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Labor and its unemployment targets



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Liberal Campaign HeadquartersA STRONGER AUSTRALIA. ^ , C -

Labor and its Unemployment Targets

Opposition Leader Kim Beazley has claimed a number of times during the campaign (including in the Great debate) that the previous Labor Government met every employment target it set itself. He said it again yesterday morning:

“Now what we say is this. Governments have got to set themselves targets on employment. We hit every single target we ret in our 13 years in office. Every single target we set. I think we’re entitled on our experience to be believed that when we say w e’re going after a target, we mean it, we’ve got a chance of hitting it.”

Kim Beazley: Philip Clarke Show 2BL 22 September 1998

Mr Beazley is wrong. Labor failed to meet its Budget unemployment rate targets in 1990-91 and again in 1992-93. Further, Labor would not have reached its target for 1995-96 but lost office before the end of the financial year.

Mr Beazley has also set a target of reducing the unemployment rate to 5 per cent within two parliamentary terms.

Mr Beazley’s “target” has been greeted with uniform scepticism. John Edwards, a former economics adviser to Paul Keating, now with the Hong Kong Bank of Australia, points out that achieving the 5 per cent target will require a huge lift in job creation -

“We’d had over the last ten years, for example, created about 800,000 jobs in this country. But if we wanted to create, if we wanted to get to 5 per cent unemployment w e’d have to create, say over six years, w e’d have to create around 1.2 million jobs. We’d have, in other words, to do very much better than we’ve done over the last decade. So if you’re going to set a target like that you’ve got to say how you’re going to achieve it.”

John Edwards: ABC Four Comers 22 September 1998

The HSBC Australian Economic Weekly supports this -“In summary, whilst a 5 per cent unemployment rate target sounds attractive and is praiseworthy for its ambition, conservative projections involving gradual participation rate growth show that the required pace of employment growth would be unattainable. For a 3 year horizon, employment growth would need to average over +3.3% per year, and for a 6 year horizon, over +2.7% per year. With long run productivity growth estimated to be around +1.5% per year by Treasury for the current cycle, this implies average annual GDP growth of +4.8% for the next 3 years, or +4.2% for the next 6 years.”

HSBC Australian Economic Weekly. Week beginning 14 September 1998

23 September 1998 Media Contact: Robert Reid, Lynton Crosby's office 03 9229 4300 or 0411 285580

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