Posted: August 14, 2006

Full potential means wasting 1.8 million people

The Federal Treasury Secretary, Ken Henry seems to have the idea that full economic potential means wasting the productive capacities of some 1.8 million Australians. He told an AiG function in Canberra today that the economy was growing at its potential without any notable problems (see Sydney Morning Herald, August 14 - "Economy growing at potential: Treasury"). He said that the "inflation also appeared to be relatively under control ... [and] ... Notwithstanding very high oil prices, and consequently high prices for products derived from oil, the Australian economic environment appears remarkably benign."

He concluded that "The macroeconomy is growing at around its potential growth rate of 3 to 3.5 per cent."

It is quite clear that the Australian economy wastes massive amounts of its productive capacity by not providing sufficient jobs for those who want them. Official unemployment is over 500,000 and underemployment (of those in part-time work) is around 3.5 per cent of the labour force. Then you have to add in the marginal workers who are not even included in the official labour force who would work if circumstances were appropriate. There are more than a million persons in that status.

So until we bring home to the mandarins that potential means potential things are not going to improve for hundreds of thousands of Australians.

Blog entry posted by bill