Campbell: Govt's clueless response to unemployment

Well, we’re now seeing some of the fruits of small government, and having government butt out of our lives. Unemployment rose to 7.3 % during the last three months of 2009, the highest rate in ten years. Some 168,000 New Zealanders are now out of work, and the message to many young people is that New Zealand society offers them no opportunities occupationally, socially or financially. The unemployment rate is now 18 % among young people between the ages of 15-24.

As Werewolf pointed out a month ago, if there is a recovery happening at all – and remember, the economy grew by only a miniscule 0.2% in the last quarter of 2009 – it shows every sign of being a jobless one. There is no basis for confidence that job growth will return again, like swallows in the spring, when the economy finally improves again. At best, any recovery in the job numbers is expected to be a year away.

The government’s response? To cross its fingers, and hope the economy get better (maybe) by itself, sometime soon. John Key, who can afford not to, is not panicking.

‘It is very important people don't panic because they see an unemployment number rising,” Key says. “It is a rearward looking figure, it always lags behind what is happening in the real economy.” People aren’t losing their jobs so much, Key believes, as more people are looking for jobs. [Really? The working age population grew by only 14,500 last year. And usually in a recession, the ‘discouraged worker’ effect deters people from looking for jobs.] "I think we are likely to be very close to the peak. If we are not at the top then it may be one more quarter, but we are getting somewhere near the top."

Yep, that’s leadership. It certainly inspires confidence to be told that we’re very close to a peak (maybe) and are ‘somewhere’ near the top. Reminds me of Churchill’s immortal ‘We will (probably) fight them on the beaches, or wherever you like really, its up to you, just don’t panic, I’m OK.’ In the meantime, while the government whistles and hopes the situation won’t get much worse for much longer, it is hard to see any policy response remotely commensurate with the scale of the unemployment problem.

It is now a year since the Job Summit, and as Eric Frykberg reported on RNZ this morning, the main practical idea from that gathering (the nine day working fortnight) is estimated to have saved 621 jobs – which as Frykberg says, is less than one half of one per cent of the 168,000 out of work. The Maori Party is just as clueless. It has achieved nothing for Maori on the jobs front – during the quarter to December 2009, Maori unemployment rose from 14.2% to 15.4%.

For all the talk about the gap with Australia, the one that has really mattered over the past 12 months has been in the way Australia has responded to the recession. As always, we have placed out faith in the trickle down benefits of tax cuts. Among the raft of things that Kevin Rudd did however, was to put money directly into the hands of ordinary Australians via a cash handout, to keep the economy moving and to protect the spending power of the vulnerable. Australia’s unemployment rate is now only 5.6%. Would it be too much to expect Don Brash and his well-paid task force to turn their attention to how we can achieve within the next 12 to 18 months, an unemployment rate as low as the one in Australia? Maybe, probably, certainly.

High unemployment is a social failing, and it requires a collective response. So far, the Key government has failed the challenge. As Phil Goff has pointed out, the 2,300 jobs that the Key government boasts that it has created with its stimulus package is less than the 3,500 people who recently queued for the 150 jobs at a South Auckland supermarket. Perhaps the Maori Party could re-focus its attention from the symbolic victories it is winning for Maori, and start demanding that its new best friends in government start funding large scale work schemes - which would deliver substantial social rewards for our communities, as well as economic ones.

Mike Moore, US Envoy

A small point, and one I’ve raised elsewhere. The recent appointment of Mike Moore as New Zealand’s ambassador to the United States has been an interesting example of a media consensus quickly emerging on an issue worthy of many different points of view. This is, after all a case of a former politician being appointed to one of our key posts, over the heads of the professionals in the diplomatic corps.

Quite simply the equation among the media and business groups has been : Mike Moore = experienced politician and former WTO boss = a possible free trade deal with the US = a brilliant coup for the government. In the real world though, this political gambit looks like playing far better at home than it will do among the Americans. One might have thought there would concern about whether Moore was really was a such an astute pick, given the prevailing trade climate in 2010. After all, Moore was WTO boss during that organisation’s most zealous free market period, including during the famous anti-WTO riots in Seattle in late 1999. Why would anything think that someone synonymous with that era would be – and would be seen by the Americans to be - an ideal representative for the more protectionist climate obvious in Washington since Barack Obama became President?

Moore has not changed his spots. Last October, for instance, Moore was telling the NZ Herald that protectionism was the crack cocaine of global economics – which was a line that Moore had lifted from a February attack by a Dallas, Texas political figure upon President Obama’s stimulus package. Thus, we have the poster boy for de-regulated free trade, who has recently parroted an attack line on a central policy of the current President, now promoting our interests in Washington? And we are supposed to be applauding Moore’s appointment as a stroke of bipartisan genius by John Key?

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