

    Release of the report’s findings are timely with COVID-era unemployment surging and an expanding pool of vulnerable workers relying on “gig” work to meet living costs. How do platform “digital sweatshops” work?

    Platform business models recruit workers without access to secure and better compensated jobs (especially migrant and young workers). Jobs performed are often menial and without adequate safety protections. Gig workers lack stable work schedules or incomes, and receive wages that often fall well-below social norms and legal minimums.

    The major recommendations by the Inquiry chaired by former Fair Work Ombudsman Natalie James include:

    • A more systematic application of the “work test” currently used to classify workers as employees or independent contractors by codifying the test in the Fair Work Act (rather than common law). This would create a nationally coherent framework for extending protections including minimum pay and conditions to gig workers genuinely working for another’s business.
    • Alter competition laws and establish a new industry Award to enable gig workers to bargain collectively with platforms.
    • Strengthen the gig work regulatory regime through industry codes of conduct between platforms, governments and unions for non-employee gig workers, overseen by the Australian Competition and Consumer Commission, and allow an independent tribunal to oversee work status determinations.

    We commend the Inquiry on the ambitious scale of the investigation, and the innovative pathway proposed for gig work regulation.

    Three Centre for Future Work reports on gig work in Australia were cited in the final report. Research by Director Jim Stanford (with Andrew Stewart from University of Adelaide) featured in the report’s major recommendation that collective bargaining rights be extended to gig workers to lift pay and conditions of gig work.

    Read our full submission to the Inquiry — Turning Gigs Into Decent Jobs — by Jim Stanford and Alison Pennington.


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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

  • Austerity Threatens Women’s Access to Paid Work

    Austerity Threatens Women’s Access to Paid Work

    by Alison Pennington in The New Daily

    Alison Pennington

    Senior Economist

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    Originally published in The New Daily on June 25, 2020

    Women have suffered the worst labour market impacts since the shutdowns. Gender-unequal impacts have been due to women’s greater exposure to customer-facing industries shut down first by public health orders, higher employment intensity in insecure and part-time positions, and an increased caring burden unmet by the state. But instead of providing countervailing support, the federal government is accelerating women’s work crisis.

    In this commentary, originally published in the New Daily, Senior Economist at the Centre for Future Work Alison Pennington outlines how government’s austerity agenda has intensified the unequal jobs fallout and threatens to “turn back the clock” for women’s economic security.

    How the government is turning back the clock for women

    The increase in women’s workforce participation is the most significant labour market trend of the past 40 years.

    However, in the COVID-19 health and economic crisis, the gender boundaries of paid work are being redrawn.

    Worse still, the government is the one holding the pen.

    Women have suffered the worst labour market impacts since the shutdowns.

    Total employment fell by 7.3 per cent for women compared with 5.7 per cent for men between February and May.

    About 450,000 women have lost their jobs and 350,000 left the labour market all together.

    Women saw a 12 per cent decline in hours worked, compared to 9 per cent for men.

    This gender inequity stems from three main channels:

    This combination has created a ‘perfect storm’ for women in the workplace.

    However, instead of stepping up to provide countervailing support, the federal government is only exacerbating the crisis.

    This started back when JobKeeper was announced and excluded short-term casuals by design, which affects more women than men.

    And then, most recently the government targeted early JobKeeper cuts to childcare workers in what is a cruel double blow.

    Not only do more women work in child care, but more women benefit from access to affordable child care.

    The cumulative impact of Australia’s effective gender pay gap of 32 per cent (in average weekly earnings for all workers) and inadequate parental leave supports for cash-strapped families makes their work-care decisions clear cut.

    Without affordable child care, mum’s got to stay home.

    There’s more bad news on the industrial relations front.

    Last week the Fair Work Commission decided to freeze minimum wages for up to seven months, in the sectors with the lowest wages and most precarious jobs – which are, surprise, mostly women’s jobs.

    While women have been bearing the brunt of the economic impacts of COVID19, state and federal governments have targeted stimulus spending on the most bloke-heavy industry in the economy – construction.

    For every $1 million invested in construction only 0.2 direct jobs are generated for women.

    Yet $1 million invested in education generates almost 11 jobs for women.

    In fact, education investment creates more jobs for just women than construction creates for anybody: Man or woman.

    Job-generating spending for women is best directed to the public sector.

    Women make up 61 per cent of all public sector workers, with the sector supporting fuller female participation – women hold 54 per cent of full-time roles but only 35 per cent of full-time roles in the private sector.

    Not only would public sector pay cuts risk driving this recession into a depression, they disproportionately hurt women’s incomes.

    Even temporary wage freezes (of one or two years) compound into tens of thousands of dollars in lost wages compounding over her working life.

    And austerity pain radiates far beyond income losses for affected workers, reducing consumer spending (right when the economy needs more), tax revenues and enhancing deflation risk.

    When the largest employer in the economy cuts wages, it has a powerful effect for other employers.

    It’s not just a hunch, this is exactly what happened after the GFC.

    The unnecessary 2011-12 federal public sector wages caps cut the legs out from everyone’s wages.

    But the pain induced from pay cuts doesn’t end there. Because lower-wage environments breed insecure work.

    People accept lower-quality jobs or juggle multiple jobs to earn the same income. Women are much more likely to work these precarious jobs.

    Prime Minister Scott Morrison has acknowledged that COVID-19’s fallout has been harshest on women.

    Yet his government is pushing an agenda that will ensure there will be less jobs for women, and they’ll be worse paid.

    Economic inclusion of women must be targeted in a long-term, sustained public investment plan that mops up the private sector carnage and lets us build back better.


