Yesterday afternoon I had a good chat with Pat Hession on Townsville ABC Radio about the latest discouraging unemployment data for my old home town of Townsville. Readers will be familiar with the vastly different economic conditions across Queensland (see my post on the June ABS labour force data), and the latest detailed regional labour force data from the ABS confirm just how bad economic conditions are in Townsville (see chart above), as the region struggles at the end of the mining boom, and after it has suffered large cuts to public service jobs in recent years. The Townsville Bulletin reports today that:
“TOWNSVILLE has recorded its worst unemployment rate in at least 20 years as the business community pleads for government investment in major projects to create jobs.
Australian Bureau of Statistics figures released yesterday revealed a 14.8 per cent unemployment rate for June.
The jobless rate is the worst in ABS records going back to 1998. The next worst was 14.2 per cent in February 2003.”
The Bulletin is reporting raw, seasonally un-adjusted data from the ABS and it is important to recognise that, due to the relatively small number of households sampled by the ABS in the Townsville region, there is a large degree of sampling error in the unemployment rate estimate. So a smoothed “trend” estimate is likely to give a better reading of the unemployment rate. Using a twelve-month moving average, the Queensland Treasury estimates the current Townsville unemployment rate at 9.7 percent (and rising), while Cairns region economist and former London investment banker Pete Faulkner from Conus estimates the trend rate at 12.6 percent using a more sophisticated statistical technique (see Pete’s latest post Regional jobs data; improving for Cairns, worsening for Townsville). I suspect Pete’s estimate is closer to where the real Townsville unemployment rate is, as it is not as backward-looking as the Treasury trend estimate.
I doubt that major projects can come quickly enough and absorb enough local unemployed workers to make a major impact on the regional unemployment rate, so I have not called for major projects as a solution to Townsville’s unemployment problem. (Also we need to consider whether major projects pass the cost-benefit analysis test and are good value for money, of course.)
A summary of my conversation on Townsville ABC Radio yesterday with Pat Hession by the Insentia media monitoring company which was forwarded to me by a contact gives a reasonably accurate summary of the points I made, including the need to cut taxes and charges on business that are holding back job creation (e.g. payroll tax):
Hession says there is plenty of interest in the employment market. He says there are not enough jobs to go around. He says Tunny is a former Treasury Economist. Tunny shares his thoughts regarding Townsville’s unemployment rate. He mentions the figures are from the ABS. Hession mentions there are significant job losses through the closure of Qld Nickel. Tunny mentions the Townsville Chamber of Commerce stated that they have had significant job losses. He says there must be a substantial flow on. He says it is not just Qld Nickel but the mining downturn itself. He says the drought is affecting the economy too. He mentions there are positive signs in the construction industry. He says the economy is not in a good state. He says the Townsville Bulletin has recently reported an increase in bankruptcies. He makes suggestions on what governments can do to improve the situation. He says he suggested the relocation of something like Work Cover in the Courier Mail a few months ago. He says it would be great if a significant government agency can be moved to Townsville. He says governments could look at cutting the cost to businesses hiring people. He says they could look at cutting stamp duty. He says there is a limit to what the government can do. He says people in Townsville need to accept that things will be tough for a while. He says it may take some time for things to get better. He mentions JCU has been doing great.