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Hawke's job whimper



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Peter Reith

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DEPUTY LEADER of the OPPOSITION PRESS RELEASE SHADOW TREASURER

HAWKE'S JOBS WHIMPER

Prime Minister Hawke's "Mini Mini Mini Budget" to be delivered tomorrow will have virtually no impact on the level of

unemployment in Australia.

The Coalition has run various scenarios on increased capital expenditure through the "Murphy Model" which shows that virtually no improvement in the unemployment rate following the potential employment programs to be announced tomorrow.

The Murphy Model of the Australian economy, the econometric model based on the same one used by the Commonwealth Treasury, and developed by Dr Chris Murphy, the former Head of the Econometric Modelling Section in the Department shows that a $250 million

boost to public capital spending would only decrease the

unemployment rate by 0.01 percentage points.

That is, an unfunded $250 million boost to public spending would decrease the September 1991 unemployment rate from 10.1 per cent to 10.09 per cent!

This would be the ultimate band-aid solution.

Other scenarios put through the Murphy Model by the Parliamentary Library on behalf of the Coalition shows that a $500 million ongoing boost to spending would have no effect on the

unemployment rate in 1991/92 and at best would only decrease the unemployment rate by 0.03 percentage points in 1992/93.

A $1,000 million boost in spending would again only lead to at best an 0.06 percentage point improvement in the unemployment rate.

These types of band-aid solutions do not work. What is needed in Australia is fundamental taxation and structural reform.

The Coalition will soon be releasing proposals for the most massive taxation and structural reform program in Australia's history.

We will demonstrate by also using the Murphy Model that sweeping reforms can have a substantial effect on the level of

unemployment in Australia and that band-aid solutions are near worthless.

CANBERRA 13 NOVEMBER 1991 CONTACT: DAVID TURNBULL 06 277 4277 D126/91

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PAR L L V ,. . iv'iiCAH

NWlA u K

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ATTACHMENT

MURPHY MODEL SIMULATIONS OF EMPLOYMENT PROGRAMS

Mr Hawke's mini, mini, mini-Budget tomorrow is expected to increase funding on capital works, and recurrent spending, to boost jobs.

The Coalition commissioned the Parliamentary Library to examine a number of conservative scenarios of increased capital spending and their effect on the unemployment rate.

It is assumed that the increased spending begins in the second half of the present financial year (1991-92) and is an on-going, unfunded increase in expenditure.

The results are detailed in the following table:

DECREASE/INCREASE IN TODAY'S UNEMPLOYMENT RATE

Scenario A $250m boost Scenario B $500m boost

Scenario C $1000m boost

1991/92 - 0.00 - 0.00 - 0.01

1992/93 - 0.01 - 0.03 - 0.06

1993/94 - 0.01 - 0.03 - 0.05

1994/95 - 0.01 - 0.02 - 0.03

1995/96 - 0.00 - 0.00 - 0.01