Jobs and Economic Crisis


Mr RICH-PHILLIPS (South Eastern Metropolitan) (10:09): I move:


That this house:


(1) notes the impact of the COVID-19 crisis, in particular the harsh lockdown, has unevenly impacted certain groups and industries, specifically:

(a) ABS figures show the number of unemployed Victorian women is now the highest on record at 146 500 or 8.8 per cent;

(b) the underemployment rate for Victoria is now 13 per cent, the highest in the country, and combined with the unemployment rate, a total of 20.4 per cent, with one in five Victorians either looking for work or more work;

(c) over the past 12 months Victoria recorded the largest drop in job advertisements of any state, with Geelong and the Surf Coast down 27.9 per cent, Gippsland down 16.9 per cent and Ballarat and Central Highlands down 13.3 per cent and that, together with Melbourne, these regions have recorded four of the five largest reductions in Australia;

(d) ABS payroll jobs and total wages data shows, since the pandemic began, payroll jobs in small businesses that employ under 20 people have fallen by 9.4 per cent and in businesses that employ between 20 and 199 people by 9.3 per cent;

(e) the travel and tourism, hospitality and events, fitness, creative industry and retail sectors have borne the brunt of the burden;

(2) accepts that Victoria has not provided commensurate targeted assistance that recognises the more severe impacts;

(3) notes that many businesses will be lost in the absence of appropriate additional support; and

(4) believes it would be prudent for the government to take further targeted steps to remedy these inequities.


Notice of this motion was given by Mr Davis yesterday. The motion highlights the jobs crisis that Victoria now faces—a jobs crisis and an economic crisis—as a consequence of the policy decisions taken by this government, the Andrews Labor government, over the course of the last six months in particular. But it is worth pointing out that the consequences of this government’s policies were being seen even before the COVID situation, and in many respects the budget situation we have now and the budget we saw yesterday was well on the path we have seen delivered before COVID started.


We only need to look at the budget update from the end of last year to see the trajectory that things were on in this state. In many respects COVID has come along at a convenient time for this government to mask the problems it had created.


But as a consequence of this government’s choices and its panicked response to the COVID pandemic we now have a major economic and jobs crisis in Victoria. We saw yesterday the government release a budget in which it forecast economic growth for the financial year just finished—that is, to 30 June 2020—to contract by a quarter of a per cent. But we now know that the official ABS figures, which came out last Friday, which would have been after the budget was finalised, actually show that the economy in Victoria contracted by half a per cent in the 2019–20 financial year. The government forecast that this year the economy will contract by a further 4 per cent. These are unprecedented numbers. We have not seen this level of contraction in economic activity in this state before. We have not seen the commensurate impact on employment that we are now seeing and will continue to see, on the government’s own forecasts, over the coming two years.


As I said, it did not have to be this way. It is not this way in every other state in Australia and it is not this way in many jurisdictions elsewhere around the world who managed to contain the COVID situation without destroying their economies and their workforces in the process. But this government knew better. This Premier knew better. They went down the path of what was effectively a scorched earth approach, and we saw after the initial response a then protracted lockdown, which affected particularly metropolitan Melbourne but also had flow-on effects for the rest of the state. We saw what started out as a strategy to flatten the curve—that was the terminology that was bandied around in this place ad nauseam by the Minister for Health in the first wave of the pandemic—abandoned later on for an unspoken strategy, which seems to have been elimination. We only need to see some of the rhetoric in the last week and the talk of 28 days now without mystery cases to demonstrate that that was in fact a strategy of elimination, which of course is unlikely to be achieved long term and which gives rise to the prospect of when cases do reappear in Victoria—as they will with any cross-border movement, be it international or domestic—further lockdowns and further scorched earth approaches as the government once again panics, as we saw over the last six months.


