Employment reality check

Employment reality check. It’s easy when you are an economist, banker or Opposition politician safely in well paid employment to spruik the need for a rise in interest rates and a cut back in government spending. It doesn’t make the same sense when you are one of the 615,900 the Australian Bureau of Statistics reported this morning were looking for work last month.

The global financial crisis might have gone but the unemployment rate in February at 5.3%, up a marginal 0.1 points on the previous month, was still well above the 4% rate before the crisis began.

As the stimulus spending by the Federal Government tapers down in coming months the scope for a rapid fall in unemployment declines as well. Thus a Reserve Bank Board mindful of its responsibilities towards creating full employment as well as controlling inflation should consider it has done enough on the interest rate front for the time being anyway.

Perversely it’s good news for the Government. The prospect of an interest rate rise next month is now much less which gives the Government more scope to hang on until early July before holding a double dissolution election. That there will be such an early poll is looking more likely every day as the Coalition, with the support of the Greens and independents, plays the obstructionist in the Senate.

The enthusiasm which Greens, Fielding and Xenophon have to knock back Labor’s legislation is easy to understand. Their electoral prospects are enhanced in the next Senate vote is for all positions. A half size quota is easier to obtain than a full one. Why the Coalition has embarked on the oppose at all costs strategy is less easy to understand. Tony Abbott’s best chance of becoming Prime Minister is surely the hope that given time Labor will make more mistakes like the insulation debacle and that economic conditions reach the point where interest rate rises are necessary and home owners really begin to suffer.

The spin keeps coming. First it was an investment in human capital. Now, according to Tony Abbott on Fox News yesterday, his hefty proposed tax on big business to pay for paternity leave, is nothing more than “a modest levy”. I like the advice Harvey Tarvydas gave to Labor yesterday when commenting on my snippets yesterday that it should follow the Liberal lead and start calling its emissions trading scheme “a most serious investment in saving the human race.”

A dash of wage inflation. With unemployment at its current level Australia might not have to worry about wage push inflation but the market is a wonderful thing to behold as Chinese manufacturers are learning. With the country’s exports again surging the demand for labour is forcing costs higher. The China Daily reports this morning:

An example of US hypocrisy. The United States is reportedly annoyed at the decision of Australia to look again at whether imports of beef should be allowed from countries where there have been outbreaks of Mad Cow Disease. Apparently they think our Government is using quarantine as an excuse to prevent free trade. Meanwhile Brazil has successfully taken the US to the World Trade Organisation because of restrictions on cotton imports and is now threatening to take punitive action against US products as the international trade rules allow. And the US reaction? That Brazil is being unfair.

What leaders wear. Dark grey suit, red tie, white shirt = the no-fail outfit of a world leader. Oh dear me, it seems that little equation ran through the heads of all three leaders yesterday morning as they hopped out of the shower. Was there a reason? Is it a commemorative tie? Did Therese just want to avoid the traditional navy blue stripe?