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A Conspiracy of Convenience

Much has been written here recently about Modern Monetary Theory (MMT), the job guarantee, structural deficits, fiscal statements, fiat currency and the like. But that, it turns out, is just the tip of the iceberg. There is also the neo-liberal ideology that drives our governments, the buffer-stock of unemployed so necessary, it seems, to keep wages growth in check, the fallacy of supply side economics and a host of other measures that most people don’t understand and shy away from for fear of appearing stupid.

Most of this was foreign to me except for the gold standard; I knew about that and well remember the day Richard Nixon made the announcement that the USA would no longer tie its currency to its gold reserves. I remember that the gold price was fixed at $US35.00 per ounce and Nixon abandoned that as well. But that story pretty much got lost or buried as Watergate began to encroach upon ‘Tricky Dick’s’ tenure in the White House.

But last Friday, listening to ABC Radio 774 in Melbourne with Jon Faine, there was a discussion raging over the 457 visa programme and as it progressed I quickly realised its proximity and relevance to the previously mentioned buffer-stock of unemployment. The 457 visa programme, as most people would know, is designed to enable a company to employ people from overseas on short term visas; people who have the necessary skills needed for particular work where the company cannot find an Australian citizen or permanent resident to fill the position.

It was heralded as analogous to plugging a gap in the wall; a short term fix. Interestingly, such a worker with the required skills did not have to be outside the country when the application was made. Importantly, they did need to have the skills required and be sponsored by an approved business for up to four years. Holders of 457 visas could bring their families and even change jobs after they arrived provided a new employer sponsored them. Even more interesting, there was no limit on the number of people a company could sponsor.

On Jon Faine’s programme last Friday, two particular callers alerted me to what might be described as a window to rorting on a grand scale. One caller decried the system because it allowed one applicant to be sponsored and employed as a truck driver. Just how the sponsoring company was able to convince the Department of Immigration and Citizenship that they could not find any citizen in Australia able to drive a truck was beyond both me and Jon Faine, but somehow they did.

The second caller alerted me to something even more sinister. He claimed that he had received calls from a person offering him $10,000 to sign a few application forms that would enable multiple 457 visas to be issued to persons unknown for which he (the caller) had no need.

Clearly, there is something wrong here. Notwithstanding the obvious fact that 457 visas are being issued to foreign workers when local workers could quite easily be found, i.e. truck drivers, it also looks suspiciously like it is being used to maintain a buffer-stock of unemployed in the true tradition of neo-liberal economics.
In February, the Abbott government quietly lifted the cap on business nominations for skilled migrants imposed by the former Labor government and undertook a review of the scheme.
Subsequent changes meant that businesses could increase the number of foreign workers above their initial application.

The Australian Industry Group claimed the change would help those businesses that were struggling to find highly skilled people, but clearly the move has the potential to impact on wages and conditions for Australian workers and leave foreign workers vulnerable to exploitation. Currently there are more than 90,000 foreign workers in Australia with 457 visas.

When we look at what is happening with 457 visas and overlay that upon the neo liberal economic platform one can see it fits quite neatly into its broader ideology and looks a lot more like a programme designed to maintain a buffer stock of unemployed than it is to help meet the sometime dubious requirements of business. It might seem to be only a small part of a much larger conspiracy, but a conspiracy nonetheless; a conspiracy that proponents of MMT could effectively highlight and expose.


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  1. Peter F

    Sadly, this is all too true.

  2. Kaye Lee

    “Migration agents” are making a fortune. $20,000 for “help with a working visa” and $10,000 for ‘‘permanent residency fees’’. One Vietnamese fellow was promised a job as a chef….after paying his money he was not given a cooking job but was forced labour as a cleaner and a painter, for just $15 an hour.


    And Gina is in trouble already with her Roy Hill mine.

    “We’ve got a whistleblower who has informed the union that there’s up to 150 to 200 Korean workers who have been brought in, that they are being exploited,” he said.

    “The allegation is that they’ve been brought in to do certain types of work and then they are being allocated other types of work in breach of their visa conditions.”

    Aside from being asked to do work outside their visa conditions, the CFMEU alleges many of the staff are working more than 84 hours a week and being paid as little as $16 an hour.


