Qld Government & Treasury disagree over jobs created by capital works projects – Treasury right, of course

A recent media release from the Deputy Premier Jackie Trad (Jobs bonanza for regional Queensland) appears to have contained a huge typo. The media release from Tuesday last week states:

“$200 million will kick off 723 projects and support almost 6,000 jobs across regional Queensland on economy-boosting infrastructure projects as part of the Palaszczuk Government’s Works for Queensland program.”

Somehow an extra zero was added on to the correct estimate of 600 jobs, so the media release incorrectly states that 6,000 jobs would be supported by the new $200 million program, which is absurd.

As the Shadow Treasurer Scott Emerson pointed out in Parliament this morning (see p. 269 of the Hansard proof), there is a rule of thumb in Queensland that every $1 million of capital expenditure supports around three jobs. For example, the Queensland Government has previously noted, in a media release last November, that the Townsville Super Stadium (a $250 million project) will support 750 jobs in the construction phase, and the $450 million Logan Motorway Enhancement Program will support “more than 1,300 construction jobs”. Incidentally, both these projects involve higher levels of capital works than the latest $200 million program, but would deliver far fewer than the 6,000 jobs claimed for the new program. It is obvious the 6,000 jobs estimate is absurd.

Based on the three jobs per $1 million of capital works rule of thumb, you would estimate that the $200 million of capital expenditure in the Government’s latest program would support 600 jobs, not 6,000. The rule of thumb, though imperfect, at least provides a ballpark estimate of employment impacts. 600 jobs is in the ballpark. 6,000 jobs isn’t even in the surrounding car park; it’s over the other side of town.

The Government might possibly argue that the 6,000 figure includes jobs indirectly supported via the supply-chain and not just those directly employed on the projects. But that would imply a ridiculously high employment multiplier of 10: 6,000 total jobs (direct plus indirect) divided by 600 direct jobs. Multipliers of over 2 are usually suspicious; a multiplier of 10 is absurd. There is no defensible economic model that would estimate 6,000 jobs flowing from $200 million of capital works.

My guess is that whoever wrote the Deputy Premier’s media release, or the original briefing on which it was based, saw the 600 jobs figure in another document and misread it or mis-typed it as 6,000. They possibly saw the 600 figure in this earlier media release from January, a media release which appears to rely upon the rule of thumb mentioned above:

“Regional Queensland councils are being urged to submit their job-creating projects after being allocated a share of the new $200 million Works for Queensland program…

…“The Palaszczuk Government is absolutely committed to creating jobs for Queenslanders and this innovative program will deliver on this commitment,” Ms Trad said.

“It will serve a double duty – supporting more than 600 jobs and upgrading important regional infrastructure across the state.”

So the Government was originally using the right estimate of 600 jobs, but has subsequently incorrectly referred to 6,000 jobs, and, instead of correcting its mistake and moving on, it has unwisely stuck with the incorrect figure.

On ABC News Tuesday night last week, a Government spokeswoman was quoted as saying that the original 600 jobs estimate came from Treasury, and that Treasury was wrong. But it was the Government spokeswoman who was wrong. The Treasury’s estimate was sound, and the Government ought to find a face-saving way out of this regrettable situation, perhaps by claiming there was a miscommunication between ministerial staffers and officials.

The Treasury is too important an institution to have its reputation called in to question by a nameless Government spokesperson, who was obviously trying to manage what they viewed as a purely political issue, without understanding the full implications of their criticism of Treasury.

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2 Responses to Qld Government & Treasury disagree over jobs created by capital works projects – Treasury right, of course

  1. Jim says:

    Gene

    Perhaps the Works for Queensland program uses a 1920’s style capital works program where bulldozers and other machinery are banned, and all replaced by human labour…….???? That way the jobs claim might be correct.

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