Tuesday, October 14, 2014

Don't fall for the election spin. Victoria's job creation record is appalling

Timing is everything when you're trying to stretch the truth.

Launching his six-point plan for jobs last week Premier Denis Napthine boasted there were 100,000 more Victorians employed than when his government came to office in 2010. The figure was correct at the time he quoted it, but it was an admission of failure. It meant the number of Victorians with jobs had climbed just 3.9 per cent at a time when Victoria's working age population climbed 6.8 per cent.

No state other than Tasmania performed as badly. Victoria's Coalition government inherited an unemployment rate of 4.9 per cent and will bequeath to its successor something close to the present 6.8 per cent. Australia's national unemployment rate was also 4.9 per cent when the Victorian Coalition assumed office. But it is now 6.1 per cent, well below Victoria's.

The beauty of Napthine's boast was the timing. He spoke on Monday. Four days later on Thursday the Bureau of Statistics released updated employment figures for September that marked down the Coalition's job creation record to 89,300.  Employment is now only 3.1 per cent higher than it was back in December 2010. Victoria's working age population has climbed 6.9 per cent.

The revised figures are a measure of both how much monthly job figures bounce around these days and of how weak Victoria's job creation record has really been. But it's all right. The premier has a six-point plan. It would be more impressive if much of it wasn't simply a (glossy) reprinting of the things he was doing anyway that have so far had little success.

Not quite the oldest trick in the book, the six-point plan dates back to at least 1976. The former ABC host Stuart Littlemore was working as a media advisor to the Tasmanian Labor Premier Bill Neilson at the time. As Littlemore tells it in his book The Media and Me, polling had established "with embarrassing clarity" the public perception that the Nielson government had achieved nothing...

To counter the perception Littlemore and Labor came up with the "Neilson Plan – a 15-point program to get Tasmania working". "Neilson launched the plan (little more than a repackaging of existing policies with addition of a few items such as a retirement option for state public servants at the age of 55) about three months before he intended to go to the polls," writes Littlemore. "Thereafter he worked 'the Neilson Plan' or 'my 15-point Plan' into most answers he gave to journalists, whatever their questions may have been."

Back then it worked. "The result was that by the time we go into the campaign proper the Neilson Plan was a fixed value. Nobody even questioned its content and the perception of a do-nothing government had been turned around ... because the journalists neglected their fundamental duty," writes Littlemore.

It's unlikely to happen this time, in part because Labor has produced its own jobs plan, released the day before the Coalition's. It has five points.

Labor's plan is the boldest. Daniel Andrews wants to establish a $100 million fund to provide payroll tax relief to companies who hire unemployed young people and long-term and retrenched workers. He'll also set aside $500 million for grants to "drive growth and create high-skill high-wage jobs", plus another $200 million for a Future Industries Fund and $200 million for a Regional Jobs Fund. He is silent on how he would be able to afford it.

Napthine is also talking of big sums, but is silent on how he will afford them and how many of them are rebadging of things he is doing anyway.

The sad truth for both is that there are limits to what state governments can do. More than anything else it's the condition of the national economy that creates jobs. Local factors such population growth, the mix of industries and housing and transport make a smaller difference at the state level.

The latest ANZ forecasts show the Victorian economy growing just 2.3 per cent this financial year. Only South Australia, Tasmania and the ACT will grow by less. The national economy will grow 2.8 per cent, the NSW economy 3 per cent.

Napthine and Mr Andrews can talk as big as they like in the leadup to the November election, but when it's over, jobs will be hostage to whatever Joe Hockey decides in his December economic statement to be delivered a few weeks later. The Treasurer needs to find billions to pay for billions to pay for the Iraq campaign, billions to pay for the measures that were blocked in the Senate, and billions to replace the tax revenue that's vanishing as the iron ore price slips. Andrews is unlikely to be able to put in a good word for Victoria.

And nor is Napthine. So little influence does Victoria's premier have over the Federal government  that in May Hockey cut grants to the states for schools and hospitals by $80 billion over ten years. Almost all of those states were governed by the Coalition.

It's fine to vote on the basis of who'll do the most for jobs, but it's not fine to believe that either will be able to do very much.

In The Age and Sydney Morning Herald