Tony Abbott's 300,000 new enemies

Tony Abbott is making mistakes spookily similar to Julia Gillard’s. Car industry job losses will be hard to absorb and will come at a terrible time for the prime minister.

As the 44th Parliament opens Tony Abbott and his Coalition are looking to preside over a task unique in the western world, at least since the GFC – the destruction of 300,000 jobs or some 2.4 per cent of the full- and part-time work force.

The job destruction prospect equals around 274 jobs each day of the Coalition’s term of office or around 11 each hour. Most of the jobs will be lost in the final year of the Abbott government, when there will then be a job destruction rate at least twice the three year rate. Accordingly, there is now a real prospect that, like Julia Gillard, Tony Abbott will be a one-term prime minister.

Indeed Abbott in employment is on the brink of making a mirror image of the mistakes that Julia Gillard made in carbon. The next prime minister could be Bill Shorten.

So how do we get to 300,000 jobs to be lost?

First, the mining investment boom is coming to a rapid end but the rate of project completion will be very high in 2015-16 (the 44th parliament ends in 2016). These projects currently directly employ in the vicinity of 35,000 people but indirectly around 150,000 people are involved. Tony Abbott cannot in any way be blamed for these job losses but there are very few new mining investment projects on the horizon.

Second, Tony Abbott has promised that 12,000 jobs will be lost in the public service but the deregulation, department rationalisation and other measures will take that figure beyond 20,000 and it could be much higher.

Absorbing these two employment destruction exercises is a big task but with the help of infrastructure spending, and Bruce Billson’s clever independent contracting and small business help schemes, much of the effects can be nullified. But a third employment blow, equal or exceeding the mining investment cut back cannot be absorbed.

Yet the government appears to have almost given up in the motor industry. So with the looming government driven closure of both GM Holden and Toyota another 45,000 direct jobs will be lost and with indirect losses the total figure will be well over 150,000.

I am using the 300,000 total to be conservative.

The parallels with Julia Gillard are eerie. For the argument, let’s first assume that the Gillard carbon tax/emission trading scheme was in the national interest when it was introduced. What made it crazy was the timing. The carbon tax came in when there was an enormous increase in power infrastructure spending, which on its own was sending power prices through the roof. The time to introduce a carbon tax/emissions trading scheme was either three to six years earlier (when John Howard proposed it) or three to six years later when the infrastructure price rises were absorbed. The 'chardonnay green socialists' completely ignored what was happening around them and, accordingly, the ALP and the Greens were hammered in the 2013 poll.

In the case of the motor industry, for the argument, let's again assume that it is in the national interest that we stop subsidising jobs in motor manufacturing. But in 2013-14 we are proposing to take this action at a time when the unprecedented level of mining investment is ending and spilling vast numbers of people into the non-mining workforce at a time of big public service cutbacks.

As with the carbon tax, the time to act on motor was three to six years earlier when we were on the brink of the mining investment boom or three to six years after the investment boom has stopped (say 2022). We will then have absorbed the employment rundown in the workforce.

Like their opposite number in carbon the 'chardonnay rationalists' are blinkered and don’t take into account what is happening around them.

In the case of motor the ALP gained industry agreement with a package. The Coalition can either duplicate that package or, preferably, reduce it by linking the FBT concessions to locally made cars.

The Coalition should also make any offer fixed. So, if Holden still announces they are shutting then all the money plus the FBT concessions go to Toyota, which becomes the national champion of Australian motor. Toyota should substantially increase its market share to maintain the component industry as General Motors faces the prospect of being a minor Australian player. That will at least cause the GM executives in Shanghai and Detroit to think twice.

It’s highly unlikely that in 2022 we would face anything like the mining/public service labour exodus that we face in 2014-16.

With the ALP already dreaming about the next election campaign, the lower echelons are thinking about running on radio Abbott’s laughter every hour on the hour, 24 hours a day, as he boasts about the current hourly job loss rate. The ALP might try it in 2014 if there is a West Australian Senate election. 'Mr Unemployment' would be hard to re-elect.

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