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    Commonwealth Budget 2025-2026: Our analysis

    by Fiona Macdonald

    The Centre for Future Work’s research team has analysed the Commonwealth Government’s budget, focusing on key areas for workers, working lives, and labour markets. As expected with a Federal election looming, the budget is not a horror one of austerity. However, the 2025-2026 budget is characterised by the absence of any significant initiatives. There is

  • Participating in growth: Free childcare and increased participation

    Education & Training

    Participating in growth: Free childcare and increased participation

    by Matt Grudnoff and Richard Denniss

    Authors

    Matt Grudnoff

    Senior Economist

    Richard Denniss

    co-Chief Executive Officer

    The provision of free childcare provides the rarest of economic policy opportunities – it’s both an effective form of fiscal stimulus in the short term and has the capacity to boost the long-term participation rate and, in turn, the long run rate of economic growth.



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  • Repairing Universities & Skills Key to Meeting COVID-Era Challenges

    Repairing Universities & Skills Key to Meeting COVID-Era Challenges

    by Alison Pennington

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    Training must play a vital role in reorienting the economy after the pandemic, supporting workers training for new jobs including millions of young people entering a depressed labour market without concrete pathways to work. But what kind of jobs will we be doing in 2040? And how prepared is Australia’s skills system (and universities specifically) to play this important role now?

    Our Senior Economist Alison Pennington was interviewed by UTS The Social Contract podcast on how COVID-19 is reshaping relations between universities, government and industry. 

    Alison explains how the pandemic economic crisis presents significant challenges to Australia’s fragmented, underfunded and unplanned skills system wounded from decades of failed marketisation policies, and why sustained public investments in skills and jobs pathways will be essential to solving our economic and social challenges. 

    Listen to the episode on Whooshkaa. She is joined by Megan Lilly, head of Workforce Development at the Australian Industry Group.


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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

  • Unleashing a National Reconstruction Plan Fit for Our Era

    Unleashing a National Reconstruction Plan Fit for Our Era

    by Alison Pennington in Newcastle Herald

    Alison Pennington

    Senior Economist

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    Originally published in Newcastle Herald on June 9, 2020

    Our nation is confronting the most significant economic challenge in nearly a century. Australia’s own experience of long-term, sustained public investment during post-war reconstruction shows direct tools of government planning and investment will be essential to our recovery today. Yet Scott Morrison continues to pretend his hands are tied: “if there’s no business, there’s no jobs, there’s no income, there’s nothing.”

    In this commentary originally published in the Newcastle Herald Centre for Future Work Senior Economist Alison Pennington explains why Australia needs a public spending program proportionate to the nature, speed and depth of this crisis, and outlines some priorities for a public-led post-COVID-19 reconstruction plan.

    Why governments must spend, spend, spend to save the Australian economy

    Our nation faces the most significant economic challenge in nearly a century. GDP will likely contract at least 20 per cent compared to pre-pandemic levels, with millions of jobs already on the scrapheap.

    Unbelievably, a top priority for governments has become freezing or cutting wages, public sector pay freezes and an industrial relations power play to kill the Awards system.

    Recent research on impacts of the NSW government’s proposed public sector wage freeze shows over 1100 jobs will be lost from workers’ lower consumption.

    Cutting wages and dooming working people to poverty is senseless. But governments refuse to learn from our own historical crisis responses in the GFC and the Great Depression.

    We recovered from the GFC better than other countries because government invested in keeping people in jobs (key word here is “invested”).

    Others countries that walked the austerity path were mired for years with lower growth and higher unemployment.

    But stimulus soon ran dry and critical failures of the business-led economy were painfully evident before the pandemic: declining business investment in new capital and innovation; the slowest sustained pace of wages growth since WWII; rising inequality; an explosion in insecure jobs and the labour underutilisation rate.

    It will be impossible for this emaciated economy to “snap back”. We need a powerful public policy response proportionate to the nature, speed and depth of this crisis. Discrete government stimulus programs will not cut it.

    But Scott Morrison continues to pretend his hands are tied: “if there’s no business, there’s no jobs, there’s no income, there’s nothing.” Market ideologues said this for 10 years during the Depression.

    They tried to convince people government was powerless to fix joblessness and protect living standards, heralding a private-sector recovery that never came.

    But there is something called public investment, Prime Minister. It’s what we did on a mass coordinated scale to ensure we didn’t return to the economic and social turmoil of the Depression.

    And it’s this fully-fledged comprehensive national government spending program we need now.

    Government must break the investment gridlock. There are many priorities for a public-led post-COVID-19 reconstruction plan including: repairing and expanding our public healthcare and education systems; a sustained public investment program, for transportation, energy, utilities, and social housing; and building our renewable energy systems and networks.

    We have the most educated generation in our history, and young workers have been disproportionately affected by the decline in hours worked and unemployment in this crisis.

    Let’s expand genuine career pathways before we lose a generation of skills, passion and potential.

    Universities have been decimated by the loss of foreign students and exclusion from the JobKeeper wage subsidy.

    Meanwhile, the disastrously privatised VET system cannot meet the needs of our economy for skilled workers. We need a complete reconstruction of the post-secondary skills system, with government funding injected into pillar institutions in both public universities and TAFE.

    Ensuring public money is targeted to people’s needs demands greater participation across all levels of society.

    We need to open avenues for collective representation – not shut them down. In the rebuild, we need new localised reconstruction and jobs plans, especially for regional communities rebuilding from bushfires, anti-union laws lifted and a new sectoral bargaining system to increase participation and coordination of workers across industries.

    The only actor with sufficient investment power and planning capacity to lead economic reconstruction is government.

    With the private sector wounded, it’s time we got comfortable with invoking direct tools of public investment, tools forced out of favour during a generation of market-worshipping neoliberal policy but which are essential to our recovery today.

    This is a historic crossroads moment.

    Should government refuse to take up the investment mantle they will plunge millions into misery only to endow a smaller layer of business the power to restructure a harsher, more unequal economy.

    In 1942, years before the war ended, our national government formed a National Reconstruction Department to begin planning for post-war rebuilding.

    We can unleash another national reconstruction plan fit for our era. One with a commitment to full employment at its heart, that pulls us through COVID-19 with stronger public services, and paves our way to a sustainable future.


