New Premier in Victoria Australia Promises to Spend $1bn for Half the Jobs We Need
Congratulations to Premier-elect Andrews who is set to formally take power in Victoria in the coming days.
All of us in business in Victoria, particularly those of us in the recruitment field will be hoping that the new Premier has adopted a policy of under promising and over delivering when it comes to his soon to be implemented job plan.
The state ALP promised it would create 100,000 jobs in the first term of parliament at a rate of 25,000 jobs a year.
The focus is to be on growth in six areas the new Government believes Victoria is ready "to lead the world" in, including: medical technology and pharmaceuticals, new energy technology, food and fibre, transport, defence and construction technology, international education and professional services.
Also to be set up is an independent body of senior business and industry leaders who will advise the premier on spending $500 million for jobs and investment.
The group is to include the ACTU, VECCi, AIG and the Farmers Federation among others.
Two other funds will also be established; a $200 million future industries fund of grants to support new job-creating projects in high-growth sectors and a $200 million regional jobs fund to support job-creating projects in the country.
Labor's first act in parliament, the "back to work Act", will provide payroll tax rebates and credits through a $100 million fund for companies hiring unemployed youth, the long-term unemployed and retrenched workers into full-time work.
Under the scheme companies will be given a $1000 rebate for every eligible worker employed.
Labor believes these payroll tax changes will generate 100,000 jobs alone over two years.
Well that's $1billion to be spent on creating jobs in Victoria over the next 4 years! Previous Changes of Government Its interesting to look at the last four changes of Government in Victoria and what influence prevailing rates of employment may have had.
In October 1992 the ALP's Joan Kirner lost government with unemployment on an upward trajectory at 11.
7%.
In September 1999 the Liberals Jeff Kennett lost government with unemployment on the way down at 6.
9%.
In October 2010 the ALP's John Brumby lost government with an unemployment rate on the way up at 5.
5%.
And of course 29 November 2014, Dennis Napthine lost government with unemployment on the rise at 6.
8%.
If there is anything to take from these results it is that in three out of the four last changes of government unemployment was on the rise - the Kennett defeat being the exception.
So, in simple terms in order for the incoming government to remove unemployment as a factor from its re-election chances in November 2018, it needs to ensure that unemployment is certainly no greater than 6.
8% as it is today and in fact trending down.
So what does this actually mean? Well, based on the ABS statistics we can see that over the last two terms of government the population rose by 350,000 and 327,000 respectively and that participation rates dropped from a record high of 65.
7% to a still relatively high 64.
6%.
Over the same period unemployment rose from 5% to 6.
8%.
If we make the assumption that the population will rise over the next term of Government by 300,000 and that participation rates will climb to 65%, then in order to keep unemployment from rising beyond the current 6.
8%, the economy will need net job growth of 200,000 jobs.
Obviously this is significantly higher than what the incoming government is promising.
If the government delivers, on its 100,000 new jobs we could expect to see unemployment based on the assumptions above rise to 9.
8% and in that climate another single term government.
Payroll Tax Some in the incoming government are talking up the Payroll Tax change as being itself able to generate the 100,000 new jobs in just 2 years.
Really? Just to recap; the incentive being offered to employers is, that if you employ unemployed youth, the long-term unemployed or retrenched workers into full-time work your business will receive a $1000 pay-roll tax rebate.
So, if you operate a business with total salaries of less than $550,000 per annum you get nothing as you pay no payroll-tax currently.
For the rest of us, if we employ one of these eligible employees at the minimum wage we will receive a one off rebate of $1000 against the payroll tax of $1,962 incurred each year in employing the person.
If we employ an eligible person at the average wage, then we too will receive a one off rebate of $1000 against the $4,291 payroll tax incurred each year in employing the person.
Is the rebate welcomed by employers - of course.
Will it change employment decisions of employers - I would suggest that that would be highly unlikely.
Thankless Task So, as we welcome in the new government lets wish them well in the implementation of their Jobs policy and hope they can over deliver at least the 200,000 jobs we need to at least maintain the current level of unemployment.
