If the 2020-21 budget is, as the Morrison government says it is, all about jobs, what are the chances of the ambitious targets being met?
Well, a bit rubbery at the moment and you only have to look at our most recent performance in the area to get an understanding of how tough the next couple of years are going to be in repairing the broken jobs market.
Up to the February March period of 2020 the economy was in the dying days of the greatest jobs boom this country has seen.
The Morrison government estimates the economy will recover 950,000 jobs over the next four years from a combination of budget measures and the recovery in the economy, based on the crucial assumption of a widespread COVID-19 vaccine next year.
There will be a further 100,000 positions for apprentices at a 50% subsidy while 400,000 people will be on the JobMaker wage subsidy.
The jobs boom started when Malcolm Turnbull was PM and Scott Morrison Treasurer back in 2016 and saw 1.01 million new jobs created from December 2016 (when 11.966 million people were employed, until December 2019 when 12.976 million people were employed).
The boom was the largest seen in this country and saw hundreds of thousands of jobs created in the service sectors of construction, education, health and social welfare, with the growth in the NDIS a major factor.
In fact so positive was the boom that it saw a surge in female participation to record highs as women of all ages came back into or remained in the workforce but at different jobs.
But it had little on wages and annual growth in the key measure, the Wage Price Index rising from an annual rate of 1.8% in the final quarter of 2016 to 2.2% in the final quarter of 2019.
But the most telling illustration of the lack of an impact from this jobs boom were the three cash rate cuts from the Reserve Bank in 2019 – in June, July and October, each a trim of 0.25% as the central bank sought to try and arrest a slide in household spending.
And the national accounts show that household final consumption (the main driver of growth) fell from an annual 2.5% growth rate in 2016 to 1.2% in 2019. Which is why the RBA cut rates three times in 2019 as the extent of the slide became apparent.
The outlook for the next four years for this budget and its forecasts is far more fraught – it depends in things out of our control – a new vaccine that works, some sort of stable leadership in the US, a resumption of growth in the global economy, an easing in the political and trade tensions with China (that’s all up to the Chinese). On top of this, Australian households have to regain the confidence to spend and businesses to invest.
And the trouble with an expectation of a consumer-led boom with the tax cuts and other benefits is that we have just been through a boom in home office/work from home electronic goods (plus early and sustained hoarding of consumer goods).
Retail sales might have fallen 4% in August from July but they remain 7.1% above the level in August 2019 when there was no pandemic to send people to their homes and online.
Retailers like JB Hi Fi, Kogan, Harvey Norman, OfficeWorks and Bunnings have already seen a boom this year in sales – especially online.
Online sales were 81% higher in August this year than in August, 2019 according to the Australian Bureau of Statistics. Retail sales fell 4% in August from July but were still 7.1% above a year ago.
The question is having had a boom, can that be kept going by the instant write-off, tax cuts and other one off payments?
Sales growth need to continue at boom-like levels for much of the next year to boost demand and spending – all without a significant rise in jobless numbers as JobKeeper is wound back and the inadequate JobMaker clicks in.
