On 14 September, the Economic Society of Australia (Qld), of which I am the Secretary, is hosting the inaugural Ted Evans Public Policy Lecture at Customs House, Brisbane. The inaugural lecturer will be none other than former Treasury Secretary Ted Evans himself. Evans was the major advocate within the Treasury for floating the dollar in 1983, and led the Treasury during the GST implementation. But he may well be remembered by many for a profound observation he made on unemployment in the 1990s. At the time of Ted Evans’s retirement in 2001, the then Prime Minister John Howard observed:

Ted will be forever associated with that memorable phrase; in one sense, we can choose the level of unemployment which we are willing to bear; when discussing economic and social constraints on reducing unemployment.

While general economic conditions obviously play a large role in determining the level of unemployment at any time, Ted Evans’s famous phrase suggests we should review current policy settings (e.g. penalty rates, trading hours’ restrictions) with a view to changing those which are constraining employment. This is particularly the case for Queensland, where our unemployment rate remains stuck above 6 percent. In June, it was 6.3 percent (ABS trend estimate), significantly higher than the national average of 5.6 percent, not to mention the NSW unemployment rate of 4.8 percent, based on the June labour force data released by the ABS on Thursday.

While the volatile seasonally adjusted Queensland unemployment rate jumped 0.4 percentage points to 6.5 percent in June, this was likely a statistical aberration, as the labour market appears to have been improving over this year, vacancies are higher than they were 12 months ago, and nationally the labour market is performing reasonably well. My fellow Queensland economists Pete Faulkner and Nick Behrens are also positive about the Queensland labour market outlook:

Jobs report as expected, but it’s generally good news

Queensland employment growth stands out in June 2017

As I have noted previously, the positive trend in the labour market means the Palaszczuk Government will most likely be able to claim jobs growth was superior over its term than during the previous LNP Government’s term (see chart below).

That said, the Government remains vulnerable to criticism, because the bulk of the jobs growth has been in part-time jobs, and public sector employment has surged. This has led property market experts, among others, to question the true strength of the Queensland labour market, as reported recently in the Courier-Mail:

Buyers agent firm Propertyology warned the state’s jobs growth was “being artificially inflated by one solitary sector” – the public service.

Property director and Real Estate Institute of Australia hall of famer Simon Pressley said “it’s clear that Queensland’s economy is weaker than how it appears on face value”.

Certainly, the Queensland public service has been a major contributor to recent jobs growth in Queensland (see chart below based on the most recent public service data for March 2017*).

Growing the public service is one way of increasing employment, but it is generally not an efficient or sustainable way of doing so. We should instead reflect on Ted Evans’s point that the level of unemployment we are willing to bear is a policy choice, and re-evaluate those policy settings that restrain economic activity and employment growth.

*Note that full-time employment in Queensland is now slightly above the level in March 2015 (1.6423M) with the ABS estimating full-time employment at 1.6435M (in trend terms) in June 2017. Over the term of the current Government, full-time employment is now up by 13,600 or 0.8 percent.