When Labor leader Anthony Albanese couldn’t say whether the unemployment rate was 5% or 4% on Monday, he might have had a point.
It’s 4%. But for a decade – the entire decade leading up to COVID – it never strayed too far from five-point-something per cent.
Melbourne University labour market specialist Jeff Borland points out that in March 2010, Australia’s unemployment rate was 5.4%. Ten years later, before COVID changed things in March 2020, it was 5.3%.
At the risk of being political – and politics is important, it will determine how we are governed for the next three years – economic conditions could scarcely be better for a government seeking re-election.
The economic things that matter most to most people are, in my view:
jobs – if employment is climbing rather than falling, most people are not at much risk of losing their job
economic growth and wages growth – if things are getting better rather than worse, even in small ways, people feel better about the future
the ability to buy a home – if it is getting hard, even for other people or for their children, they are concerned about what the future will become
mortgage rates – as long as rates stay low they know their own personal budget won’t go out of whack
What’s the boldest thing the Morrison government could do in next month’s budget?
It would be to forecast an unemployment rate below 4% (a rate of three-point-something), then to pledge to go further, to two-point-something.
Neither have happened for half a century; not since the long Coalition reign of Robert Menzies and his successors from the 1950s to the early 1970s, when unemployment was between 2 and 3%.
Astoundingly, both are now within Treasurer Josh Frydenberg’s reach in a way they weren’t mere weeks ago.
If you told someone a year ago unemployment was about to dive below 5%, to just above 4%, they wouldn’t have believed you.
If that person was an expert, and you said it would happen despite a Delta outbreak and lockdowns in our two biggest states, they might have said you had little idea of how the economy worked.
At the beginning of last year, The Conversation asked 21 of Australia’s leading economists what would happen in 2021 and 2022. At the time, the published unemployment rate was 6.6%.
None of them thought it would slip below 5% in 2021 or 2022.
Asked when the unemployment rate might eventually even touch 5%, none nominated 2021. Only two nominated 2022. The rest picked dates years into the future. Three picked “not for the foreseeable future”.