Research Shows Abbott Government to Fall Short of 200,000 Jobs Creation

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By Vittorio Hernandez | January 2, 2014 2:05 PM EST

The Abbott government, a few months in power, appears to be headed to break some more of its election promises in 2013. One of them is that it would fall short by 200,000 jobs of its election vow to create 1 million jobs over five years.

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During the campaign, then Opposition leader Tony Abbott said he will under-promise and over-deliver should he become prime minister.

The forecast of 200,000 jobs short was made in an analysis by the Parliamentary Library at the request of Labor. However, the prediction is back by economists, reports The Sydney Morning Herald.

The 1 million new jobs, expected to double to 2 million within 10 years, would be the result of the scrapping of the carbon and mining taxes, reduction of red tape for business and improving productivity.

The study combined Australian Bureau of Statistics data and Treasury jobs growth forecast in the December mini budget, the Mid-Year Economic and Fiscal Outlook (MYEFO), and calculated that 620,000 new jobs would be created over the next four years. However, a fifth year would fail to reach the 1 million new jobs promised by Mr Abbott.

However, acting Treasurer Mathias Cormann insisted the government would meet the 1 million new jobs promise and blamed Labor for the dismal jobs forecast in the MYEFO.

He said, quoted by The Sydney Morning Herald, "It is no secret that we inherited an economy growing below trend, rising unemployment and a budget in very bad shape from the previous Labor government in which Bill Shorten was a senior cabinet minister ... MYEFO is a reflection of that."

However, shadow treasurer Chris Bowen countered, "We cannot continue to see the poor performance on jobs continue with mass layoffs, particularly in manufacturing, as the government abandons any meaningful role in fostering innovation and the high-skills and high-wage jobs that come with that."

Bill Mitchell, director of the University of Newcastle Centre of Full Employment and Equity, sided with the Opposition. He said the 1 million new jobs promise is "incredibly farfetched." He believes the shortfall would even be higher than the 200,000 forecast of the Parliamentary Library.

"They're talking about a very tough fiscal position in May ... if they are true to their word ... then they will be worsening the current situation, which is parlous," Mr Mitchell said.

Saul Eslake, chief economist of Bank of America Merrill Lynch, said for the 1 million new jobs promise to be reached, Australia's real gross domestic product growth rate much be between 4 and 4.5 per cent, but he noted that no one is predicting that kind of growth rate.

The Abbot government had already reneged on its election promises on school funding and he rollout of the National Broadband Network. It has also indicated changes to paid parental leave, the national disability insurance scheme and Medicare.

In his New Year's message, Mr Abbot said Australia should enter 2014 full of optimism and willing to have a go to improve the country.

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"We'll start new businesses, we'll build new houses, we'll undertake further study, make investments and plan a future. May we all be nearer to our best selves in 2014, government included," News.com.au quoted Mr Abbott.

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UK unemployment rates are now tied to the Bank of England governor Mark Carney's forward guidance. Rates will drop when jobless rates drop to below 7% (Photo: Reuters)
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