TREASURER:
In October unemployment in Australia fell to 5.3 per cent, the lowest unemployment rate in a generation.
Since we began recording unemployment data on a monthly basis, back in 1978, unemployment has not been recorded lower. And you have to go back to the quarterly results, back as far as 1977 - back more than a quarter of a century - for unemployment to be recorded at a level as low as it stands in Australia today.
This is a result which I believe all Australians will welcome and take pride in. The fact that we have more Australians in work than ever before and the fact that our unemployment rate is the lowest in a generation.
In the month of October employment increased again by around about 43,700 people, about 19,000 of those were in full-time jobs and over the course of the last year 243,000 new jobs have been created in Australia and full-time employment has increased by 173,000. Over the course of the last year 243,000 new jobs have been created in Australia and full-time employment has increased by around 173,000.
Since March of 1996 when the Coalition Government was elected 1.4 million new jobs have been created in Australia. And that is extraordinary jobs growth and it has led to the lowest unemployment rate in more than a quarter of a century. That gives much better opportunities for young people in our community today. Much better opportunities for mature aged workers that want to remain in work. I want to make it clear that you can only produce jobs growth off the back of a healthy business sector. It is a healthy business sector that creates real jobs for people and gives them security of employment.
Our consumer confidence which was measured yesterday is almost as high as it has ever been in Australia and that is because there are more people in work than ever before, interest rates are low, businesses are profitable and work opportunities are being created. This is the result of economic reform. The hard work of economic reform has lowered unemployment to its lowest level in more than a quarter of a century and it is important that we continue the work of economic reform in Australia if we want to lock in these results and if we want to give better opportunities for our fellow Australians.
But I think we can sit back and say that as the reforms of yesterday have created the jobs of today, so the reforms of today will create the jobs of tomorrow. We should not let it rest here. Australia must continue to try and put in place the best economic policy that we possibly can so that we give the greatest opportunities that we possibly can to our young people and to our citizens of tomorrow.
JOURNALIST:
Can this sort of jobs growth be sustained?
TREASURER:
Well you see the unemployment rate goes up and down from month to month but the important thing about this is that it is the 14th consecutive month that unemployment has been below 6 per cent. So it now appears as if structurally we have improved things. Structurally unemployment has moved down a notch and the task, of course, is to lock in an unemployment rate below 6 and try and move towards an unemployment rate that is closer to 5. Now it will vary on a month to month basis by small amounts. That’s just the statistical reality but if you can lock it in below 6 and move increasingly towards 5 you will get a new structural improvement, a new low in unemployment and a new high in job creation.
JOURNALIST:
(inaudible) a lower unemployment rate is (inaudible) wage pressure. Are you concerned at all about (inaudible)?
TREASURER:
Well I would say this, that if we were to get wage pressures building up in the economy then it would threaten the kind of job creation and it would threaten the low unemployment rates. The worst thing that we could do is say we have had this once in a generation result, let’s now unleash negative forces because those forces would take that once in a generation result away from us. So I would say wage restraint, wage increases based on productivity improvements - as we have had in recent years - creates more jobs for more people. And if we ever lose sight of that then we will lose sight of the goal of providing work for all those Australians who want to work. That ought to be the goal of economic policy – for those Australians that want to work, the opportunity to find a job.
JOURNALIST:
Treasurer doesn’t this take the pressure off industrial relations reform? If the job figures are so stunning then why (inaudible) reforms?
TREASURER:
It was said probably seven or eight years ago, people were saying, that full employment in Australia would be between 6 and 7 per cent. We have proved that was wrong. We have proved that you could lower the unemployment rate below 6 or 7 per cent. And if we had structural improvements in industrial relations and unfair dismissal then we might be able to structurally take unemployment lower again. We won’t know until we try. But I wouldn’t say: “…these are the best figures in a generation, they are the best figures in more than a quarter of a century should we say that is enough, that we don’t have to work any more?” I think what we ought to say is having got an outcome like this let’s see if we can do even better in Australia. Let’s take the structural changes and see if we can actually get this down towards 5 per cent. Let’s try and test the limits of employment. The goal of economic policy should be for every person that wants to work, the opportunity to find a job. That ought to be the goal.
JOURNALIST:
Mr Costello there’s another 6 per cent of the labour force on the disability support pension. Do you think that reform to disability support pension could get another 1 or 2 per cent of participation in the labour force?
TREASURER:
Yes I think reform of the disability support pension would increase participation. The disability support pension should not become an alternative to New Start or Job Search. The disability support pension is available for people who can’t work. But if you are capable of even part-time work, I think with retraining and encouragement, we should try and encourage you to participate in the labour force and that would lift participation. We have got low unemployment at the moment and actually the participation rate is quite high. What we have got to keep focussing on is not just lowering unemployment but also increasing in the participation rate. That is the longer term issue that I have been banging on about now for years – that as the number of people of workforce age is more or less constant or static we have got to lift the participation of that static number in the workforce. And reforming the disability support pension is a big way of doing that.