    And they have these people over a barrel because if they lose their job they are deported unless someone else sponsors them so they don’t complain.

  3. Diannaart

    I have been following Jon Faine’s reports on this issue also.

    Today he revealed the 451 visa. That’s a temporary visa for international workers who only receive board and lodging and NO PAY at all – saves on super & insurance, pay roll tax, I believe and out competes those who actually do the right thing and pay their workers.

    Of course this is the market place at work, so that makes it all right 😉


  4. Margaret-Rose Stringer

    I’m coming to think that perhaps what TROWC will be most remembered for is not all the appalling election promise breakages nor the made-up-on-the-fly policies it has perpetrated upon us, but the fact that it is the most secretive guvmint we have ever had.
    I can’t help wondering if the Opposition is keeping its eye on the ball. If it is, how can things like “In February, the Abbott government quietly lifted the cap on business nominations for skilled migrants imposed by the former Labor government and undertook a review of the scheme.
    Subsequent changes meant that businesses could increase the number of foreign workers above their initial application.”

    occur …?

  5. Lee

    You’re absolutely right John. When I went to school economics was an optional subject beginning in year 11. I didn’t take it because I was more interested in sciences. I really regret that now. If economics was a compulsory subject beginning in year 8 perhaps more people would understand that politicians are lying to us more than we previously thought possible and causing us unnecessary hardship. Then perhaps we would not vote these incompetents into office.

  6. Matters Not

    Economics is very much the ‘social science’ and as such is not free from ideological assumptions. I well remember Ted Wheelwright arguing that courses in ‘economics’ were really all about ‘political economy”

    Sure you can load up ‘economics’ with maths and science but you can’t eliminate the underlying ‘ideological’ assumptions, the most important of which is a view of human nature.

    the fact remains that a great deal of economic theory and policy presume a rather crude, archaic model of human being. Despite its obvious unreality, Homo economicus, the fictional abstract individual who actively maximizes his personal “utility function” through rational calculation, continues to hold sway as the idealized model of human agency in the cultural entity we call the “economy.”

    I didn’t study economics at school and I didn’t study phrenology either.


  7. Gregory T

    One must remember, that there are no bad economic models, they are all 100% accurate, as long as the parameters that the model was structured with remain constant. Hence the love of economics by the conservatives, the models right, it’s just those damn human conditions, sickness, health, unemployment, education, old age that keep interfering with the perfect world. I might be slow, because it took me two weeks into my Uni economic course, to realize that I be better off, taking the astrology elective and I’d be making more accurate predictions. But, live and learn.

  8. Lee

    “One must remember, that there are no bad economic models, they are all 100% accurate, as long as the parameters that the model was structured with remain constant. Hence the love of economics by the conservatives, the models right, it’s just those damn human conditions, sickness, health, unemployment, education, old age that keep interfering with the perfect world.”

    and the Labor party.

    “Trickle down” economics….the principle that the poor, who must subsist on table scraps dropped by the rich, can best be served by giving the rich bigger meals. ~ William Blum

  9. Matters Not

    ‘Trickle down’ economics is sometimes described as being pissed on from above.

    But seriously, very few economists these days try to limit themselves to ‘descriptions’ of ‘what’ is happening and ‘why’. Instead they readily delve deep into ‘prescriptions’ of what should happen (the ought) and why.

    Not that ‘description’ and ‘prescription’ can ever really be separate, particularly when it comes to significant issues.

  10. Trevor

    Shocker this story.

    It plainly comes under the neocons heading, not of supply side or any other theory of economics known to punters.

    The correct neocons title for this economics model is
    UNDERHAND economics.

    Export Abbott not Refugees

  11. Lyndal Breen

    When this problem was raised by Julia Gillard/ALP, they were accused of racism; the 457 visas are, as you state, a gigantic rort to keep wages down and maintain unemployment. Meanwhile, business has no need to train and develop their employees’ skills

  12. Gregory T

    Lee Jul 2, 2014 at 2:13 pm

    Of course the labor party, after all, they’re the kissing cousins of the LNP. And my, what an incestuous lot they have become.