So we have had a scorched earth approach not dissimilar to a government seeking to eradicate weeds and vermin in a national park and deciding the way to do that is to burn the national park down. That is essentially what we have had over the last six months in this government’s response to the pandemic. What we saw through the middle of this year in particular, when we hit the second wave, was a distinct lack of planning and a distinct lack of strategy. On the question of strategy I go to the issue of what the government was seeking to achieve. In April it was very clear: it was to flatten the curve. It was to reduce the growth in the rate and number of COVID cases to allow the capacity in our health system to be increased to deal with the growth in the number of cases. It was to slow down the rate of growth in cases. It was not to eliminate the virus. There was no belief that we could magically eliminate this virus in Victoria. It was to slow down, by having social distancing, by restricting the movement of Victorians, the growth of the virus to allow the capacity of the health system to be increased.


We had the then Minister for Health in here talking about the number of intensive care beds which would be created, and to this date we do not know whether that was achieved. There are significant question marks over whether the funding that was put into the health system actually delivered the additional beds that the minister claimed would be created.

But what we do know is those beds were never needed. We never saw the wild forecast of hospitalisations and intensive care hospitalisations that were floating around in March and April eventuate. Even through the worst of the second wave, which was caused by this government’s incompetence, we never saw the rates of hospitalisation which had been forecast.


We did have a clear aim back in March, and it was to flatten the curve; it was to reduce the rate of growth so the health system could catch up. With the second wave—the panicked response to the second wave—there was no clear strategy. The Minister for Health while she was here—before she resigned in protest at the way she was thrown under the bus by the Premier—and the Premier in his own utterances in that second-wave response never once articulated what the government’s strategy was, what its objective was, what it was seeking to achieve in locking down the state and crippling the economy and destroying employment, what his objective was. As I said, we now hear talk of, ‘Oh, we’ve eliminated the virus, we’ve succeeded’, which of course is not the case. While we may not be reporting cases at the moment, inevitably it is still in Australia. Inevitably we will see new cases announced and the government is going to need to have a strategy to respond to them, and another scorched-earth approach is not the answer.


Worryingly for Victorian citizens, we saw the response to the outbreak in South Australia last week where the South Australian government overreacted in shutting down South Australia, and we had the Victorian government react in closing the border with South Australia. It is worth pointing out this is the first time that the Victorian border was closed, because through Victoria’s own second wave the Victorian border was open to interstate. Other states did not want us, but the Victorian border was open to people from other states. So for the first time we closed because of an outbreak of six, I think it was, in South Australia—we closed the Victoria-South Australia border. If that is going to be the reaction every time we have a single-digit number of cases in other jurisdictions, it is going to completely undermine any economic recovery and any jobs recovery that we see in Victoria, and it is worrying that there is that lack of a clear, articulated strategy, which most likely will lead to that sort of panicked and overstated reaction as we saw on the South Australian border.


And of course that will lead to undermining confidence. You cannot expect businesses to start to recover and you cannot expect businesses to start to employ people again if they have no certainty, if they cannot have any confidence in the environment in which they are operating. It is bad enough that the economic environment has been severely undermined without the government creating further uncertainty. The prospect that on any day of the week the Premier may come out and announce, ‘We’re locking down a part of Melbourne’ or ‘We’re locking down a state border’ or ‘We’re going to lock down regional Victoria’ because we have half a dozen cases completely undermines confidence.


We saw with the second lockdown, which began on 2 August, businesses had made decisions, businesses had planned. Hospitality businesses in particular had only just recommenced operations with severe restrictions on the number of patrons they could have in their venues. They had ordered food, they had ordered other stock only to be told they had to shut again. The damage that has done, the damage that did then and the damage the prospect of that does now to businesses which need to make investment decisions and which need to purchase stock with the threat of an erratic decision from government throwing them completely out of operating—it does enormous damage and completely undermines their confidence and their ability to get back on their feet. While that continues to be the environment in which they are operating, where erratic decisions of government can be made—and, as we saw last week, will be made—on the flimsiest of evidence, the prospect for an economic recovery is severely undermined and severely limited.