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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

    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

  • Australia Needs Universal Paid Sick Leave To Get Through the Pandemic

    Australia Needs Universal Paid Sick Leave To Get Through the Pandemic

    by Alison Pennington

    Alison Pennington

    Senior Economist

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    Chief Medical Officer Brendan Murphy recently issued a directive that going to work with the ‘sniffles’ is ‘off the agenda for every Australian in the foreseeable future.’ But with millions of workers without access to paid sick leave, government plans to lift restrictions on economic activity could risk dangerous and costly outbreaks. 

    In this commentary, which originally appeared in 10 Daily, Centre for Future Work Senior Economist Alison Pennington discusses the consequences of low paid sick leave coverage for worker safety and public health efforts during the pandemic, and reviews the merits of a universal paid sick leave scheme to address both COVID-19 and precarious work.

    ‘No More Heroics Going To Work Sick’ Sounds Fine Unless You Have No Paid Leave

    Remember the Codral ‘soldier on’ television commercial? “With Codral you can soldier on”.

    In 2008 a concerned citizen on a WA hospital pandemic influenza committee complained to the Advertising Standards Bureau (ASB), worried the ‘soldier on’ message would ingrain community habits that could undermine emergency efforts during a national/international pandemic.

    The ASB dismissed the complaint, agreeing that Codral was designed to self-medicate for “sniffles”, not for more serious influenza symptoms.

    Now fast-forward to the present day. The world is facing a global pandemic. It’s clear the decision has not aged well.

    Outlining plans to get people back to work, Chief Medical Officer Brendan Murphy announced last week “no more heroics”. Going to work with a sniffle is now “off the agenda for every Australian for the foreseeable future”.

    I welcome Murphy’s sentiment. Changing social attitudes and behaviours is key to infection control.

    But sentiment isn’t policy.

    Murphy’s public health directive is out of touch with the reality for working Australians who, Codral or not, continue to soldier on in a labour market marred by precarity, low wages, and jobs without basic sick leave protections.

    In fact, more than 3.3 million workers have no access to sick leave – almost one in three workers. This includes almost one-quarter of the workforce employed on a casual basis. One million more are independent contractors, including many so-called ‘gig workers’ — better described as misclassified employees like food delivery drivers.

    Casuals without sick leave are often the most vulnerable workers in the economy. As unemployment surges they will feel increasingly pressured to work every shift they can. There are real financial consequences of taking unpaid leave from the workplace. The bills don’t stop rolling in. Rent needs to be paid.

    Even before the pandemic, going to work sick is not some benign workplace habit. Taking sick leave is perceived by many bosses as a lack of commitment to the job. Workers are often punished for absences with diminished opportunities and disciplinary performance management akin to bullying. This fuels high levels of presenteeism — even for those with sick leave entitlements.

    The new COVID-19 work regime is exposing society-wide risks of unequal sick leave coverage. About 30 percent of the workforce have the potential to work from home — predominantly professionals, managers and administrative workers. Insulated from contagion, remote workers are paid almost 25 percent more than those working outside the home. They’re more likely to be permanent, full-time workers with sick leave.

    Meanwhile millions of essential workers across supermarkets, transport, cleaning and community and social services go to work each day exposed to both income precarity and higher viral loads, all without the ‘safety’ of sick leave and secure work.

    The common factor in the two major workplace COVID-19 outbreaks at Cedar Meats and Newmarch House aged-care facility is labour hire: on-call work with no guarantee of future shifts. And no sick leave.

    To put it bluntly: in a pandemic, insecure jobs with no sick leave will literally kill people.

    The Fair Work Commission introduced two weeks unpaid sick leave for half the private sector workforce in April. Unpaid sick leave is, however, useless in preventing workers coming to work unwell if the outcome of sickness is still financial punishment.

    This is why Australia needs universal paid sick leave: a system that allows for up to four weeks of leave to account for the full incubation, treatment and recovery lifecycle of COVID-19.

    It’s easy to do this. The New Zealand Ardern Government introduced a sick leave scheme for all NZ businesses, organisations and self-employed people under hardship due to COVID-19 from day dot. Australian policymakers have been slow to act on sick leave reform, but it can act now.

    A universal sick leave scheme can be publicly funded and transferred to employers at a future date when they’re in better shape. To signal the transfer of obligations, the entitlement should be entered into the National Employment Standards (NES) — the set of minimum employment conditions covering all employees — with an additional scheme for independent contractors not covered by the NES.

    The elephant in the room is that government intends to plough on with a ‘bosses knows best’ industrial relations agenda that would expand casual jobs (without sick leave), cut wages, and undermine workplace coordination needed to contain the disease.

    But it will be impossible to resume economic activity without universal paid sick leave — lest we risk dangerous and costly outbreaks.

    Trust, discipline and sacrifice has been demonstrated by Australians to flatten the curve and ensure community safety. It’s time government reflected this good will in people’s working lives.

    The virus doesn’t care about the employment status of its host. We must combine principles of public health with safe, secure jobs.

    Taking a codral won’t help us soldier on through this pandemic. Legislating universal paid sick leave will.


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  • Log of Extraordinary IR Measures During COVID-19 Shutdowns

    COVID-19, Wages & Entitlements

    Log of Extraordinary IR Measures During COVID-19 Shutdowns

    by Alison Pennington

    Author

    Alison Pennington

    Senior Economist

    COVID-19 containment measures have suspended large sections of the economy. Governments have committed over $220 billion in income supports to workers and firms. The $130 billion JobKeeper wage subsidy scheme is the most extensive “shock absorber” (with worrying exclusions of many casual and migrant workers). With the scheme now in place, assessment of the government’s COVID-19 measures is now shifting to implementation. This includes effects on the laws and regulations governing wages and how businesses and employees (and their unions) interact to determine the terms and conditions of employment.