  13. Lee

    This just makes no sense at all. The government doesn’t even bother collecting income tax from the wealthiest people in the country and some large corporations. How will cutting the income of the poorest people in society help to collect more GST?


    “So tepid was the outlook for economic growth that wages were set to grow at only half their usual pace, he told an Association of Mining and Exploration Companies breakfast in Perth. Incomes were likely to grow by by only 1 per cent per year in the decade ahead.
    ”It is hard to overstate the need for reforming the tax system,” he told the breakfast.
    ”If our public finances are not placed on a sustainable footing, tax reform becomes more difficult as time passes.
    ”Our tax mix is heavily weighted toward direct taxes on income — personal and corporate. If we were to leave our tax rates and bases as they are, our reliance on income taxes would grow over time.
    ”We will move even further in this direction if, as we anticipate, the relative share of total indirect taxes continues its long-term decline, including the GST.” “

  14. Totaram

    After hearing some of Martin Parkinson’s recent utterances, I am beginning to suspect he was co-opted as a Coalition mole while Julia Gillard was still in power. Remember Godwin Grech? That is why Parkinson produced treasury projections that said that Wayne Swan could produce a surplus quick smart. He probably also encouraged Swan to keep promising the surplus so that he would look like a real fool when it didn’t eventuate. Now this man tells us that there needs to be serious tax reform. He didn’t see this just a few years ago? Sounds very strange to me. With this bunch of liars and cheats, you expect this kind of dirty dealing in the first instance.

  15. Stephen Bowler

    The LNP and Employer groups and including Malcom Fraser had said before he election that the ratio of incomes to prices was too far toward the benefit of incomes
    I presume this means that business want a greater slice of the pie

    The LNP said that wages were too high, presumably the bigger slice of the pie would be gained by cutting costs rather than increasing their business revenue!
    seems to me that all businesss should take a good look at a stratagy that improves profit and loss by cutting costs at the expense of improving revenue!

  16. Florence nee Fed up

    Back in the fifties, I did touch lightly on economics. What I remember from those days is very little, bit I still think is important.

    First was the idea, that money goes around in circles, creating wealth on the way. That is what creates a economy. Very simple idea I know., Probably remembering it wrong.

    Second was that the main component in how the economy worked, relied on what the people thought. Yes, if people lost confidence, the economy would collapse. Yes, it was easy to talk oneself into a recession, no matter how good the indicators are. It amazes me how well our economy has stood up, taking into consideration that Abbott and co have been talking it down for years. Still is, while in government,. That I do not understand. I suppose getting even with Gillard, is more important than delivering good governance yourself. Well to Abbott, that seems to be the case.

    The third was, that when it comes to unemployment, it takes on a life of it’s own, if allowed to go into double figures. After this, it is nearly impossible to turn around. Yes, one can see where that is true.

    There is another truth today, after each recession, it takes much longer to get the unemployed back to work.

    One thing I did not understand then, and still cannot comprehend, is why the reasons put forwarded for the great depression was over production of goods. Are they saying, more was being produced than wanted or needed. Seen no evidence of this. My observation seem to be, people still wanted and needed what they were producing, The problem was, they did not have the money to spend.

  17. Florence nee Fed up

    Jon Faine’s has been good value lately. I wonder how long he will survive.

  18. Florence nee Fed up

    Funny, it seems that rising wages are no longer a threat. It is appears that sluggish wage growth, could be a bigger problem.

    Yet, we see this government, doing all they can, to depress wages even further.

    We still have low inflation, low unemployment, but slowly edging upwards.

    Low I interest rates.

    Growth in the economy.

    All we heart is one must live within their means, Cut to all those on the bottom.

    Unions must be destroyed.

    Too poor, to invest in the well being of the nation and its future.

  19. Kaye Lee

    I refuse to pay to read the Australian but, in a wonderful example of “if I do say so myself”, Maurice Newman has written an article praising the budget. Not surprising, but I just had to share the trailer with you…

    For the sake of our kids, this budget must pass

    The Australian |
    July 02, 2014 12:00AM

    FOR all the public outcry over the lack of fairness and equity in the budget, scarcely a word is uttered in defence of future generations. It seems today’s parents and grandparents care little for George Washington’s advice: “We should avoid ungenerously throwing upon posterity the burden that we ourselves should bear.”

