CANBERRA, AAP – Treasurer Josh Frydenberg is confident the unemployment rate can remain relatively low, even in the face of a significant economic shock with the nation’s two most populous states in coronavirus lockdowns.
The lockdowns in NSW and Victoria, along with the shutdown in the ACT, are expected to result in a large economic contraction in the September quarter.
“But we have seen with previous lockdowns and the subsequent opening up or easing of restrictions is that people have got back to work very quickly,” Mr Frydenberg told an online conference on Monday.
“So I’m confident that we can keep the unemployment rate relatively low.”
He pointed to the most recent labour force figures, which showed the unemployment rate unexpectedly falling to 4.6 per cent in July – a 13-year low – and featured a spike in hours worked in Victoria after the state reopened after its previous lockdown.
The latest in ANZ’s job advertising series – a pointer to future hiring intentions – eased 2.5 per cent in August after a downwardly revised 1.3 per cent fall in July, due to the current spate of lockdowns.
However, ANZ senior economist Catherine Birch said the decline in job ads over two months has been minuscule compared to the 64 per cent plunge during last year’s national shutdown.
“It is likely that ANZ job ads will decline further over coming months and we expect sizeable employment losses in locked down areas, with the national unemployment rate to lift back above five per cent,” she said.
“But given the momentum going into lockdowns, policy support and signs that activity should rebound once restrictions ease, we think the setback will be temporary.”
Mr Frydenberg told the ANU Crawford Leadership Forum the Australian economy has proved to be remarkably resilient, particularly in the face of political tensions with China, the nation’s number one trading partner.
He said China has cited 14 grievances, covering everything from Australia’s foreign investment laws to its calling out of cyber attacks.
“They have targeted our agricultural and resources sector, with measures affecting a range of products, including wine, seafood, barley and coal,” Mr Frydenberg said.
But he said Australia has remained steadfast in defending its sovereignty and its core values, and always will.
He said many of the firms and industries targeted by China’s trade restrictions have also been successful in redirecting goods to other export destinations, particularly for larger bulk commodities that trade on global markets.
China’s trade actions have seen total exports to China fall by around $5.4 billion over the year to the June quarter.
“But over the same period, exports of those goods to the rest of the world have increased by $4.4 billion,” the treasurer said.
He warns that China’s trade actions will carry a cost to both Australia and China.
“They rob Chinese consumers of premium Australian wine, seafood and other goods,” he says.
“And they rob Chinese industry of high quality and high value inputs, such as Australian coal. We would both be better off if markets were allowed to operate freely.”