    Despite enduring a heightened anti-union agenda, unions (headed up by ACTU) liaised early with government to secure the JobKeeper wage subsidy to prevent mass layoffs. Unions have negotiated with industry to adapt Awards and enterprise agreements (EAs) to new business conditions. The Coalition government has proceeded with significant changes to the Fair Work Act that could hamper efforts to drive an inclusive economic and labour market recovery. What’s more, the Morrison government has indicated it will continue its pre-COVID agenda to further weaken representation rights and minimum labour laws.

    To inform assessment of the impacts of COVID-19 on jobs, wages, and workplace protections, we have summarised major developments within the industrial relations system since March 2020. The log traces revisions to Awards, enterprise agreement-making rules, new instruments formed between unions and industry, major decisions by the Fair Work Commission, and ongoing lobbying efforts by business to weaken minimum labour laws. Links to relevant research from Centre for Future Work released during the crisis, or prior to, are provided. All log entries are reported in the industrial relations publication Workplace Express. Links to other media outlets are provided where relevant.

    If there are any major IR developments that we have not reported here please get in touch at futurework@tai.org.au.

    Thursday 17 September

    • The Fair Work Commission rejects a union application for a $5 per hour “COVID-19 care allowance” for disability workers attending to clients quarantining with COVID-19. While the FWC acknowledged that disability workers were more at risk of having to take paid or unpaid leave to self-isolate, they considered the circumstances in which the allowance would be paid “rare and temporary”, while also presenting an undue cost burden on employers dealing with real or potential COVID outbreaks. The Commission also noted concern that the decision would trigger further litigation, leading to “pressure for a flow-on to other employees and awards” to other sectors with the same circumstances including in hospital care, aged care, home care and crisis accommodation.

    Thursday 3 September

    • New legislation introduced by Morrison government granting more flexibility for parents of young children to vary how they use their 12 months’ unpaid parental leave under the National Employment Standards (NES). The NES entitlement presently requires 12 months unpaid leave to be used in one continuous period (with the employee forfeiting any unused leave if returning to work before 12 months is up). Under the proposed changes, all parents (primary and secondary carers) will be able to access 30 days of flexible unpaid leave of their 12 months’ quota, subject to agreement by their employer about how the leave can be used (e.g. reduced hours, single days, groups of days, or one single block). Primary carers currently eligible under the government’s parental leave scheme will be able to claim the minimum-wage parental leave payment from Services Australia for their 30 days of flexible unpaid parental leave ($753.80 per week). The proposed laws also provide for 12 months of unpaid parental leave for families who have experienced stillbirths, infant deaths and premature births.

    Wednesday 26 July

    • Morrison government introduces JobKeeper V2.0 legislation. The Bill establishes a new two-tiered JobKeeper payment scheme and an additional revenue test that expands access to JobKeeper-enabled exemptions to the Fair Work Act (FW Act) for employers no longer eligible for the wage subsidy. The emergency FW Act measures were introduced in April for businesses receiving JobKeeper, allowing employers to change workers’ hours, duties, days, and location of work, and direct employees to take annual leave. The new Bill allows businesses that fail the existing 30% revenue decline test to apply for FW Act exemptions under a new 10% revenue decline test to determine whether they’re still “distressed”. Employees in businesses that qualify for the revised revenue test for JobKeeper-branded FW Act exemptions can have their hours reduced by up to 40%, with worrying implications for large reductions in employee incomes. The legislation states that employers cannot require staff to work less than two hours a day, and must provide seven days’ written notice before a JobKeeper-enabling direction is given. The Bill adds that employers cannot unreasonably target certain categories of workers for hours reductions, compared with other employees also subject to the directions.
    • The new two-tiered JobKeeper payment replaces the flat $1,500/fortnight rate with $1,200/fortnight for employees who worked full-time prior to the pandemic (in February), and $750/fortnight for employees working less than 20 hours. From January 2021, payments will reduce again to $1,000 and $650, respectively. The scheme will be extended to March 2021.

    Monday 27 July

    • As COVID cases surge in Victoria’s aged care sector, the Fair Work Commission approves an application for two weeks paid pandemic leave for healthcare and social services workers required to self-isolate for coronavirus. The Commission originally adjourned the application on 8 July due to concerns the leave entitlement would cause private aged care providers financial difficulty. The new COVID-era paid leave entitlement expires in three months and applies to full-time and part-time workers, but only casual workers with “regular and systematic shifts”.

    Tuesday 21 July

    • Morrison government reveals JobKeeper wage subsidy payments will be reduced from late-September under a new two-tiered system paying $1,200 for employees who worked full-time prior to the pandemic, and $750 for those working less than 20 hours in February. In January 2021, payments will reduce again to $1,000 and $650, respectively. Employers must continue to meet turnover tests to be eligible for the scheme which will be extended to March 2021.
    • The federal government announces the JobSeeker coronavirus supplement will be reduced from $550 a fortnight to $250 per fortnight, extended only until December 2021. The $300 cut to the supplement coincides with an increase in the income-free threshold for JobSeeker payments from $106 per fortnight to $300 per fortnight. Means-testing and mutual obligations will be reintroduced on 4 August.
    • Cuts to the JobKeeper and JobSeeker programs will reduce government spending by $10 billion per month and reduce the number of employees covered by the wage subsidy by over 2 million by December. Research released by The Australia Institute shows cuts to JobSeeker will plunge 370,000 people into poverty, including 80,000 children.

    Friday 17 July

    • Prime Minister Scott Morrison announces intention to extend JobKeeper exemptions to the Fair Work Act for employers no longer receiving JobKeeper. The COVID-era exemptions were introduced in April for a period of 6 months and allow employers to change workers’ hours, duties, days, and location of work, and direct employees to take annual leave. Extension of JobKeeper FW Act provisions would allow businesses no longer receiving JobKeeper to continue operations with all relevant Awards, enterprise agreements, individual contracts or transitional instruments suspended (though hourly rates of pay under the prevailing pay instruments remain in place).