Now, I would like to put in context the numbers and the results we have seen, as articulated by the Australian Bureau of Statistics in its most recent labour force publications.

As members know, the ABS publish a monthly labour force set of data for every state and territory in Australia as well as for the nation. Looking at that monthly ABS data and comparing the way in which the labour force in Victoria changed from February 2020—which was before the onset of the pandemic and more particularly before the onset of the government’s policy response to the pandemic—with the most recent data of September 2020, we see that in Victoria there has been a loss of 245 000 jobs. From February to September 245 000 Victorians lost their job. The breakdown of male and female: 102 000 of those were male, 143 000 of those were female. In the split between full-time employment and part-time employment 159 000 of those jobs were full-time jobs, which highlights that perhaps contrary to expectations the biggest impact has actually been in the full-time segment of the economy, with 86 000 jobs lost in part-time employment. So this is a very significant impact in a short period of time.


As we saw in the budget papers yesterday, the government expects that to get worse, because the government is forecasting over the course of this year—and I highlight a lot of those losses were in the last financial year—a further drop in employment of 3.25 per cent over this year and a rise in unemployment to 7.75 per cent, which means we will see a further substantial increase in the number of people who are unemployed over the course of the 2020–21 financial year.


It is worth noting where those job losses have been. The ABS, in that same series of data, breaks the data down between greater Melbourne and the rest of Victoria. Not surprisingly 220 000 of those lost jobs are in greater Melbourne, which is a reduction in employment of around 8 per cent from the February peak. For regional Victoria it is around 25 000 jobs lost, which interestingly is about a 3 per cent reduction. The heaviest impact, obviously in terms of the number of jobs because of the density and in terms of the percentage reduction, is on metropolitan Melbourne, which reflects of course the fact that it was Melbourne which bore the brunt of the scorched-earth policies of this government. So 245 000 jobs were lost between February and September, with expectation from the government that more jobs will be lost over the course of this financial year.


Now, the question that generates is: what is the government doing about it? What platform does the government have to assist the restoration of these jobs, which it bears responsibility for destroying? I have already outlined it does not have a strategy. It does not have a clear strategy around COVID which gives businesses confidence that they can invest, gives businesses confidence that they can create employment. But what we did have was a budget yesterday which went down the path of pump priming. We have a budget which takes on $154 billion in debt, which is equivalent roughly to $23 000 for every man, woman and child in Victoria, which is an extraordinary level of debt accompanied by an extraordinary level of deficit funding.


It is interesting that in the budget papers yesterday the Treasurer outlined a forecast, or an estimate, provided by Deloitte Access Economics as to the impact of this budget—this year’s budget and the estimates over the next four years. Deloitte Access Economics have provided advice to the government, with the figure included in the budget papers, that they expect the settings announced yesterday—the spending announced yesterday and the spending over the next four years—will boost gross state product by $43.9 billion.

So the uptick, the boost in economic output, is going to be just under $44 billion as a consequence of the spending decisions of this government.


Now, anyone who studied high school economics or university economics is familiar with the concept of pump priming—is familiar with the concept of deficit spending to boost economic activity. Interestingly though, while Deloitte Access Economics forecast an economic boost from this budget of just under $44 billion, the deficit spending in this budget and over the forward estimates is just under $49 billion. So we are incurring $49 billion of deficit spending—that is, $49 billion of pump priming—to generate economic activity, by the government’s own estimate, by the government’s own consultants, of $44 billion. Now, normally with pump priming you look for a multiplier effect. If you spend $10 billion in pump priming you would like to see $10 billion or $20 billion or $30 billion in economic benefit. But here we are committing $49 billion in deficit spending over the next four years to generate $44 billion in economic activity—89 cents in the dollar return on that pump priming, which is an extraordinary outcome and does raise questions as to the effectiveness of some of the spending that we are seeing in this budget.