    Ever hear of climate change you flat earther? I will NOT be lectured by THIS man about “defence of future generations”.

  20. sam

    “One caller decried the system because it allowed one applicant to be sponsored and employed as a truck driver. Just how the sponsoring company was able to convince the Department of Immigration and Citizenship that they could not find any citizen in Australia able to drive a truck was beyond both me and Jon Faine, but somehow they did.”

    Just wait until this gets done on an American scale.

    Deregulate/deunionise any industry… Say agrucuilture for example.
    Always turns out such that profit margins disproportionately large for the players at the top.

    Tracking the ingredients or produce that go into a the finished product back down the supply chain to the farmers/workers themselves you will see the profit margins squeezed. Massive inequality.

    Farmers cant afford to pay employees EXCEPT for immigrants (the only ones that are willing to work for such low wages). Paradoxically citizen workers cont afford to work for such low wages because its not enough to live on so this feeds the rhetoric about ‘bludgers’ or ‘too good for the jobs on offer’ etc.

    So it becomes self-fulfilling. Then if someone steps in and demands a better wage they would have a neo-liberal economist eg: chicago school of double-think come in and say that would be counter ‘free market’ and would only cause inflation because the monopoly at the top of the supply chain would just pass the increase on in final product.

    Everyone exploited.

  21. vilasini

    I was reading a daily newspaper in Sri Lanka earlier this year, when I came across an ad for an Australian jobs expo being held in Colombo. The ad stated that there are 190,000 jobs available for professionals in Australia, nurses, doctors, IT, dentists etc.
    The Australian government, the ad said, was offering assistance with visa’s, relocation etc.
    Get your head around that, with Abbott now cutting 8 billion from hospitals and health care over the next four years.

  22. Lee

    And many good comments from John Armour too. 🙂

  23. John Armour

    Thanks Lee. This is a battle that can only be won from the Left flank.

  24. Anomander

    A short interview with Joseph Stiglitz on ABC nightline here.


    He makes some incredibly intelligent and incisive points about investing in our future and not slashing and burning our people, but the interviewer is atrocious and resolutely sticks to his pre-scripted (government-centric) questions and spends almost no time exploring Stiglitz’s answers.

  25. John Armour

    Thanks Anomander, for that Sitiglitz interview.

    The question from Cannane that exposed his ignorance (although it’s a widely held belief) was this one:

    STEVE CANNANE: “But I know you’re a fan of the way Australia handled the Global Financial Crisis, but wasn’t one of the reasons they were able to do that was that their budgets were balanced, that they had that money up there sleeve for difficult times?”

    Stiglitz, who Stephanie Kelton says understands MMT, probably couldn’t afford the time to digress and lose his audience so he played it safe and gave what I thought was a useful answer.

    The reality is that past budget surpluses (or deficits) have absolutely no effect on a government’s ability to exercise its full range of options to meet any future need. Deficits are a “flow”, “water under the bridge” as I’ve heard Professor Mitchell describe it.

    The myth about Howard leaving Labor with “money in the bank” with his surpluses is shot through with a bitter irony.

    First, there cannot ever be “money in the bank” from surpluses. There was no locked box in Canberra stashed full of banknotes. That’s because surpluses take money out of the economy, the private sector, and destroy it.

    If anybody ever wants to go looking for evidence of a surplus, you can see it reflected in increasing indebtedness of the the private sector and a rundown of savings. It’s a bit like the Cheshire cat in Alice in Wonderland, when it disappears, all that’s left is its grin.

  26. Anomander

    Thanks John. Agreed 100%.

    Cannane was appalling and his questions phrased completely to support the government’s message – so much for left-wing bias at the ABC!

    Thanks to AIMN expanding my knowledge of MMT too, I laughed at that same question about surpluses being useful to cover the Rudd GFC response and was somewhat disappointed that Stiglitz didn’t just back-slam the question with the MMT case.

    I get more and more angered every time this feckless government continues their lies about deficits and needing to return to surplus, as though we are running the country like a household budget – another futile analogy designed to deceive the public.

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