this year’s federal budget brings some good news for the labour market.
It has a focus on creating jobs by stimulating the SME sector and announcing changes to childcare support, which enables more skilled workers to return to the workforce.
The government has placed an emphasis on the creation of jobs in Australia. A big part of this is the announcement that small businesses will get an immediate 100 per cent tax write off for assets costing less than $20,000, as well as the reduction of tax for small business owners - those with annual turnover under $2 million. This will allow startups and SMEs to stimulate jobs growth, as they can improve their cash flow and create new employment opportunities.
The SME sector is the biggest employer in Australia and offers significant potential for innovation and the creation of new jobs and industries in the coming years. The simulation package that has been announced is likely to have a positive impact on jobs by freeing up cash flow to enable these businesses to grow and invest in their future.
In addition to this, the treasurer has announced the Australian Infrastructure Facility, will 'unleash our nation’s potential. With $5 billion available for concessional loans for infrastructure in the north of the country, as well as $101.3 million in funding over four years to improve road infrastructure for cattle supply chains, these investments in the North will create jobs. More importantly, it will create an infrastructure that will enhance Australia's capability to interact with Asia and maximise the job potential the free trade agreements have created.
There is also some good news for the unemployed youth of Australia in this budget. With youth unemployment more than double the national average, it is good to see the government starting to take some action with a $330 million package. It delivers a Youth Transition to Work Program, which includes 6000 work experience places that will help young people get the essential experience employers are looking for.
The youth of Australia is an important part of Australia's economic future and, whilst we think there is much more that needs to be done to support young job seekers, combined with the focus on SMEs, will help create employment opportunities for young people.
whilst the 2015 budget is generally positive for jobs there are also some challenges it is likely to present and expected to cause the short term unemployment rate to rise.
In the last 12 months, we have seen increases in the Workforce Participation Rate causing a rise in the unemployment rate, due to the slower growth in new jobs. With the changes to childcare likely to stimulate more skilled workers to return to the workforce, unemployment is likely to rise if new job vacancies do not outpace rises in the participation rate.
When you see this combined with the forecast budgeted job cuts in the public sector and the bleed of jobs we are still seeing in the resources sector, it is highly likely we will see our unemployment rate rise above the predicted 6.5% in the short to medium term. A lot will hinge on SMEs starting to spend money and hire new employees.
The Northern Territory is also likely to face a different kind of jobs problem, where it is already experiencing a talent drought. The unemployment in the NT is the lowest in the country at 4.5 percent and with a participation rate that is the highest at 76.4, its challenge will be to find the workers it needs. It is already hard to find skilled workers in the North.
With the increased investment and potential new businesses that can be created to market Australia to Asia, the challenge will be to attract workers to the North and maintain wage rates when demand is likely to create some of the wage issues we saw during the mining boom.