One of the things we saw in the budget papers yesterday was a so-called Jobs Plan, and there was a figure, a target—no detail provided as to what base, what time frame—of 400 000 jobs to be created, with 200 000 jobs to be created in the next two years. Now, the headline sounds good until you put it in context, and the context is that we have already lost 245 000 jobs. So the government meeting its own target means that in two years time 45 000 Victorians who had a job at the beginning of this year still will not have a job—except it is going to be worse than that, because the government expects unemployment to continue to rise and employment to continue to fall. So we are going to lose more jobs before the government assists or creates these 200 000 jobs it claims it will create over the next two years. More than 45 000 people who had a job at the start of the year still will not have one in two years time.


Now, earlier this year in response to the pandemic and the economic situation created by the government’s response to the pandemic the Liberal-Nationals coalition and the leader, Michael O’Brien, published our back-to-work platform Back to Work and Back in Business. It was published in May in response to the first wave and the economic circumstances arising from the first wave and refreshed last month in response to the even more devastating second wave. That policy document called on the government to do a number of things on the employment front, one of which was to commit to creating 380 000 jobs by 1 July 2022. Why 380 000? Because that is where the Victorian economy was supposed to be tracking prior to COVID. It was about getting Victoria back where it should have been—not getting Victoria partially back to where it was but getting it to where it should have been, replacing the jobs that have been lost this year and delivering the jobs which the government otherwise said it would have created over the next two years. So the government’s own target of 200 000 falls well short of getting anywhere near where the Victorian economy was or where the Victorian economy was going to be prior to the COVID situation.

The other target in Back to Work was to create 143 000 youth jobs by the beginning of 2022, and that reflects the number of young people that have lost jobs in this state. Young people—that is, under the age of 24—have been heavily impacted by the loss of jobs, by the employment situation which has developed and accelerated over the last six months in this state.


It is particularly important that we see and we encourage the creation of jobs for young people, because if young people do not have the opportunity to re-enter the workforce or enter the workforce for the first time, the risk of that having long-term consequences is very significant. We have seen that; we saw that in previous recessions back in the early 1990s when young people could not get jobs at a young age. It can have lifelong negative consequences for them and for their families, so it is particularly important that the challenge of youth unemployment is addressed and an environment is created which encourages the creation of jobs for young people. And this is not public sector jobs. This is not about the government hiring more and more public servants. It is actually about creating the economic environment which leads to the creation of businesses and the creation of employment.

And that leads to the third employment-related target in the back to work package, and that is the target of meeting 57 000 new apprentice starts by March 2022, being the start of the TAFE year in 2022. Why 57 000? That reflects the drop-off in the number of apprenticeships in Victoria over the last five years. Under the life of this government, since the election of the Andrews government in 2014, we have seen apprenticeships in this state decimated. The drop-off in apprenticeship starts, apprenticeship commencements and indeed apprenticeship completions, which is actually worse, has been extreme and will have substantial long-term consequences for this state. Now, one of the reasons for that is the framework we have for apprentices, the incentives—or lack of incentives rather—for employers to take on apprentices. I am not talking in terms of cost or salaries or that type of support, though the federal government has announced support in that area—whether it will be effective or not remains to be seen—but the fundamental issue of having young people who are suitable to take on apprenticeships.


Yesterday we saw an announcement from the Minister for Education that the distinction between VCE and VCAL will be removed over the next couple of years. Now this is potentially—potentially—a worrying direction for anyone seeking an apprenticeship or anyone seeking to hire an apprentice, because we saw a similar move back in the early 1990s with the first introduction of the VCE and the shutdown of Victorian technical schools and the development of a so-called single path in VCE, which completely undermined the capacity of young people who wanted to go into apprenticeships to get the core foundation skills they needed to start an apprenticeship.


