The Reserve Bank’s quarterly Statement on Monetary Policy highlighted growing concerns about high and rising unemployment in the face of fading government support.
The RBA has been forced to enact extreme measures to support the economy because the Morrison Government is failing to prevent the jobs crisis from getting worse.
It makes no sense for Scott Morrison to be pulling support out of the economy when unemployment is expected to be too high for too long.
The Reserve Bank highlighted that:
- “Growth in employment is expected to be subdued over the next few months, as policy support measures, such as JobKeeper, are tapered”;
- “the pace of improvement [in employment] has slowed since August”;
- “Employment remains well below its pre-pandemic level and measures of labour market underutilisation are high”;
- “The outlook [at the November meeting] implied a large shortfall in activity and employment from levels that would be consistent with full employment”; and
- “There is a risk that business insolvencies will rise by more than expected as government support programs are tapered, slowing the recovery in activity, reducing investment and placing upward pressure on the unemployment rate.”
The Morrison Government’s decision to prematurely rip support out of the economy coupled with the lack of a proper plan to get the place moving again is risking more job losses, more business closures, and jeopardising the recovery.
Today’s Statement follows comments by the Treasury Secretary, Stephen Kennedy, who warned that “given the lack of conventional monetary support available, the recovery could falter without a strong fiscal policy response”.
The Liberals and Nationals’ decisions to cut JobKeeper, cut JobSeeker and exclude many Australians from the new hiring credit scheme will mean that the recession will be deeper than necessary and the unemployment queues longer than they need to be.
Australians need and deserve a comprehensive economic plan for the recovery to prevent a trillion dollars of debt and higher unemployment for longer being the only lasting legacies of this recession.
FRIDAY, 6 NOVEMBER 2020