Josh Frydenberg says we’re on cusp of Menzies-era model of full employment

Josh Frydenberg says the jobless rate is on track for a return to the lowest sustainable levels in decades.

Josh Frydenberg says ‘we now have an opportunity not seen for decades to drive down unemployment even further’. Picture: Andrew Henshaw

Josh Frydenberg says Australia is positioned to return to the Menzies-era model of full employment, with the jobless rate on track for a return to the lowest sustainable levels in decades.

In a speech on Thursday night to launch The Robert Menzies Institute at Melbourne University, the Treasurer said the country had an opportunity to achieve today’s equivalent of full employment where the unemployment rate could be sustained below 5 per cent.

From 1949 to 1966, the unemployment rate averaged about 2 per cent, with the goal of full employment established in 1945. The Reserve Bank has recently reset its benchmark for full employment – otherwise known as the non-accelerating inflation rate of unemployment – at between 4 and 5 per cent.

“For Sir Robert, full employment was not an abstract economic concept or a political slogan,” Mr Frydenberg said in a keynote speech to the inaugural conservative think tank.

“In his 1962 budget speech, Menzies described it as a ‘state of affairs in which people are employed because they are needed for work’, ‘the desired end of a great co-operative effort throughout the country — an effort in which action is productively ­directed and people are productively employed’.

“We understand, just as Menzies did, that the foundation for a strong economy rests on individual aspiration, reward for effort and free enterprise.

“As we emerge from this crisis, we embrace these principles and now have an opportunity not seen for decades to drive down unemployment even further.

“Growing our economy and the pursuit of low unemployment is our purpose.”

Mr Frydenberg’s claim of a country poised to return to a golden era of employment follows Scott Morrison’s rallying call this week for a pre-Christmas jobs boom, with estimates of a post-lockdown surge leading to the potential creation of 280,000 jobs by the end of the year.

Despite a spike in the unemployment rate last week because of Delta lockdowns in NSW and Victorian, unemployment was forecast to drop again to 4.25 per cent by the end of 2022. It is then forecast to reach a sustained level at about 4 per cent in 2023.

With next year’s election set to be a contest over economic recovery and jobs, Mr Frydenberg has flagged a Coalition campaign embracing the Menzies ethos that the private sector rather than government would underpin the economic recovery and drive down unemployment.

Labor leader Anthony Albanese has said Labor would put job security as a key plank of its economic policy platform.

“When it came to the economy, Menzies believed in the centrality of the private sector, not government and harnessing individual aspiration and hard work,” Mr Frydenberg said.

“Then as now, this is what delivers economic prosperity.

“It is not to say that there is no role for government. Having lived through two world wars, Sir Robert understood that government has a unique responsibility in times of crisis.

“In his words, among the ‘true economic functions of the state’ was to ‘assist in preventing the periodic recurrence of large scale unemployment’.”

Mr Frydenberg said the government had been determined in its response to the pandemic that it would not allow a repeat of the unemployment crisis that sprung from the 1990s recession.

The Robert Menzies Institute, a joint project of the University of Melbourne and the Menzies Research Centre and aligned with the Liberal Party, promotes itself as a “think tank that champions Liberal principles”.

“If we don’t take responsibility for preserving and promoting the story of Menzies, his detractors will, blurring his legacy and the important lessons it provides,” Mr Frydenberg said.