JOURNALIST:
Will altering those participation rates (inaudible) wage pressure and/or the unemployment rate itself?
TREASURER:
Well it is quite possible that if you lifted participation rates the unemployment rate could edge up. That is quite possible. But that shouldn’t deter us because what we are on about now with unemployment low is lifting the participation rate. And that shouldn’t deter us in the slightest. You know, there are some people that say “…oh well, it is possible that, you know, some of the unemployed people are being hidden on the disability support pension.” To which I say, well let’s reform the disability support pension and find out, and let’s take that on as an issue. This is a genuine reform.
JOURNALIST:
Mr Costello would you favour re-examining the work test requirements on sole parent pensions?
TREASURER:
Well we have put in place some measures which require parents to meet with case managers and to work out a plan for their re-entry into the workforce at various stages. And I think that is a good plan. I think we have got to look at that and give it a chance to work.
JOURNALIST:
Just on participation rates again, does the Government have any stated targets?
TREASURER:
No we haven’t stated a numerical amount. But the participation rate in today’s figures was 63.7, up from September. It is close to the all time record - not quite an all time record - but it is close to it. And my point is we ought to work at increasing those participation rates, particularly amongst people who have low participation rates and we know who some of these people are. Men over 45 have a low participation rate by international standards. One of the reasons could be that the disability support pension is discouraging them from actively seeking work, that is why I keep mentioning that as an important reform.
JOURNALIST:
Mr Costello with the rate rise in the US overnight and also pretty strong (inaudible) figures here, are you concerned the upward pressure on interest rates here?
TREASURER:
Well as expected the United States raised interest rates overnight by another 25 basis points to 2 per cent for its official rate. It is the fourth increase in the United States this year but from an abnormally low base. The fact that the United States is increasing interest rates indicates that authorities in the United States are now becoming more confident that their economy is recovering. But Australia and the United States have been on different economic paths now for three or four years. The United States was a recession economy, the United States was shedding labour. Australia was a growth economy, Australia was increasing employment. Our economic path has been much stronger than the United States economy. We welcome the fact that the United States is now recovering. As a consequence of its recovery the authorities in the United States are now changing monetary policy. But that does not have implications for Australia. It is Australia’s path which will determine Australia’s monetary policy.
JOURNALIST:
Are you troubled by the big spike in investment housing finance (inaudible)?
TREASURER:
I don’t think it was a big spike. I think if you look over the course of the year finance for housing has actually declined over the course of the year. You will see from month movements, zig zag movements, but when you look at it over a period we believe that finance for investor housing and credit in relation to housing, the rate of growth has declined. And we think that is consistent with a cooling housing market.
JOURNALIST:
Mr Costello the Treasury paper suggests that the company tax rates could be lowered. Is this something that you would support?
TREASURER:
Sorry which paper is this?
JOURNALIST:
It is something that is out today suggesting that there is a global trend towards declining company tax rates. Do you support a further decline in the company tax rate in Australia?
TREASURER:
Well we have cut the company tax rate in Australia from 36 to 30 per cent and I think that is quite a competitive rate and I am not putting on the table the prospect of further cuts in relation to company tax at this stage no.
JOURNALIST:
The US rate rise, does that have any particular impact on Australian companies and/or markets? Not so much monetary policy but the fact that the rates are rising in the US have any bearing (inaudible)?
TREASURER:
Oh I don’t think so. I don’t think it would have a large effect. No.
JOURNALIST:
Will this tight labour market exacerbate skills shortages that are already appearing in sectors such as the resources?
TREASURER:
Yes I think Australia does have skills shortages of qualified tradespeople and it is particularly apparent in the resource sector which is very strong at the moment. The Australian resources sector, particularly exporting to China is in a very, very healthy state and it is coming up against labour shortages and in particular skills shortages. What we have to do, is we have to work at improving training for skills. And a big part of what we announced in the election for these Australian Technical Colleges is to actually get more kids into technical training to produce more kids that have skills. We are actually importing skills at the moment as part of our immigration programme. We are giving priority to people who want to come into Australia who have skills training to try and deal with those skill shortages. That is one way of going about it but another way and an important way is training our own children with better opportunities in apprenticeships and in trades to fill those skills. And I will make this point, not every child is best advised to go into university. There are wonderful opportunities in trades where we have shortages at the moment, where there are great job opportunities and where young people would have very prosperous careers. And I would urge young people to consider trade training as a future occupation. We need you and because there are the shortages you will do rather well. Try employing a plumber these days, it costs quite a lot of money. Okay, thanks very much.