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Legislative Council - Fifty-Third Parliament, Second Session (53-2)
2015-12-08 Daily Xml
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Employment Growth Forecasts

The Hon. R.I. LUCAS (14:38): I seek leave to make a brief explanation before directing a question to the Leader of the Government on the subject of employment growth forecasts.

Leave granted.

The Hon. R.I. LUCAS: In response to an earlier question, the minister indicated that the employment growth forecast included in the budget and Mid-Year Budget Review documents were essentially conservative by nature, the inference being that the reality will be better than the conservative estimates done by officers within the Department of the Premier and Cabinet.

Can I refer the Leader of the Government to the recent history of job forecasts. For 2014-15, what the minister has referred to as a conservative forecast was for 1 per cent growth in the South Australian economy. The actual reality was half that, at 0.5 per cent. For the financial year 2015-16, the first employment estimate done by the government—conservative, according to the minister—included in the June 2014 budget document, was for an employment growth forecast of 1.25 per cent.

Just six months ago, 12 months after that first forecast, the government downgraded that estimate from 1.25 per cent to 1 per cent. Of course, yesterday, in the Mid Year Budget Review that was downgraded again to 0.25 per cent. The minister has argued today in response to the earlier questions that these estimates for each budget year are conservative by nature. My questions to the minister are:

1. Is the minister aware that for the last three years—and possibly for longer—the supposedly conservative job forecast included in the budget documents in reality have been significantly overestimating employment growth in those years?

2. If that is the case and the minister is aware, on what basis does she stand up in this house and claim that these are conservative estimates of job growth?

The Hon. G.E. GAGO (Minister for Employment, Higher Education and Skills, Minister for Science and Information Economy, Minister for the Status of Women, Minister for Business Services and Consumers) (14:40): I thank the member for his questions. I have already answered them but I will reiterate the principal purpose. I do accept that the changes that have occurred in most recent years in terms of the estimations tending to be over-predictions rather than under but generally in terms of overall trends they tend to be conservative and they are generally considered to be conservative, and the reason for that is because, as I have indicated, they are forecasts that are generally for the purpose of estimating revenues and, therefore, estimates for revenues are inherently generally conservative.

However, we have seen—as I have outlined—an unprecedented double whammy happening here in South Australia. We have seen the decline of our automotive industry and the withdrawal of our automotive industry, and on top of that we have seen plummeting commodity prices. Both have had a significant impact on South Australia's economy in particular. I am advised that it is that softening of our economic outlook that has operated to influence the downgrading of our employment forecast.

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