However, recent history shows us that even a government like the Bracks/Brumby government which generated net job growth of 246,400 (the highest on record in a single term) can be thrown from office by the unappreciative crowd.
All of us in business in Victoria, particularly those of us in the recruitment field will be hoping that the new Premier has adopted a policy of under promising and over delivering when it comes to his soon to be implemented job plan.
The state ALP promised it would create 100,000 jobs in the first term of parliament at a rate of 25,000 jobs a year.
The focus is to be on growth in six areas the new Government believes Victoria is ready "to lead the world" in, including: medical technology and pharmaceuticals, new energy technology, food and fibre, transport, defence and construction technology, international education and professional services.
Also to be set up is an independent body of senior business and industry leaders who will advise the premier on spending $500 million for jobs and investment.
The group is to include the ACTU, VECCi, AIG and the Farmers Federation among others.
Two other funds will also be established; a $200 million future industries fund of grants to support new job-creating projects in high-growth sectors and a $200 million regional jobs fund to support job-creating projects in the country.
Labor's first act in parliament, the "back to work Act", will provide payroll tax rebates and credits through a $100 million fund for companies hiring unemployed youth, the long-term unemployed and retrenched workers into full-time work.
Under the scheme companies will be given a $1000 rebate for every eligible worker employed.
Labor believes these payroll tax changes will generate 100,000 jobs alone over two years.
Well that's $1billion to be spent on creating jobs in Victoria over the next 4 years! Previous Changes of Government Its interesting to look at the last four changes of Government in Victoria and what influence prevailing rates of employment may have had.
In October 1992 the ALP's Joan Kirner lost government with unemployment on an upward trajectory at 11.
7%.
In September 1999 the Liberals Jeff Kennett lost government with unemployment on the way down at 6.
9%.
In October 2010 the ALP's John Brumby lost government with an unemployment rate on the way up at 5.
5%.
And of course 29 November 2014, Dennis Napthine lost government with unemployment on the rise at 6.
8%.
If there is anything to take from these results it is that in three out of the four last changes of government unemployment was on the rise - the Kennett defeat being the exception.
So, in simple terms in order for the incoming government to remove unemployment as a factor from its re-election chances in November 2018, it needs to ensure that unemployment is certainly no greater than 6.
8% as it is today and in fact trending down.
So what does this actually mean? Well, based on the ABS statistics we can see that over the last two terms of government the population rose by 350,000 and 327,000 respectively and that participation rates dropped from a record high of 65.
7% to a still relatively high 64.
6%.
Over the same period unemployment rose from 5% to 6.
8%.
If we make the assumption that the population will rise over the next term of Government by 300,000 and that participation rates will climb to 65%, then in order to keep unemployment from rising beyond the current 6.
8%, the economy will need net job growth of 200,000 jobs.
Obviously this is significantly higher than what the incoming government is promising.
If the government delivers, on its 100,000 new jobs we could expect to see unemployment based on the assumptions above rise to 9.
8% and in that climate another single term government.
Payroll Tax Some in the incoming government are talking up the Payroll Tax change as being itself able to generate the 100,000 new jobs in just 2 years.
Really? Just to recap; the incentive being offered to employers is, that if you employ unemployed youth, the long-term unemployed or retrenched workers into full-time work your business will receive a $1000 pay-roll tax rebate.
So, if you operate a business with total salaries of less than $550,000 per annum you get nothing as you pay no payroll-tax currently.
For the rest of us, if we employ one of these eligible employees at the minimum wage we will receive a one off rebate of $1000 against the payroll tax of $1,962 incurred each year in employing the person.
If we employ an eligible person at the average wage, then we too will receive a one off rebate of $1000 against the $4,291 payroll tax incurred each year in employing the person.
Is the rebate welcomed by employers - of course.
Will it change employment decisions of employers - I would suggest that that would be highly unlikely.
Thankless Task So, as we welcome in the new government lets wish them well in the implementation of their Jobs policy and hope they can over deliver at least the 200,000 jobs we need to at least maintain the current level of unemployment.
However, recent history shows us that even a government like the Bracks/Brumby government which generated net job growth of 246,400 (the highest on record in a single term) can be thrown from office by the unappreciative crowd.
Source...