    Wednesday 8 July

    • In a major decision with concerning public health consequences, the Fair Work Commission adjourns a union application to introduce a paid pandemic leave entitlement for Award-covered healthcare and community services workers required to self-isolate during coronavirus crisis. The Commission contended the COVID-era paid leave provision would undermine financial security of private aged care and NDIS providers.

    Wednesday 1 July

    • Fair Work Commission extends temporary COVID-19 variations made to the fast food, retail, health industry, clerks, hospitality and vehicle maintenance awards in late-March. The flexibility schedules broadly allow employers to deploy workers across classifications, direct employees to take annual leave, and reduce minimum hours requirements. The Clerks Award variation enabling employers to spread out employee working hours without paying penalty rates were opposed by the ASU but the FWC granted the extension until September 27.
    • FWC extends unpaid pandemic leave provisions until further order for health professionals, nurses, aged care, pharmacy and ambulance awards. Other awards granted extensions until defined cut-off dates include fast food, retail, and hair and beauty (July 31), and airline pilots (December).

    Thursday 11 June

    • The Morrison government announces intention to withdraw the regulation introduced in April enabling employers to reduce the period of notice they give employees of proposed changes to EAs from seven days to one. IR Minister Christian Porter stated that the regulation introduced to support employers to rapidly respond to COVID19 disruptions to business was no longer needed.
    • Senate approves Labor proposal to discharge the Ensuring Integrity Bill.

    Tuesday 26 May

    • Morrison announces five working groups of business representatives and unions will be assembled to create a new workplace relations deal by September. The working groups will cover five key areas: award simplification, enterprise agreement making, casual and fixed-term employment, greenfields projects, and compliance and enforcement in areas including wage theft. Morrison also announces withdrawal of the Ensuring Integrity Bill from its second vote in the Senate.

    Wednesday 20 May

    • A full Federal Court rules that a coal miner employed as a casual under six consecutive contracts over almost four years is an employee entitled to leave benefits. The decision exposes employers to annual leave backpay claims for approximately 1.6 million casuals working on a regular, predictable basis.
    • FWC approves AiG application to vary the Fast Food Industry Award covering over 200,000 fast food workers to mitigate impacts of COVID-19 on employees and businesses. The variation approved by the SDA and ACTU (and contested by RAFWUU) allows employers to cut part-time workers’ hours with reduced overtime penalties, amend rosters, and request employees take annual leave which they cannot “unreasonably” refuse.

    Tuesday 19 May

    • Australian Industry Group release post-COVID-19 IR proposals for enterprise agreement-making, limiting Award content, and expanding casual employment. AiG propose to abolish the Better Off Overall Test (that requires employees covered by an EA to not fall below terms and conditions outlined in Awards), replaced by the weaker No Disadvantage Test, and weakening scrutiny of non-union EAs by the FWC, unions and employees. Award content would be drastically reduced under AiG’s proposals to remove annual leave, personal/carer’s leave, redundancy pay and public holiday loadings from Awards. Other Award derogation proposals include the expansion of Individual Flexibility Agreements (a revitalised form of the Australian Workplace Agreement implemented under WorkChoices by John Howard), and annualised salary clauses. Contrary to “fresh” branding, these proposals were developed long-before the pandemic struck. We documented the enterprise bargaining proposals from AiG and other business lobbyists in October 2019.

    Monday 18 May

    • Federal Court rules in favour of Qantas claim that it is not required to pay sick leave, carers’ leave and compassionate leave to the thousands of Qantas workers stood down due to coronavirus. Court considers entitlements forms of income protection that are extinguished when workers are not in receipt of income.

    Thursday 14 May

    • Federal government announces intention to limit the life of enterprise agreements varied using the shortened access period to 12 months. IR Minister Christian Porter said government intends to introduce the regulation through agreement with the Governor-General. On April 16, the government reduced the access period employers are required to consult with employees on changes to EAs from seven days to one.

    Friday 15 May

    • FWC flag that wages paid by distressed companies signed up to Job-Keeper could be frozen as part of the Commission’s Minimum Wage Review decision. The Commission will hand down its decision by June 30.

    Wednesday 13 May

    • The FWC hands down the first published ruling in the JobKeeper dispute jurisdiction, ruling a part-time employee unreasonably refused an employer’s request to use up one day annual leave each week for 16 weeks. The employee argued the wage subsidy was not intended to be used to offset employers’ annual leave obligations, but the case was unsuccessful.

    Friday 1 May

    • Federal government modifies JobKeeper eligibility rules to exclude workers employed by corporations owned by foreign governments. This exclusion applies to all workers including Australian residents.

    Monday 27 April

    • FWC approves joint employer-union application to vary Educational Services (Schools) General Staff Award covering non-teaching staff in non-government schools (bus drivers, maintenance workers, and others). For workers otherwise stood down due to school operations ceasing, the variation allows employers to cut hours by 25%, and redeploy workers across classifications (similar to hospitality and clerks Award variations).

    Friday 24 April

    • Business lobby groups propose changes to the enterprise bargaining system as key economic recovery measure. The proposals to increase employer unilateral power setting terms and conditions of work in EAs were prefaced pre-crisis (documented by Alison Pennington here) and include: removal of Better Off Overall Test, introduction of “whole of life” greenfields agreements, and less scrutiny of non-union EAs.

    Wednesday April 22

    • Government announces intention to reintroduce the Ensuring Integrity (EI) Bill (defeated in the Senate in December 2019). The anti-union Bill would allow the federal court to disqualify union officials, place unions under court administration, and deregister unions altogether. The Bill would also empower the FWC to prohibit union mergers on “public interest” grounds (See Jim Stanford’s submission on EI).