VCAL was created to nominally address that. It did not. The lack of technical schools ensured we were still not giving the young people the skills they required to start apprenticeships. Yet now we are seeing, with the announcement yesterday, again an apparent merging of VCE, nominally the academic stream, and VCAL, the technical stream, in a single certificate, which if history serves and the current example of VCAL stream serves will mean we will not be providing the type of technical education which is needed to provide a pathway to apprenticeships.


In that regard I would like to refer to an email I received I think it was two weeks ago from an employer in western Victoria who is the proprietor of a small engineering business and who wrote about the plight of apprenticeships. And to quote his email:

When these students left the technical school they certainly weren’t a qualified tradesperson, but what they did have was a full education covering all the basics on how to use virtually all the tools and equipment etc that they would be expected to use in their future workplaces, whether that be as a builder, electrician, fitter and turner/engineer, mechanic, plumber, welder, wool classer etc.


For example, in fitting and turning, we were taught how to drill a hole in various types of metals, what speed to turn the drill at for the various drill bit diameters, what lubrication to use on the drill bit for the different materials we were drilling into, and then how to resharpen the drill bit when it became blunt or broken. We were also taught how to set up a basic metal turning engineers’ lathe, how to sharpen their cutting tools and how to use them—making all sorts of different items. We made model aircraft, we made stools to sit on, tables, all sorts of boxes to keep things in and so on.


It goes on to say:

The knowledge we gained over the full 5+ years in the trade subjects above-mentioned was immense, and just simply can’t be given, or even taught or passed on to the same level in a normal commercial workplace (on the job). The knowledge gained was immense over numerous different trades, giving a student exposure to several different potential job roles/careers, and once one was selected, there was a certain amount of cross-over tooling and basic expertise required.


It goes on to say:

It’s got to a point now where automotive garages, experienced plumbers, builders etc—especially smaller businesses are extremely reluctant to take on a school leaver simply because they haven’t had the technical schooling background that they themselves were privileged to have. They and we have all tried time and time again without success to employ school leavers without traditional technical school training. More often than not they only lasted a few months and it’s got to a point now where we simply don’t bother but look for a mature age person with the skills. I know several garages and plumbers that have decided to stay small with just one or two workers and just not bother with apprentices. It’s very sad—most of these tradies are now in their 60’s and have a wealth of experience to give, but the frustration of taking on someone without that technical school education is too great.


I can assure you it’s a sad situation for both the school leavers who don’t get an apprenticeship or start in industry, and the employers. I’ve spoken to numerous potential apprentice employers in all different trades, and they would LOVE the reintroduction of traditional technical schools. Like myself, they too see the VET system as having absolutely no comparison to a traditional technical school education. VET is merely putting a bandaid on the problem of unemployable school leavers.


That highlights one of the challenges we have with the lack of technical education in Victoria. The announcement yesterday of the government, combining the VCAL qualification and VCE, does nothing to alleviate that concern. We continue to have a lack of real technical education of the sort my correspondent highlighted—providing actual, real technical skills to young people to make them employable for apprenticeships. While that continues to be the case we will continue to have a crisis in attracting people, both employers and candidates, for apprenticeships.


We are in a situation now that we should not be in. The scorched earth approach of this government has created a jobs crisis, has created an economic crisis. It was not necessary. It has not happened elsewhere in the world. It has not happened elsewhere in Australia. The government was woefully underprepared to deal with the challenges of different industry sectors, as we saw with the flat-footed, deer-in-headlights approach as the lockdown started and individual industries were unable to get advice from government as to what they needed to do. Individual industries were not supported as they were subject to the government mandate that they shut their doors.


Despite the record spend we saw in yesterday’s budget, there is little confidence that the government has the platform and has the tools to help restore the economy, with 245 000 jobs lost to date and, on the government’s own forecast, more to come. We have a record spend, but what we do not have is the policy and the strategy to ensure that we can get Victoria’s economy and Victoria’s workforce back on track.