Former treasurer says full employment ‘would restore the bargaining power of workers and repair the broken link between labour productivity and wages’

This article is more than 3 years old

This article is more than 3 years old

Governments must be prepared to expand the size of the public sector and employ more people directly as part of pushing the Australian economy to full employment, according to the former Labor treasurer, Wayne Swan.



Swan will use a speech in Adelaide on Wednesday to argue that full employment needs to be an active strategy for governments, not a passive one.

Wednesday’s intervention is part of efforts Swan is spearheading to generate community discussion about the concept of inclusive growth, and also challenge his party to develop a more overtly progressive policy platform for the next federal election to appeal to disaffected low and middle income voters currently being courted by Pauline Hanson and other protest parties.

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The former treasurer will use a speech he will deliver at Flinders University to argue governments need to embrace the use of fiscal policy “to get to and stay at full employment”.

“To reverse the squeeze on middle incomes and to power economic growth, the case to boost public investment through the use of active fiscal policy is irrefutable,” he will say.

“Pushing the economy back to full employment would restore the bargaining power of workers and repair the broken link between labour productivity and wages.

“And when we talk about full employment we’re talking about secure ongoing jobs.”

He says that means governments providing more than job training. “Governments must not only direct their emphasis on job training and reskilling initiatives but must also be willing to contemplate more ambitious programs of public investment and direct employment.”

The former Labor treasurer used a speech at the Australian Workers’ Union national conference at the beginning of the month to argue the opposition needed to put rising inequality at the heart of its agenda for the next federal election – and also consider whether a “Buffett rule” should be part of the policy mix.

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Swan was the first figure from the Labor right faction to validate the debate, which thus far has been pursued by left faction figures.

Neither the Labor leader, Bill Shorten, nor the shadow treasurer, Chris Bowen, are keen on the “Buffett rule” concept.

Shorten recently told a town hall meeting in Canberra reforming negative gearing was a more effective redistributive mechanism than making wealthy people pay a minimum share of tax.

This week’s Guardian Essential Poll suggests, however, that the concept would be popular. The poll found a clear majority of voters would support a range of tax increases, including a Buffett rule.



Swan insists the Labor party needs to give the “Buffet rule” serious consideration.

He will acknowledge on Wednesday Shorten’s analytical point on negative gearing, but argue Labor needs to do more. “Labor’s decision to scale back negative gearing for future investments and tackle capital gains concessions is a critical part of making our tax system fairer.

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“This is a good start but we do need a through discussion of a Buffet rule to give people confidence that wealthy individuals are paying their fair share.

“On the corporate tax side we need strong action against transfer pricing and debt dumping and we need to fix the petroleum resources rent tax.

“Both sets of measures would go a long way towards repairing our budget bottom line.”