Prime Minister Malcolm Turnbull, who has the privilege of leading Australia through a period of persistent low growth and resurgent economic populism, could do worse than have a read of the Chifley Research Centre’s Inclusive Prosperity Commission report on inequality released yesterday. Being from a Labor think tank and a panel chaired by Wayne Swan and former top Labor adviser Michael Cooney, there’s more than a few partisan snipes, but if the PMO reads deeply enough they’ll unearth at least one rubber bullet to fire against Bill Shorten on Mediscare (hint, guys — bottom of p.48).

More apposite, however, is the way the panel presents a coherent and rigorous argument that addresses both economic growth and the need for inclusion and shared prosperity, the perceived absence of which is partly driving the resurgence of economic populism and nationalism (see today’s Essential Report numbers on foreign investment to see how great the voter backlash against liberal economics is becoming). This was essentially the task Turnbull undertook in his “major economic speech” to CEDA last week, now better known for being interrupted by protesters than its content; Turnbull’s diagnosis of the problem was correct, while his prescription was more likely to exacerbate the problem than address it.

While the report devotes much effort to making the case that inequality undermines economic growth, and undermines it significantly, it’s interesting how the prescriptions for addressing it are also the basic components of a sound pro-growth economic policy — higher workforce participation, investment in education and health, infrastructure investment, improving housing affordability. It’s also refreshingly free of Labor’s recent obsession with propping up manufacturing — its approach to encouraging innovation falls comfortably into the middling slot between Kevin Rudd and Kim Carr’s neo-protectionism and Turnbull’s jargon-led focus on start-ups achieved by Swan himself and Greg Combet in 2011. And Swan’s been engaged in the inequality debate for a long time, of course — back to his 2005 book Postcode: the splintering of a nation, but more recently in a similar report on inclusive prosperity by Larry Summers and Ed Balls last year.

One of the issues the report grapples with, only partly successfully, is the shifting nature of employment. It’s strong on the increasing fragility and casualisation of work, something the ACTU (Dave Oliver is a member of the panel that wrote the report) has been talking about for years but that has been turbocharged by the advent of the “sharing economy”. Oliver has repeatedly invited the business community to engage with the union movement on the implications of the uberisation of work, but the current generation of business lobby group leaders is so rigidly ideological that they appear entirely incapable of thinking creatively.

The report acknowledges the dilemma of this process — casualisation and the sharing economy can increase inequality, reduce demand (it’s hard to spend when you’re worried you might not have an income next week) and harm family life, but also provide greater flexibility, increase workforce participation, put to work underutilised assets and provide options for more employment for part-time or casual workers who want more income. It’s also much better for high-skilled individuals, who can exploit the opportunities the sharing economy provides, than for lower-skilled workers.

The panel is also aware of, but not sure what to do with, changing employment patterns elsewhere. In its good discussion of the gender pay gap (it acknowledges rising female participation as a key to Australia’s relative success in slowing the growth of inequality, but is concerned about the persistent gender pay gap) it notes the impacts of “female dominated industries and jobs tending to attract lower wages … low wages and job security in the government-funded services sector affecting social and community work mainly performed by women.”

This is one of the most significant ongoing shift in the Australian workforce — not merely from manufacturing to services, but from relatively higher-wage, strongly unionised manufacturing to lower-wage, less unionised social and healthcare jobs, which by 2020 will employ more than 14% of the entire workforce. That workforce — in health, aged and child care — is predominantly female (78%) and predominantly government funded — either directly via hospitals and the health system, or indirectly through high levels of government subsidies for aged and child care. An ageing population will mean more and more money flowing into aged and healthcare, but overall society values these jobs less than traditional male jobs, and we’re still at the early stages of any policy debate about investment in early childhood care and education.

Governments thus have at least one lever for gender-based employment inequality in their own hands — pay rates for the health and social care sector (education is another — that employs nearly 8% of the workforce, 70% of that sector are women). But being a publicly employed worker in an industry less valued by society even as we come to rely on it more and more is a poor combination for anyone interested in improving economic outcomes for women.

Peter Fray

Get your first 12 weeks of Crikey for $12.

Without subscribers, Crikey can’t do what it does. Fortunately, our support base is growing.

Every day, Crikey aims to bring new and challenging insights into politics, business, national affairs, media and society. We lift up the rocks that other news media largely ignore. Without your support, more of those rocks – and the secrets beneath them — will remain lodged in the dirt.

Join today and get your first 12 weeks of Crikey for just $12.


Peter Fray
Editor-in-chief of Crikey