Friday, March 23, 2012

Treasury overoptimistic again

Last month, Treasury released its Budget Policy Statement, basically the fiscal assumptions which will underlie this years budget. In that statement, they made some projections about unemployment:


Now, the Department of Labour has just released its model of Short-term employment prospects: 2012-14, in which they make some projections about unemployment:

The unemployment rate is expected to trend down slowly over the entire period, to below 6.0% by March 2013 and to 5.4% by March 2014.
(That difference looks small, but its an extra 7,000 people without work, in poverty, having to scrape to get by)

So, basically we're looking at a longer, slower "recovery", with more unemployment, than the golden-eyed optimists at Treasury had projected. Who'd have thunk it? (And meanwhile, the government is planning to throw thousands of solo parents into the workforce to compete for nonexistent jobs. The millions spent policing that is simply wasted money).

Looking back through old Budgets, Treasury has consistently underestimated unemployment for the past three years. Their 2010 Half Year Economic and Fiscal Update, for example, projected 6.1% in 2011, 5.2% this year, 4.9% in 2013, and 4.6% in 2014. Its almost as if Treasury simply goes "the recession is over", and projects the same curve forwards, regardless of actual reality. Meanwhile, out in the real world beyond their well-remunerated ivory tower, jobs remain scarce, the dole queues remain long, and people continue to wonder why the government doesn't act.