    Monday 20 April

    • Major law firms seek variation to the Legal Services Award mirroring previously agreed changes to the Clerks Award. Changes allow employers to provide workers of 24 hours’ notice of a vote to reduce working hours by 25%, give directives to use annual leave (beyond two weeks), reduce the minimum hours per shift for part-time and casual workers from three hours minimum to two hours, and widen ordinary weekly hours.
    • Australian Tax Office issues updates JobKeeper advice to employers clarifying the “one in, all in” rule. “You cannot choose to nominate only some employees.”

    Sunday 19 April

    • Australian Mines and Metals Association (AMMA) launch second call to abolish all Awards and all enterprise agreements (EAs) for a period of 6 months due to impacts of coronavirus on business activity.

    Thursday 16 April

    • Federal government drastically weaken representation rights under the Fair Work Act, reducing the access period employers are required to consult with employees on changes to EAs from seven days to one. Employer instruments to change hours and pay hitherto were only available to those qualifying for JobKeeper. These FW Act changes are accessible to all employers covered by EAs (including those in no danger of business failure).

    Wednesday 15 April

    • NSW Industrial Relations Commission approves a “splinter Award” covering NSW local government workers (who are ineligible for JobKeeper as state public sector workers) in the first instance of new union-employer Award-making during the pandemic. Covering over 100 councils, the Award requires councils find alternate work for worker redeployment. Those who cannot be redeployed receive a retention allowance of $858.20 per week for a period of 13 weeks. The Award provides a new Special Leave entitlement of four weeks at normal pay to cover any period where no suitable work can be provided (including self-isolation due to contracting COVID-19).

    Tuesday 14 April

    • FWC approves an employer application from Melbourne-based Mason Architectural Joinery to cut redundancy pay – the first redundancy pay entitlement cut by the Commission during the pandemic.
    • The Commission rules against an employer application to reduce the redundancy pay for three manufacturing workers on the same day. Cash flow problems were deemed an insufficient excuse since the company “has both the means to pay the full amount of the redundancy entitlement[s]. . . and the money in the bank to do so”.

    Thursday 9 April

    • Government announces pay freeze for hundreds of thousands of Commonwealth public sector workers. The pay increase deferral is stipulated by determination from April 14 for a period of 12-months. CFW release a report one week later assessing the negative impacts of public sector wage freezes on workers’ incomes and economic recovery post-pandemic.
    • JobKeeper wage subsidy legislation passes Parliament.

    Wednesday 8 April

    • FWC introduce two weeks’ unpaid pandemic leave to Award-covered workers required to self-isolate. The entitlement is available to workers who cannot access other leave entitlements and is inserted into 103 modern Awards, covering around half of all private sector workers (or 4.4 million workers). Awards were selected by the FWC based on a combination of factors including industries most affected by COVID-19, and industries with high proportions of Award-reliant workers and small and medium businesses.
    • In a worrying sign the FWC will permit enterprise bargaining to unravel due to COVID-19, UWU lose their bargaining order application with large food manufacturer Baida after the company refused to continue EA negotiations, proceeding to present the same EA deal to employees previously voted down. The FWC agreed with employer claims that it was too difficult to host negotiations due to virus social distancing requirements.

    Tuesday 7 April

    • Government introduces $130 billion JobKeeper wage subsidy scheme delivering payment of $1,500 per fortnight for a period of 6 months to employees within businesses who have experienced a 30% revenue decline compared to this time last year (less than $1 billion turnover). Registered charities with 15% revenue decline qualify for the scheme. Only Australian citizens (NZ included), employees in full-time or part-time roles, casual roles where an employee has been with the same employer for at least 12 months, and self-employed workers with ABNs are eligible for the subsidy.
    • Morrison government seek substantial changes to standard operation of the Fair Work Act 2009 (FW Act). Government and ACTU reach agreement allowing eligible employers to lawfully change workers’ hours, duties, days and location, and force employees to use annual leave (with two weeks’ “buffer” leave remaining) for period of 6 months. Limited safeguards are introduced with the FWC empowered to adjudicate disputes. No additional funding for the FWC to deal with disputes has been announced. These changes were implemented through entirely new provisions in the FW Act (Parts 6-4C in The Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020) that suspend operation of all relevant Awards, enterprise agreements, individual contracts or transitional instruments applicable to employers covered by JobKeeper for a period of six months. The new JobKeeper provisions in the FW Act state:
      • Employers must pay all eligible employees an amount of at least $1,500 per fortnight. Employers are required to pay all wages earned above the JobKeeper threshold to employees who performed work in the period.
      • New employer powers to decrease employee hours, and change duties and location of work. These “JobKeeper enabling directions” allow employers to amend hours of work to “match” the subsidy rate (though hourly rates of pay under the prevailing pay instruments do not change). All directions must be provided in writing, reasonable in the circumstances, delivered with three days’ notice to the employee, and be necessary to the continued employment of the worker.
      • Employers may request that employees agree to alter the days and times that they work, provided the employees’ duties are safe (including with protection from COVID-19), and within the scope of the business’ operations. Employers can also request workers take annual leave, provided they maintain a two-week annual leave balance. Changes to work days and times, and request to use annual leave must be by agreement with employees, but an employee may not “unreasonably refuse”.
    • The Centre for Future Work release early analysis of the pros and cons of JobKeeper, including polling from the Australia Institute showing 81% of respondents support extending the wage subsidy to all casual workers.

    Thursday 2 April

    • The FWC full bench approves the first application by an employer to suspend wage rises payable under the EA due to impacts of COVID-19 on future business revenue. The FWC approve the application from Queensland-based electrical services to withhold a 3% pay rise due to predicted (but not yet realised) revenue decline. The FWC hold powers to change EAs so long as employees remain better off overall than the Award. An additional untested provision allows the FWC to approve EA changes that provide for below-Award conditions in “exceptional circumstances”.
    • Council of Small Business call for suspension of unfair dismissal claims during COVID-19. Joining the Australian Mines and Metals Association, the Council also call on government to suspend all Awards and enterprise agreements for up to six months.

