CTU Media Release

6 May 2013

Government books show they can afford to do more to create jobs

“The last financial statements of the government before the Budget show it has room to do more on creating jobs and address New Zealand’s high unemployment rate,” says CTU Economist Bill Rosenberg.

The statements, released this morning for the year to the end of March, show that it is ahead of forecast on tax revenue, expenses, deficit and debt.

“Treasury points out that the main reason for being ahead on tax revenue is not that wage and salary earners are earning more in total, but that more low income people are out of work so the remaining people in work have higher effective tax rates than expected. Similarly, more is coming in from tax on investment income as a result of the booming share market.”

“It’s only fair and well overdue that more was spent on those out of work and in creating more jobs. The Government’s record on unemployment has been very poor. To the extent we see growth in the economy it is largely jobless growth. Currently New Zealand has the fifth highest GDP growth rate in the OECD [according to the OECD], but we have the third worst unemployment rate among the 10 fastest growing economies. Only the US and Estonia are worse, and they have been through much worse times than New Zealand. Many countries growing more slowly than New Zealand have less unemployment: Norway, Luxembourg, Iceland, Korea, Switzerland, Austria, Germany, Japan, and the Netherlands all have lower unemployment rates – but lower GDP growth rates.”

“The government should be putting more money into assisting people when they face unemployment, with more intensive support for finding jobs, retraining and income replacement. It could be expanding enrolments into tertiary education and industry training, and rather than laying public service staff off, giving them other work that self-evidently needs to be done. It should be expanding programmes that give unemployed people jobs doing tasks that are needed in the community, and helping local government to do more too. They have announced some belated improvements to government procurement procedures that may make it easier for local firms to get government contracts, but they could do much more to buy locally. And the government could actively support local industry, especially manufacturing, including by management of the exchange rate,” says Rosenberg.

“We will be looking for initiatives like this in the Budget next week”, he said.

ENDS

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