Frydenberg frames election around jobs, taxes, growth

As economic propositions go, KPMG’s call for net migration to be lifted to 350,000 a year to make up for the collapse in overseas arrivals during the pandemic is tempting. Such a rise would boost the economy by an extra $120bn and raise GDP by 4.4 per cent by the end of the decade, according to analysis by the firm’s chief economist, Brendan Rynne. Neither major party is on board. The Morrison government is committed to permanent skilled migration of 160,000 a year and opening the nation as quickly and safely as possible, Omicron permitting. Anthony Albanese refuses to back even that moderate increase. He favours an “Australians first” approach to filling job vacancies, which are at 13-year highs. It is clear, however, Australia does not have the population to fill skills shortages. In engineering and science the education system is not producing enough graduates.

There is no doubt, Patrick Commins reports, that skilled migrants return a “fiscal dividend’’ to consolidated revenue, paying more in tax than they take in support payments. Dr Rynne points out overseas migration added 10 per cent to the size of the population over the decade to 2019, and the Morrison government should be targeting a similar contribution in the 10 years to 2029. The Australian has long supported a larger nation, and endorses welcoming 160,000 skilled migrants a year. A larger intake, however, would place additional stress on services, including transport and healthcare in growth corridors in the outer regions of Sydney and Melbourne, especially, where congestion is a longstanding problem.

The current pace of economic recovery makes opening to more skilled migrants imperative. Job numbers have surged by almost half a million since last year’s eastern state Covid lockdowns, with the economy poised for a new year job boom. With Treasury analysis showing jobs are now 57 per cent higher than pre-pandemic levels, it’s little wonder Josh Frydenberg says the election will be a referendum on jobs growth, tax policy and economic management.

An additional 485,000 jobs were available in November, he writes, compared with the trough in September caused by the Delta lockdowns in NSW and Victoria. Unemployment is at 4.6 per cent, its lowest level since the Howard-Costello era. The scarring of the labour market that lasted for years after the 1980s-90s recessions has been avoided. The jobs surge is taking pressure off government outlays and increasing tax revenue. Since early November, 33,000 Australians have come off welfare. The Covid Disaster Payment, which supported 2.3 million people who lost work due to Delta, has ceased. As the Treasurer says, the economy is set for an even stronger rebound as states close in on vaccination rates of 90 per cent.

Writing in The Australian, Mr Frydenberg has the gloves off, reminding shadow treasurer Jim Chalmers of his July statement that any decision-maker should be judged on what happens to unemployment. Dr Chalmers said: “The biggest test of this government’s management of the recession and its aftermath will be what happens to jobs.’’ Mr Frydenberg also puts the blowtorch to Anthony Albanese’s small-target strategy, delving into his earlier support for a wealth tax, inheritance tax, mining tax, congestion tax, carbon tax, opposition to tax cuts for the “big end of town’’ and to Hawke-Keating reforms on financial market deregulation, government asset privatisations and tariff cuts. Voters are entitled to know Mr Albanese’s economic philosophy as the alternative prime minister, his regard for former British Labour leader Jeremy Corbyn and why Andrew Leigh, his colleague, has written that Albanese supporters were earlier known as “Bolsheviks”. Mr Albanese’s responses will test his leadership.