    Tuesday 1 April

    • Restaurant employers apply to vary the restaurants Award with consent of ACTU and UWU. Employers apply for the same hours, leave and location variations made to the Award for clerical and hotels workers on 26 and 24 March.

    Monday 30 March

    • FWC approves UWU ballot for industrial action at RSEA – a manufacturer of personal protective equipment – after the company applied to freeze bargaining for a new agreement till July. The company claimed the industrial action ballot should not be approved due to their “essential business” status and inability to bargain within an unpredictable economic climate.

    Thursday 26 March

    • FWC approves application from Australian Chamber of Commerce and Industry and AiG for a three-month variation to the Clerks Award covering approximately 1.3 million administrative workers. Changes allow employers to reduce minimum hours, allow work across classifications, direct employees to take leave, and provide leave at half pay. The application mirrors amendments made to the hospitality Award on 24 March.
    • NSW parliament passes legislation allowing early access to long service leave entitlements for period of 6 months. Amendments to the Long Services Leave Act 1955 will allows employees to use accrued long-service leave in shorter time periods (such as one day per week), with less notice by agreement with their employer.

    Tuesday 24 March

    • FWC approves joint union–employer application to vary the hospitality Award. The joint Australian Hotels Association and United Workers Union amendment inserts a flexibility schedule expiring in three months. Changes allow employers to deploy workers across classifications, direct employees to take annual leave with 24 hrs notice, and reduce minimum hours requirements – full-time employees entitled to 22.8 to 38 hours per week, part-time employees to 60% of guarantees minimum hours.

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  • Pandemic Shows Australia Needs Domestic Manufacturing

    Pandemic Shows Australia Needs Domestic Manufacturing

    by Jim Stanford

    Jim Stanford

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    Disruptions in global supplies of essential medical equipment have served as a wake-up call to Australians that it is always vital for a country to retain the capacity to domestically produce manufactured products that may be crucial to national security and well-being.

    In this commentary, Centre for Future Work Economist Dan Nahum reviews the qualitative reasons why manufacturing retains a special strategic importance to the overall economy, and discusses the potential synergies between the development of sustainable energy resources and a revitalisation of manufacturing.

    Rebooting the Australian Manufacturing Sector in the Era of Coronavirus and Climate Change

    Since the COVID-19 crisis emerged, Australians have been starkly reminded of the importance of being able to manufacture goods domestically. International shortages of, and restrictions on, the export of medical equipment and personal protective equipment have given us all a fright. While thankfully critical shortages have not yet emerged, the crisis has confirmed that being able to domestically produce a full range of essential manufactures is a matter of national wellbeing.

    For many years the conventional economic wisdom was that as a high-wage, resource-rich economy, Australia was unable to competitively manufacture — nor did it need to. Between digging up raw materials and shipping them to Asian trading partners (subsequently paying a premium for reimported manufactures made from those resources) and our pivot to a ‘service economy’, we could somehow sidestep the need to produce what we materially use. Even Treasurer Josh Frydenberg has now conceded that unbalanced strategy is not viable.

    It’s true the extraction of our extraordinary mineral endowment made some Australians wealthy, but in a lopsided way: unbalanced reliance on resource extraction, combined with the long decline of manufacturing, has made Australia far more unequal — indeed, we are now more unequal than most OECD nations. Additionally, this myopic economic focus has put us at the mercy of boom-and-bust cycles in global demand for our resources.

    There are many core reasons why Australia needs a healthy, proportionate manufacturing sector:

    • Australians are buying more manufactured goods over time; and manufacturing output is growing around the world. The absolute decline of manufacturing in Australia is an exception to the experience of other industrialised countries.
    • Manufacturing is the most innovation-intensive sector in the whole economy. No country can be an innovation leader without manufacturing.
    • Manufactured goods account for over two-thirds of world merchandise trade. A country that cannot successfully export manufactures will be shut out of most trade.
    • Production costs in Australia are not expensive relative to other industrial countries (now that the Australian dollar is once again trading in normal range).
    • Even small remote countries (like Korea, Ireland, New Zealand and Israel) are increasing their manufacturing output, and preserving and creating manufacturing jobs. Their experience demonstrates that we cannot blame geographic isolation for our deindustrialisation.
    • Manufacturing anchors hundreds of thousands of other jobs throughout the economy, thanks to its long and complex supply chain. A myriad of supplies and inputs are purchased by manufacturing facilities.

    There’s another key reason to be optimistic about Australian manufacturing — if we create an appropriate policy environment for it. Australia is poised to take advantage of our bountiful renewable energy endowment to reinvigorate manufacturing, on the foundation of plentiful, competitive, and reliable power.

    Read The Centre for Future Work’s report Powering Onwards: Australia’s Opportunity to Reinvigorate Manufacturing through Renewable Energy, which considers the potential and actual connections between renewables and manufacturing in detail.

    The following core policy levers would help to ensure that Australia’s manufacturing sector thrives in decades to come, enhancing our prosperity and our national security:

    Targeted Tax Incentives: No-strings-attached tax cuts for corporations do not stimulate investment, innovation, or employment. Rather, fiscal incentives are more effective when they are linked directly to investment. Examples include accelerated depreciation provisions (allowing companies to write off the cost of new investments faster), investment tax credits, and public co-investments in specific strategic projects.

    Investing Public Funds in Key Industries: International experience confirms that public financial assets can effectively lever greater capital investment in key industries. These include state-owned development banks (as in Japan and Korea) or other forms of sovereign wealth (as in Singapore, the UAE, and Norway). Public investment vehicles have been used successfully — indeed profitably — in numerous applications in Australia (for example, the CEFC to finance sustainable energy projects). The same principles can apply in manufacturing investment. Additionally, industry super funds could play a larger role in financing the development of strategic products and sectors.

