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Sunday, March 13, 2011

The mining tax could have paid for the ASU community sector wage claim


In this week's contribution labour movement activist Sarah Howe considers the claim by the ASU (Australian Services Union) for fair pay in the community services sector.  The sector involves mainly women workers, and the union is arguing underpayment is effectively discrimination.   Many are pointing to the potential cost of implementing equal pay, but Howe argues that if the 'Resource Super Profits Tax' (RSPT) had been implemented in its original form - money would not have been a problem.

By Sarah Howe, March 9th 2011

As the media has widely reported, the Australian Services Union is currently running a test case through Fair Work Australia seeking pay rises of between 14 and 50 per cent for about 200,000 mostly women workers in the social and community services sector.

The union wage claim is well deserved-with the media and submissions to Fair Work Australia pointing out that professional front line workers such as non-profit housing support workers are often receiving as little as $18 for extremely qualified and stressful jobs. The importance of the community sector to the health of Australian society and economy can’t be emphasized enough.

The ASU campaign for equal pay for community sector workers (and the growing significance of the sector to the economy) should be seen in the context of the move by Australian government to adopt the UK Blair government model of implementing more engaged, ‘joined up’ and networked approaches to governance and policy-making in recent years- particularly in relation to social policy. This trend has led to planning and service delivery increasingly being devolved to the so called ‘third sector’ (or the community sector). This sector is made up of organizations that are not-for-profit and non-government in diverse industry sectors and is increasingly doing the work traditionally done by government departments and authorities.

In Victoria, the Bracks Governments core social policy document in 1995- A Fairer Victoria: Creating opportunity and addressing disadvantage - aimed to tackle poverty and disadvantage had a strong emphasis on ‘building stronger communities’(Victorian Government: 2005). The community building strategy in this policy often has given responsibility to the community sector to plan and implement social policy outcomes, for instance with urban renewal programs. This is certainly the case in the Carlton context, where I work overseeing an employment program assisting newly arrived refugees into jobs.

In practice today, the community sector now both plans place based social services as well as delivering services on the ground-sometimes with the help of Federal, State and Local Government grants. However, despite the responsibility given to the community sector, significant investment is now required.

The negative view of the Blair model argues that ‘local self help, volunteering and social entrepreneurship are no alternative to progressive state and national tax, income security, service delivery and labour market policies needed to create the conditions for broad and sustainable reductions in poverty, inequality and social exclusion’(quoted in Wiseman, J: 2006).

‘No amount of local community capacity building can substitute for long term investment in core public infrastructure of schools, hospitals, health centers, housing, transport, parks and meeting places that can provide the real foundations for resilient and healthy communities’ (Wiseman, J: 2006 ).

Social services are in high demand, but often woefully under-funded. In my work, I am currently establishing an occasional childcare service to support housing commission residents look for work in Carlton. Yesterday I inspected a similar service managed by a not for profit agency in Broadmeadows. The Broadmeadows service assists newly arrived migrants study English at a location close to their children.

The Manager of the service told me how difficult it was to run the childcare centre, off a low funding base - including paying the current award wages. As we walked to the childcare centre, she joked that they call it the Hawke building- it was paid for under the 1990’s Federal Government capital grants scheme. This scheme does not exist now. Many parents wish it did, as childcare shortages are legendary, and the Local Government and community sector are struggling to provide these vital social services to families in the community. These services are critical for women seeking to re-enter the workforce.

The Federal Government’s response to this investment shortfall is to continually reiterate its desire to ensure fiscal sustainability and return the budget to surplus. In relation to the ASU wage claim, the initial response by the Federal Government was to say that any additional wage costs would come at the expense of other government funded services (Commonwealth Government in The Australian: 2010).

However, in December 2010, the Federal Government at the instigation of the PM intervened to clarify that Fair Work Australia should not award or discount equal remuneration because of the potential impact on the Commonwealth - however despite this reassurance, not much detail was provided on how the wage claim or ongoing capital investment costs of the sector would be met in the future.

While the Federal Government clarification is a positive development for the wage claim, I agree with Kerryn Williams’s recent article in Green Left Weekly in arguing that mining company BHP Billiton’s $10.5 billion profit for the second half of 2010 ‘highlights the shameless greed of those making a fortune out of Australia’s valuable resources’ and underscores the loss for social policy associated with the enormous reduction in revenue associated with the watered down Minerals Resource Rent Tax (MRRT). Recent Treasury estimates indicate that the MRRT will reduce the original RSPT’s 40% tax to just 30%, and will bring in well under half the revenue (Williams: 2011).

“The original tax was supposed to raise about $99 billion starting from the 2012-13 financial year until 2020-21. But it now looks like this figure will be only $38.5 billion. That’s $60.5 billion that could have been spent on health care, education or the shift to renewable energy” (Williams: 2011).

We could add to Williams list of social policy funding needs- the costs of urgently needed community infrastructure and labor costs (the wages bill from the ASU case estimated conservatively to be worth Victorian tax payers $200 million and at the most $1.7 billion over four years). In the absence of reform of the taxation system, the phased in strategy for labor cost increases will have to suffice.

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References:

The Australian, ‘Government warns on women's pay rises’ November 19th, 2010

The Age, Equal pay case could cost Victoria $1.7bn, February 2, 2011

Wiseman, J. ‘Local Heroes: Learning from Recent Community Strengthening Initiatives in Victoria’, Australian Journal of Public Administration, Vol. 65, No. 2, June 2006, pp. 95-107

Williams, K, Mining profits reveal true greed, Green Left Weekly, March 6th, 2011.

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