Employment figures for August released on Thursday show an economy that has already changed down to first gear, on the verge of slipping into neutral, then slowly and inevitably grinding into reverse.
Unemployment decreased as did the unemployment rate but it was all due to a decline in the participation rate, i.e. unemployment was supplanted by a sense of futility on the part of job seekers as a result of the weak employment growth.
During the 2013 election campaign, Tony Abbott promised, if elected, he would create 2 million new jobs over the next decade. At the time, it seemed an overly ambitious target and if he were to achieve it, the economy would have undergone a demand side resurgence.
I doubt anyone actually believed he could deliver on that promise. There was no plan, no broad insight, no mechanism, just some vague promises that business would be so pleased at the prospect of a Coalition government they would unleash a torrent of expansion plans and growth would go through the roof.
In its 2013 Real Solutions Plan, the Coalition actually promised one million new jobs in the first five years and two million over ten years. While that sounds impressive, a comparison with the nation’s performance over the ten years prior, i.e. from 2003 to 2013, demonstrates how mean and tricky politicians are. Nobody did the maths at the time but someone should have.
Over that previous decade our employment grew by 2.06 million. Abbott and the Coalition were actually promising something less than what had already been achieved. Employment grew by 21.8% 2003 to 2013. If Abbott keeps his promise, employment only needs to grow 17.5% in the decade 2013 to 2023.
Which means that promise was utterly worthless. Promising 2 million new jobs was saying that we should lower our expectations because there will be no real increase beyond the level that was already being achieved at the time. That is quite distinct from the expectation of a Coalition led expansion of the labour market which is what they were alluding to.
As things stand today, the chances of employment growing 17.5% by 2023 without a stimulus to the economy is, on the face of it, remote. In the first two years of Abbott’s government, some 313,000 new jobs were created.
That puts them somewhat behind target with no visible plan beyond the odd three word slogan and some stupid reference about being on a credible path back to surplus. Yet this was the government’s great achievement nominated by Minister for Trade and Investment Andrew Robb on Insiders last Sunday.
As at September 2013 there were 11,452,000 people employed. As at August 2015, there were 11,765,00 people employed. However, unemployment as at September 2013 was 5.8% whereas today, it is 6.2%. The difficulty for the government is that the population has increased proportionately higher than the increase in employment, thus increasing the unemployment rate. Did they think about that when making the original promise? I doubt it.
In short, we are not growing at a rate that will bring unemployment down. Which means creating 313,000 jobs in the past two years is a fail, not something to shout about. And if that trend continues, after five years the Coalition’s promise of 1 million new jobs will fall short by 218,000. As for the 2 million in ten years’ time, let’s not even bother going there.
There is only one way to stop the decline and that is by stimulus measures that involve deficit spending. This is clearly counter to Liberal Party ideology. They simply won’t do it. Nor will they come down hard on tax expenditures such as superannuation concessions, mining subsidies or negative gearing.
Their answer is to lower personal income tax for the wealthy, increase the GST and continue to attack the living standards of the most vulnerable, while the teenage labour market in particular, continues to go backward. Surely we have reached the point where it must be obvious to everyone that all the rhetoric about the economy being on the right track is just utter rubbish.
Surely it is time to demand the Prime Minister and his cabinet explain their three word slogans and unchallenged scripted statements in greater detail so that we may assess their “two years of great government” more objectively.