    Innovation: Empirical evidence shows successful innovation must be embodied in the hands-on process of ‘learning by doing’. And there is no other sector more directly connected to the innovation process than manufacturing. Government needs to provide tangible, direct support to innovation in manufacturing. We need better systems for linking public innovation activity with commercial applications. And we can emulate successful public equity investments in innovation-intensive businesses in other countries (like the effective methods for financing innovative firms used in Israel, Finland, and Ireland).

    Sector Strategies: Government needs to identify manufacturing sub-sectors with the right criteria for success, and then co-ordinate investment and growth. These sector strategies must engage all relevant sector stakeholders (business, unions, educational institutions, research organisations, state and local governments). Even businesses which compete with each other can benefit when the whole sector succeeds. Criteria for identifying high-potential sectors include innovation, export orientation, productivity, and strong supply chain linkages.

    Networks, Eco-Systems, and Clusters: Successful modern industrial policy relies centrally on connections and collaboration among players from different firms, agencies, and stakeholders. Research shows that spillovers among these diverse sector participants, and the sharing of knowledge between them, are crucial to the development of ‘critical mass’ in any high-tech industry. Often, these networks and clusters are geographically concentrated. Government cannot simply ‘create’ clusters, but it can facilitate their emergence.

    Industrial Infrastructure: Government investments in public capital assets of all kinds will play a crucial role in fostering manufacturing growth. Infrastructure investments help to offset the sustained weakness of private investment, and improve weak macroeconomic conditions. One key focus of infrastructure investment should include facilities and services which support manufacturing: ranging from transportation infrastructure, to utility connections (especially renewable energy), to modern training facilities (to help better integrate TAFE and university training with industry). We should maximise the use of Australian-made manufacturing content in those (and all other) infrastructure projects.

    Connecting Renewable Energy Investment to Manufacturing: Given Australia’s superabundance of renewable resources, Australia should position itself as the world’s renewable energy superpower. Renewable energy is appropriate for most industrial applications, including heavy industry, and now offers lower costs than fossil fuel sources (including gas). To expedite the transition to renewable energy, the manufacturing sector requires stability in energy policy, industrial strategies to take advantage of Australia’s renewable energy endowment, and government partnerships with firms that can benefit from and add value to Australia’s renewable energy endowment.

    Skills and Capacities: Enhancing the future skills and capacities of workers must be a vital component of future sector strategies. Consistent funding for skills training at all levels is essential, as are efforts to more closely link training programs with future workforce needs in strategic sectors. Germany’s apprenticeship system is perhaps the most outstanding international role model in this area.

    Leveraging Procurement: Australian governments are massive purchasers of manufactured goods. An obvious way to support domestic manufacturing is to ensure those expenditures generate the maximum possible boost to domestic industry. This also helps to reduce the final net cost of the program: since the government collects additional revenues through the new work spurred by domestic procurement decisions, offsetting the public expenditure. Other countries regularly utilise domestic content targets in procurement to support domestic producers. Australia can do the same.

    Trade that Goes Both Ways: International trade is essential to the viability of most manufacturing due to the importance of economies of scale in production. Australian trade negotiators need to do far more than mutual tariff reduction to stimulate Australian manufactured exports. And Australian agencies (like Austrade) can be much more proactive in promoting Australia’s exports, through initiatives like expanded credit financing, initiatives to leverage Australian participation in global supply chains, and government support for international marketing.

    A thriving manufacturing sector confers important benefits across the whole economy. Even more importantly, a large and adaptable manufacturing sector offers resilience against periodic crises such as COVID-19. If Australia does not add value through the expansion of our manufacturing sectors, we can anticipate that our relative standard of living will decline, and our vulnerability to future supply disruptions and health crises will only increase. We can and must build a manufacturing sector that is economically and ecologically sustainable, and that adds complexity and resilience to Australia’s economy.

    See the Centre for Future Work’s previous research on the Australian manufacturing sector:

    Manufacturing Still Matters (2016) shows that manufacturing, far from being inherently doomed in Australia, is quite viable. Similar countries manufacture successfully. It provides an agenda of policy recommendations for support of the sector.

    Manufacturing: A Moment of Opportunity (2017) demonstrates that while the Australian public underestimate the size and therefore strategic economic importance of the sector, it enjoys strong popular support. Furthermore, the report identifies some promising signs of future growth in the sector.

    From Consensus to Action: Report from the First National Manufacturing Summit (2018) summarises the key findings of the first National Manufacturing Summit, including areas of strong policy consensus reached among the business, industry peak bodies, trade unions, government departments, academic institutions and vocational training providers and other summit delegates. The report also identifies several priorities for further policy research.

    Advanced Skills for Advanced Manufacturing (2018) argues that Australia’s present vocational education and training system, damaged by years of underfunding and failed policy experimentation, is a weak link in meeting the needs of the industry. High-skilled, high-paid jobs rely on a strong VET sector, and this report identifies twelve key reforms to achieve that.

    Auto Shutdown Another Economic Blow (2016) analyses the causes and impacts of the closure of the Australian car manufacturing industry. It notes that secondary job losses will be several times larger than the direct jobs eliminated at the car plants.

    Penny Wise and Pound Foolish (2016) analyses the impact of the NSW government’s decision to source railroad rolling stock manufacturing work to Korea rather than taking advantage of the opportunity to procure domestically. Governments need to account for the full range of potential costs and benefits of their procurement decisions (job creation, industry development, government revenues, and so on), not simply minimise the up-front purchase cost.


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    Post-COVID Manufacturing Renewal Represents Potential $50 Billion Boost to Economy

    New research from the Australia Institute’s Centre for Future Work reveals that Australia ranks last among all OECD countries for manufacturing self-sufficiency. While this indicator confirms the dramatic decline of domestic manufacturing in recent years, it also reveals the enormous potential benefits that would be generated by rebuilding manufacturing back to a size proportional to our national needs: including $180 billion in new sales, $50 billion in additional GDP, and over 400,000 new jobs.

    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