Yesterday’s monthly jobs report from the Australian Bureau of Statistics exposed — yet again — the self-interest of the Business Council, the ideological blinkers of the Liberal Party and the economic illiteracy of many in the media and crossbenchers seriously considering voting for the Great Corporate Tax Heist currently underway.
The latter in particular seem unable to connect two separate arguments by the Turnbull government: that it has presided over an extraordinary boom in job creation, and that a company tax cut is desperately needed to fuel job creation. It’s as if there are two separate realities, each home to one of those claims. Because both can’t be true.
The ABS February jobs report again confirms we’re enjoying a jobs boom — another 19,000 jobs in trend terms and underemployment down. For the 17th month in a row, new jobs were added last month in seasonally adjusted (16 on the more accurate trend basis). That’s the longest run of monthly job gains since 1978, when the current labour force series started.
And yes, it’s true that many of those jobs are in healthcare, the NDIS and education, rather than being created in the private sector. But there’s no gainsaying the rise in the participation rate to 65.7%, the highest since early 2011, the year of the resources boom proper — nor the rise in the female participation rate, which is at a new all-time record of 60.6%. The gap between male and female participation rates in the 15-64 age group is now below 10 percentage points. Malcolm Turnbull and Scott Morrison should be proud of this achievement and deserve every credit for it.
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Moreover, most of the jobs growth is full-time, as the ABS noted. Over the past year, trend employment increased by 3.3%, which is above the average year-on-year growth over the past 20 years (1.9%) and was the growth rate for 2017 as a whole, meaning that although there appears to be a slight cooling because job numbers in the first two months were a touch weaker than forecast, the reality is quite different.
Thing is, it’s all been achieved with the allegedly punitive and deterrent company tax rate at 30%. The government and the Business Council can’t have it both ways — either our current taxation (and industrial relations) settings have delivered record strong jobs growth, or they badly need repair. Both can’t be true.
The Business Council and the government’s line — which was conjured up after Trump’s election, but missing when the Great Corporate Tax Heist was first announced — is that we need to follow Trump’s tax lead. But Trump’s tariff actions are a far greater issue for Australia than his corporate tax cuts (the vast bulk of which are being wasted on corporate share buybacks). Trump is trying to start a trade war with China, announcing plans overnight to impose 25% tariffs on $60 billion worth of Chinese imports — primarily manufacturing and infrastructure imports, rather than the far more sensitive consumer sector. China’s immediate response was to say it wouldn’t resile from a trade war — it specifically used the term. Trade wars, of course, are a game where everybody loses, including those who aren’t even playing, like us.
And as if tensions with China weren’t already high enough, Trump this morning sacked his national security adviser H.R. McMaster (one of the alleged adults in the kindergarten White House) and replaced him with right-wing neocon hawk John Bolton, who has called for pre-emptive strikes on North Korea, tariffs on China and a massive military build-up to show the Chinese the US “means business”.
Think what a trade war with China would do to the profits and jobs at tax cut supporters like Andrew Mckenzie of BHP, Twiggy Forrest at Fortescue and Rio Tinto’s Jean-Sébastien Dominique Francois Jacques (not to mention the troubled Roy Hill mine of Gina Rinehart). It would easily swamp the purported benefits of a tax cut as identified by Treasury’s modelling, based on fantasy assumptions like no debt. The increasingly virulent anti-Chinese tone from the White House will also leave Malcolm Turnbull to walk an ever-thinning line between our economic and strategic interests.