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Wednesday, 13 May 1998
Page: 3201


Mr WILLIS (4:04 PM) —After the government has brought down three budgets, we and the nation can get a pretty good sense of the priorities of this government. What is abundantly clear after last night's budget, and this government's performance in office to date, is that increasing employment and reducing unemployment are not high priorities for this government. That is abundantly clear. The Treasurer (Mr Costello) had virtually nothing to say about unemployment in his budget speech last night. He talked a lot about journeying along a road, about passing milestones and all this sort of stuff, but on unemployment he is right up a blind alley.

The fact is that this government has been a total failure on employment creation and on reducing unemployment. It came into office promising to boost jobs growth. This was after there had been a period of extremely strong employment growth. The Prime Minister (Mr Howard) promised in the election campaign that he would boost jobs growth and that he would do better than the previous government had done. What has he done? As the Deputy Leader of the Opposition (Mr Gareth Evans) has said, his performance in terms of increasing employment has been abysmal.

Contrast the 550,000 jobs which were created in Labor's last 26 months in office with the first 26 months of this government when we had 236,000 jobs created. The Prime Minister is 314,000 jobs short of matching Labor's performance. That is three MCG grand final crowds, and a bit more, full of people who are without jobs because this government could not match the previous government's employment performance.

That is what this government has delivered: an abysmal employment performance. As a result of that, we have an unemployment rate which has hardly gone down since they came into office; it has gone down from 8.4 per cent to 7.9 per cent. It only just got there last month after 26 months and they were going around saying, `Aren't we terrific, we have got below eight per cent?' After two years and two months they should have been way below eight per cent. As the Deputy Leader of the Opposition said, we should be looking at six per cent these days, not just under eight per cent. Of course, the figures on employment show how bad this government has been for full-time employment. In the first 26 months of this government there have been only 118,000 additional full-time jobs created against 330,000 under Labor in its last 26 months—an even more appalling performance by the government in relation to full-time employment.

This government has clearly been a disaster in the area of unemployment. Why? Firstly, because of the slump in the growth rate, especially in 1996-97 where the growth rate slumped to 2.7 per cent after it had averaged an economic growth rate of 4.4 per cent per annum for the previous three years. Then it went down to 2.7 per cent. Why? Because this government came in saying, `We are going to cut like hell!' and proceeded to do so. When the growth of the economy went down, obviously, employment growth went down with it. Economic growth picked up in 1997-98 to 3¾per cent, but it is still not back to the rates that were being achieved under the previous government. So employment growth is still inadequate. We had average employment growth under Labor over the previous three years of 2.8 per cent. This government has averaged a miserable 1.2 per cent in its first two years in office.

Of course, we have also seen poor employment performance because of the slashing of government expenditure on labour market programs. A major element of the expenditure cuts brought in in the 1996 budget was in the area of employment programs. Expenditure cuts of $1,836 million over four years, which accounted for a quarter of all expenditure cuts and other budget tightening measures, were in the area of labour market programs. That has had a particularly damaging effect on the long-term unemployed and other disadvantaged people in the work force.

The government justified this by saying they would bring in a better, more effective employment services system. We can all see that out there now, and what an absolute shambles it is. Many unemployed do not qualify for free assistance. Many offices of the new job network are not open or are working part time. Their computers are not linked up. Employers are finding they are going to be charged hundreds of dollars to take on new people. It is a complete shambles.

And what of this year? The budget estimate is for employment growth of 1¾ per cent. This employment forecast, as the Deputy Leader of the Opposition said, is highly doubtful, firstly because it is in the face of a fall in the GDP growth rate from 3¾ per cent to three per cent. So you have falling growth but rising employment growth, which just does not add up.

The three per cent growth figure itself is highly dubious, and various commentators made that point last night. It depends on the AMP's shareholders deciding to spend the benefits of their shares; that is, to dissave. Once the savings are unlocked by the demutualisation they will rush out and spend the money. If that happens that will certainly give some boost to consumption. To the extent that it might happen, no-one really knows; they are basing it on an English experience in different circumstances. It is somewhat fortuitous for the government, I guess, that that is there to give some boost to the economy. The government also assumes that export growth will be assisted by substantial diversions from Asia to other markets, which may or may not occur.

Even accepting that three per cent GDP growth figure, the employment forecast of 1¾ per cent is highly doubtful because it is an increase from 1¼ per cent last year to 1¾ per cent this year. The employment growth is forecast to increase by half a per cent while the GDP growth figure is going down by three-quarters of a per cent. This implies a dramatic reduction in productivity, because in 1997-98 you have GDP growth of 3¾ per cent and employment growth of 1¼ per cent. So the difference, which is a broad estimate of productivity, is 2½ per cent. In 1998-99 you have GDP growth of three per cent and employment growth of 1¾ per cent, they tell us, which means productivity has dropped to 1¼ per cent. So you have this dramatic decline in productivity while at the same time the budget papers are telling us that productivity growth is improving.

It says on page 1.8 that the increase in the capital stock is contributing to an improved productivity performance, but the budget figures are telling us that productivity is going through the floor. This simply does not add up and it does not add up because this employment number is shonky. The 1¾ per cent figure, which they need to be able to show that there is some decline in unemployment in prospect, is simply not a figure that is credible.

The estimate of the 1¾ per cent is highly dubious. When the Treasurer was asked at question time by the Deputy Leader of the Opposition how he could justify this situation of rising employment growth whilst GDP growth was coming down, he had no explanation. He said it was because jobs growth was already in the pipeline and would continue. What is in the pipeline? You look at the trend rate of growth of employment, which was 8,500 in the last month. That is in the pipeline. If we continued with that pipeline, we would have 1.2 per cent growth in 12 months. That is what is in the pipeline, not 1¾ per cent, assuming that trend continued in the face of a declining GDP rate of growth. So this whole figure simply does not add up.

Even with this shonky employment estimate, unemployment is still estimated to increase in 1998-99. That is, we have a figure now of 7.9 per cent and we have a forecast in the budget that that figure is going to go to an average of eight per cent in 1998-99—so it must go up. If it is going to go up and then come back to 7¾ per cent by the end of the period, which is the budget forecast, we have this curious picture of the unemployment rate going up and down through the year as the employment figures go up faster through the year whilst GDP growth is coming down. It is simply does not add up. It does not add up because this government needed a figure in the bottom line that said 7¾ per cent—something less than eight per cent—and the only way they could get it was by using this employment figure. Bear in mind also that this figure of 7.9 per cent does not count 88,000 people who would be there but for the fall in the participation rate. If they were included, we would have an unemployment rate today of 8.8 per cent.

This budget also shows a lack of concern for unemployment by the fact that, in the face of this failure to create jobs and to get unemployment down, they have taken the step of further slashing another $148 million in funds off employment services on top of the $1.8 billion we lost in 1996. That means there is even less money there for the long-term unemployed and for the people who really need assistance in the face of a clear inability to get the unemployment rate down. If that does not tell you that this is a government that does not care about the unemployed, is not concerned about reducing unemployment and does not give a high priority to reducing unemployment, then I do not know what else does. This is a government which has clearly shown by everything it does in this House that it does not care about the unemployed. (Time expired)