In its 2019-20 Mid-Year Fiscal and Economic Review released in mid-December, the Queensland Government revised down the state economic outlook, with economic growth revised to 2.5%, down from 3%, and the unemployment rate revised upwards to 6.25% from 6% for 2019-20. These revisions were sensible, in my view. Regular readers will know I’ve been concerned about the strength of the Queensland economy for a while now.
One of the consequences of our under-performing economy is that long-term unemployment in Queensland has not fallen as it has in the rest of Australia over the last few years. Using the latest ABS estimates up to November 2019, see how the long-term unemployment rate increased over 2013 to 2015 and has remained much higher than in the rest of Australia since then (see chart below).
I am defining long-term unemployment as the situation where a job-seeker has been unemployed for six months or longer. In November 2019, Queensland’s long-term unemployment rate was 2.6% compared with 1.8% in the rest of Australia. I should note these rates are much lower than the historical highs following the early-nineties recession of 4.7% for Queensland and 5.8% for the rest of Australia.*
The persistence of a long-term unemployment rate of around 2½% in Queensland, in contrast to the fall in the rate in the rest of Australia, is consistent with my view that Queensland has been under-performing the rest of Australia for a while now. The Queensland Government urgently needs to review the full range of policy and regulatory settings which could be constraining business investment and job creation.
One of the policy areas which should be investigated is vocational education and training. Despite Queensland being a fair way away from full employment overall, we are seeing an increasing reliance on temporary skilled migration to fill those positions for which shortages of skilled labour are emerging. The Courier-Mail today reports:
FOREIGN tradies are flooding into Queensland as the number of skilled worker visas skyrockets and the nation faces an apprenticeship crisis.
Mechanics, chefs, welders, carpenters and electricians were all trades which saw a noticeable increase for temporary skilled worker visas granted from 2017-18 to 2018-19.
It has been reported that apprenticeship numbers have been falling and the federal government is being criticised by the federal opposition over its cuts to TAFE funding. But isn’t TAFE a state government responsibility?
This is a good example of our dysfunctional federation, brought about by the so-called Vertical Fiscal Imbalance, which I discuss in my book Beautiful One Day, Broke the Next. Each level of government blames the other for policy and program failures. The federal government blames the states for poor administration and the states blame the federal government for not providing enough funding. We’ve known about this problem for many decades. Regrettably, we’re about to enter another decade with no resolution in sight.
*Based on the Labour Force Survey data which are available since February 1978. We don’t have comparable data for the 1930s or 1890s depressions.