“This budget is an economic plan, it’s not just another budget.” With those words Scott Morrison opened last Tuesday’s Budget speech. There was plenty of time for three-word slogans, with “jobs and growth” supplanting the old Hockey line of “lifters and leaners”. There were plenty of attacks on Labor and much sacrificed at the altar of trickle-down economics. The Budget was a total shocker on many fronts, but if it was an economic plan for the next decade then it was a total dud for one simple reason.
Just like the Ideas Boom and the Intergenerational Report before it, the Budget ignored the “elephant in the room” for our society and economy’s future: the rapidly approaching change of automation that will strike Australia and the rest of the world in coming years. Automation will fundamentally reshape our society and put millions of jobs, our tax base and social cohesion at risk.
In fact, it is already happening. From transport to manufacturing, taxi driving to mining, industries are already being disrupted (or just plain old destroyed if you don’t buy the industry spin) by robots and automation. Robots have already replaced humans in some warehouses in Australia. There are robot-staffed hotels in Japan. Australia Post has recently begun testing drone delivery of parcels.
A 300-page report by analysts at Bank of America Merrill Lynch stated that “The pace of disruptive technological innovation has gone from linear to parabolic in recent years. We are facing a paradigm shift which will change the way we live and work.”
This “paradigm shift” raises many profound questions.
Above all, what does it mean for jobs?
While it might make life easier to have a driverless car to take us home from the pub or a robotic health aide when we are old, what happens when there aren’t enough jobs for everyone in the country? How do we fund our public services if payroll and income taxes have collapsed? How will social cohesion fare if a tiny elite own all the machines?
Of course, many who lose jobs to robots will find work in new or expanding industries. But do we really expect a 55-year-old truck driver from Dubbo who left school at 16 to retrain as a chiropractor or a yoga instructor?
And if you still think automation only threatens blue collar jobs like manufacturing or kids flipping burgers at McDonalds, think again. Journalists, accountants, insurance underwriters, even doctors and lawyers are on the chopping block. In the next 20 years, 44 per cent of Australian jobs are at risk of computerisation and automation, according to a report by the CSIRO and the Australian Computer Society.
What has been less studied than the employment consequences of automation is the potential budgetary impact. According to ATO figures, personal income tax accounts for 42% of total Government revenue. Job destruction on the scale predicted, without a similar number of new jobs created, could trigger a collapse in income tax revenues and a rise in social security payments that could threaten the long-term financial viability of the State. How will we then pay for our school, hospitals, roads, public transport, Army and social services?
And then, there is what automation means for inequality.
Wealth inequality is already a serious issue in Australia; across the globe it has become a catastrophe. By the end of 2016, the richest 1 per-cent of people are expected to control more than half of the world’s wealth. Automation will only exacerbate this. CEOs will soon be able to replace their costly blue or white collar workforce with robots that never get sick, fall pregnant or go on strike. Are we heading for a future where there simply isn’t enough work to go around and a handful of obscenely powerful families own the machines?
These questions should have been at the core of last week’s Budget, last year’s Ideas Boom innovation strategy and 2014’s the Intergenerational Report. But beyond a few buzz words thrown around like confetti (Agile! Innovative!) there has been a deafening silence from Government, notwithstanding Michaelia Cash’s admonishment for us all to “embrace the change”.
Australia deserves and desperately requires much better leadership on issues as fundamentally important as this. There are no silver-bullet answers on this issue, but there are some practical steps we can take immediately.
First, we must finally get serious on multinational tax minimisation, and the lurks and loopholes exploited by the richest Australians. The scale of tax minimisation in Australia is already at crisis levels. Figures released in December by the Australian Taxation Office show that almost 600 major corporations did not pay tax in 2013-14. And the private companies of many of Australia’s richest families pay little or no taxes despite multi-billion dollar revenues.
The crackdown on tax minimisation and profit shifting announced in the Budget welcome. But until we see real increases in the taxation paid by big companies, let’s keep the champagne on ice.
Beyond taxation, we must focus on education. Better education and training will give Australians the skills to thrive in new industries. Instead of putting up barriers to education, we must throw the doors open. This means open access to the skills and training needed to succeed in areas of future employment growth. It means funding public schools, not just private ones.
Finally, we should begin a conversation about what we want our country and our society to look like in 20, 50 years time. If there will not be enough jobs to go around then we must consider radical solutions. Here’s one: the Finnish Government, and the New Zealand Labour Party, are already contemplating the introduction of a universal basic income.
Bill Shorten and the Labor Party have been streets ahead of the Government when it comes to prioritising investment in educations and making sure big companies pay their fair share of taxes. But no matter who comes out on top on July 2nd, this elephant is going to be in the room for a long time to come. We need a Government which can find a way to work with it – noticing it is there would be a good start.
Barry Dunning works for the Transport Workers’ Union NSW as Media and Communications Manager. Prior to this he worked in a policy role for the Irish Labour Party. He can be found on twitter at @BarryDunning1