Interim economic forecasts released by the OECD in September have the Australian economy growing at about half the forecast global growth rate of five percent for 2021. This of course means that unemployment will not decline at the same pace as many other nations but it could if we adopt more aggressive stimulus measures. The OECD has made it clear that winding back stimulus measures now will stifle recovery and prolong hardship. Most economists agree.
Despite some welcome growth in employment following the winding back of COVID-19 restrictions, South Australia is underperforming compared to the nation. While the latest ABS jobs figures show total employment grew by around 12,000 in SA, the unemployment rate remained stuck at 7.9 percent. To the surprise of almost all commentators the national rate declined from 7.5 to 6.8. It declined in all other jurisdictions except Victoria where it rose marginally from 6.8 to 7.1 percent. This was also a surprise given the difficult circumstances that state has endured. South Australia now has the highest unemployment rate in the country. To ensure this is temporary will require boldness on the part of both the state and federal governments.
A judgement call has to be made about how much fiscal stimulus is necessary to shift the dial. If it is insufficient, as it is at the moment, unemployment will remain stubbornly high and hardship will intensify. Parsimony is the enemy of recovery.
A combination of short- and medium-term stimulus measures is needed, targeted at individuals, households, companies and our public institutions. As always, these must be funded jointly by the federal and state governments. All the major lobby groups have had a say about what this might comprise, calling for urgent action. Over the next few months we can lay the foundations for a much faster recovery. Additional spending on construction and infrastructure projects is essential but so too is spending on social infrastructure – health, education, ageing and disability services – all of which are labour intensive.
A smart recovery strategy might also include more robust measures to help deliver higher levels of local content and employment in major projects. We should also extract the maximum innovation dividend from public spending on projects, encouraging contractors and public agencies to accelerate the uptake of new design and construction methods, particularly advanced manufacturing and digital technologies. We have to leverage maximum economic and jobs benefit from the $90 billion shipbuilding projects based in South Australia. Over the medium term, thousands of jobs could flow from South Australia aggressively pursuing a low-carbon circular economy agenda by putting in place a range of incentives to recycle and reuse more or our products. All of this requires investment in research and innovation, creating jobs in our universities and industry.
Our arts, cultural, entertainment and sporting sectors have been devastated by the COVID-19 crisis. Their revival must not be seen as a luxury we cannot afford but rather an investment in our psychological and physical recovery, a critical foundation for richer, more rewarding and enjoyable lives. They must be the focus of major stimulus measures along with our ailing higher education sector which is also in crisis. A slow recovery increases the risk that we lose critical mass in multiple sectors, fuelling a self-reinforced cycle of decline rather than growth. History tells us how painful that is and how critical it is that we take urgent steps to avoid a protracted recession.
The economic crisis is cutting deeply into our social, cultural and economic fabric. The media has not been spared the pain. We will be much the poorer for the loss of The Adelaide Review and its fine team led by Amanda Pepe. I am proud to have been a long-time contributor and grateful for the opportunity to be involved. Thanks to all the editors I have worked with over the years. The Adelaide Review has delivered plurality of perspectives where too often that is missing. It has shone light on issues that are under-reported, not reported, under-appreciated and under-valued. It has been a place for scintillating writing, provocative writing and wonderfully creative writing.
Writing this article is like saying goodbye to an indulgent friend, one who has listened to me, given me a voice and left me feeling better than I did before I met them. Thanks to all of you at The Adelaide Review, past and present. It has been a great pleasure and a privilege.
Broadcaster Edward R. Murrow may have said it best: “Good night and good luck.”
John Spoehr is Director of the Australian Industrial Transformation Institute at Flinders University in South Australia.