Jan 21, 2013

Trouble in paradise — blame shifting on unemployment in Queensland

Unemployment in Queensland has -- unsurprisingly -- increased following the Newman's governments significant cuts across the public service. Blaming others doesn't cut it, says Professor John Quiggin.

Queensland Treasurer Tim Nicholls has attempted to explain away the latest unemployment figures, which show Queensland pulling up the rate for the country as a whole, as a case of "a weaker global outlook, including uncertainty about the US 'fiscal cliff' and a decline in commodity prices" -- not the result of state job cuts. The question that springs immediately to mind is: Why bother? Wouldn't he be better off with some Thatcherite "no pain, no gain" rhetoric, promising that the cuts his government has implemented will yield pay-offs for all Queenslanders in the long run? Other things being equal, sacking 14,000 people in a state with two million or so employed workers would raise the unemployment rate by around 0.7%, which is exactly what has happened. Of course, as Nicholls points out, other things aren't all equal. The mining boom has slowed a bit and commodity prices have come down from their recent peaks, highlighting the dubious timing of these massive cuts. Under boom conditions, public sector workers would have more easily found new jobs. Nicholls can, perhaps, take comfort that "second-round" effects have yet to show up in the statistics. The nurses, social workers and firefighters his government sacked have less money to spend on goods and services of all kinds. The tens of thousands who were threatened with the sack but ultimately spared would also be questioning discretionary spending. This may affect retail employment over the course of 2013. Nicholls also tries to blame international events, such as uncertainty over the US "fiscal cliff" in the lead up to the New Year. Leaving aside the question of whether anyone in Queensland, beyond a handful of political junkies like me, paid attention to these tiresome theatrics, any effects would be felt equally throughout the Australian economy. Moreover, the Reserve Bank, which does pay attention to such things, cut interest rates in part to offset the effects of global uncertainty, of which the fiscal cliff was a small part. Assuming the RBA got the call right, there should be no net effect here. There are some policies that might have been expected to have a more positive effect. Recently, Nicholls issued a press release trumpeting the fact that, despite its allegedly dire fiscal circumstances, the Newman government has raised the threshold for payroll tax, which was already the highest in Australia. Sadly, it appears that the medium-sized businesses benefiting from this move (the core supporters of the LNP government) pocketed the cash, but haven't hired new staff. Still, Nicholls looks insightful compared to Premier Campbell Newman who is quoted as saying that Employment Minister Kate Ellis' statements simply reflect the fact that Labor wants to win seats in Queensland. Well, yes. Newman won his landslide victory almost by default. He apparently finds it startling that, when one side of politics makes a mess of things, the other side tries to take advantage. It’s hard to recall a newly-elected government that has lost support as quickly and completely as that of Newman, Nicholls and Deputy Premier Jeff Seeney. Rather than trying to blame the messenger, perhaps they should pay some attention to the message they are being sent, in both economic data and opinion.

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21 thoughts on “Trouble in paradise — blame shifting on unemployment in Queensland

  1. Bill Hilliger

    Just wait till’ an Abbott/Pell coalition government gets in following the 2013 election. There will be massive redundancies and sackings of public sector employees accross the board. Justification by a lazy Pete our former fairweather treasurer who will study the Australian fiscal position and give Abbott/Pell a trigger to do their worst, unemployment figures will leapfrog to heights not seen since the Howard era, and yes interest rates will rise. Let’s hear the squeals then.

  2. klewso

    Were “Santo Claws'” lips moving when his “Timmy” said that?

  3. klewso

    This is “government by hyper-bowl”.

  4. geomac62

    Something is seriously wrong with QLD politics when just over 49% of the vote delivers a landslide in seats .

  5. Arty

    Jerry Mander main sure that the Bananabenders got the government they wanted, and that they can keep it for many many years.

  6. Karen

    Clearly, the only inference to draw is Queenslanders enjoy voting themselves out of work and services and handing their hard earned dollars to rich businesses who pocket and don’t hire. Mugs.

  7. Flowenswell

    Quiggin shows the obvious deleterious effects of a government ideologically opposed to government spending, and stimulus, unless it subsidises profit-making business. It’s a model that fails to recognise the need for a balance of prosperity in a society in order to attract sustainable investment, rather than attempt to race to the bottom. No doubt we’ll see similar results in the NT over the coming year.

  8. Hugh (Charlie) McColl

    So Karen, you write from the high ground observatory in which particular state?

  9. zut alors

    Queenslanders voted for Newman & Co because they wanted to make a point to Anna Bligh – she was obstinate, refusing to listen to the electorate’s concerns during her final term in office. Frustrated, the electorate was dead-set determined she would hear them (albeit too late).

    Unfortunately, 49% of voters having made their point and having rammed it home, we are now lumbered with this disproportionately representative gaggle who simply couldn’t believe their luck last March. We didn’t actually want them.

    Tread carefully in 2013, Australia.

  10. MJPC

    For Queensland (and NSW somewhat) it is much the case of “You reap what you sow”; of course Newman and his crown of tea party lights will implement failed policies, it is the only thought thay have…shaft the worker, look after the big end of town as aptly summarised below:

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