Treasurer Joe Hockey is hopeful that if his forecast for a higher unemployment rate of 6.25 per cent rate is correct, it will be the turning point.
Joe Hockey is hopeful 6.25 per cent will be the turning point of the jobless rate.
Despite trumpeting a $125 billion economic growth package through new infrastructure spending in his first budget, he still forecasts a rise in unemployment.
Quizzed on the topic during the treasurer’s traditional post-budget lunch, Mr Hockey said: “Imagine what it would have been if Labor had been elected.”
The budget forecasts an unemployment rate of six per cent by June, rising to 6.25 per cent over the next two years, as forecast by Labor, before gradually easing.
“I think at 6.25 per cent we can turn the corner,” he said in his National Press Club address in the Great Hall of Parliament House on Wednesday.
If the same participation rate – which measures the number of people in work or actively seeking employment – of a few years ago was still in place, the unemployment rate would be much higher, he said.
The fall in participation is the result of an ageing population and why one budget measure pays $10,000 to employers who take on unemployed people over 50.
“We have got to stimulate employment growth,” Mr Hockey said.
The boss of business software provider MYOB, Tim Reed, is encouraging small businesses to take up the initiative to employ older staff, with the retirement age set to increase to 70 in 2035.
Other business groups were generally supportive of the government’s actions to get spending under control, which will help reduce the deficit to $2.8 billion by 2017/18, which is a marked improvement on the $50 billion forecast for the financial year ending in June.
But retailers are concerned about the effect increased taxes will have on consumer spending.
Australian Retailers Association executive director Russell Zimmerman said the retail sector had only just regained momentum after years in the doldrums.
“It would be a travesty if these tax increases impacted on that recovery,” he said.
Consumer confidence dropped sharply in the weeks before the budget to its lowest level in five years.
The managing director at mortgage broker 1300HomeLoan, John Kolenda, said the budget could be a game changer for the direction of interest rates.
“Up until the budget, all indications favoured a rate rise,” he said.
But if the budget stopped people spending, a reduction could also be on the cards, he said.