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Budget job creation strategy flaw



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J O H N H O W A R D , iVl.P. ,

M E M B E R F O R B E N N E L O N G

SHADOW M IN IS TER FOR INDUSTRIAL

RELATIONS, E M P L O Y M E N T & T R A IN IN G

IRET 58/92

BUDGET JOB CREATION STRATEGY FLAWED

The budget's job creation strategy is flawed.

There will be no sustainable increase in employment until the private sector of the economy begins growing again, but the budget has done nothing to remove the fundamental impediments to private sector growth and investment.

Instead, industry is going to have to rely on the "trickle down" effects of the Government's own make-work programs.

The large deficit being used to create jobs in the government sector could bring what already is a weak and tentative recovery to a premature end in 1993.

It threatens to recreate the same set of circumstances that prompted the Government to bring on the recession - excessive domestic demand, a bourgeoning current account defi’ cit and an acceleration in external debt accumulation It - much earlier than usual in the normal recovery cycle.

Business investment - the prerequisite to sustainable medium to long term growth - may not get a look in.

The existing debt constraints on the Government are severe and worsening. Direct spending on labour market and employment programs are estimated to increase by nearly 50 per cent - by $891 million.

But $891 million is less than the increase in gross interest payments on the Government's debt, $1,039 million.

The Coalition's Fightbackl program would have delivered a budget deficit for 1992-93 of about $6-7 billion, and would have included a reduction of more than $20 billion in business taxes and charges, including abolition of the

payroll tax.

The contrast between the Government and Coalition employment strategies hardly could be starker.

CANBERRA 1? August 199

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