Thursday, March 17, 2005

Aussie Workforce News

In the past week there has been much news on the Aussie Workforce. The main issue where the skill shortages faced by the Australian Economy which is connected to the continued growth in employment with unemployment being at the 30yr low of 5.1%. Somehow strangely the Australian economy is showing signs of age and is declining.

Contradicting versions of the OECD report show that Aussies are the best paid in the world and also that they are the most taxed of the OECD counrty workers.

Aussies world's 'best paid'

WORKERS in Australia are among the best paid in the world and their standard of living has improved over the past eight years, Peter Costello claimed yesterday, citing research by the OECD.

The Treasurer said the average production worker's income after tax and family benefits was either the highest or the second highest in the world.

Mr Costello's office compared the latest edition of the OECD's report on how wages are taxed with the report it issued in 1996.

The OECD compares eight different family types, according to whether the primary earner is single or married and has children. It focuses on people on average earnings, or earning a third more, or a third less, than average earnings.

In 2004, Australia was highest for four of the family groups, while it was pipped by South Korea for the other four.

More evidence of Australia's slowing economy

An index of leading economic indicators for Australia declined to a four-month low in January, adding to signs that growth is slowing in the Asia-Pacific region’s fifth-largest economy.

The index, a gauge of growth for the next six months, fell 0.3 per cent to 211.1, the lowest since September, Westpac and Melbourne Institute said in a report released in Sydney yesterday. The index tracks nine signs of economic activity, such as share prices and phone installations.

The A$798 billion economy grew 0.1 per cent in the fourth quarter from the previous three months, the slowest pace in four years, as companies’ stockpiles declined and home building fell.

Bullish job figures spur rate fears

The unemployment rate in February held steady at its 30-year low level of 5.1 per cent, while the number of people with jobs increased by 20,000 to 9.9 million people.

The unexpected lift in employment led several economists yesterday to foreshadow another increase in interest rates next month.

Treasurer Peter Costello hailed the result, saying it showed there was still some strength in the economy.

"There is still some oomph there because you are seeing it in relation to the creating of jobs, 20,000 in the month of February," he said.

Mr Costello said it raised to 325,000 the number of jobs created over the past year.

Editorial in the Australian on Taxing workers.

HERE'S a distinction we didn't need. According to the OECD's annual report on the taxing habits of its members, released on Wednesday, "The most significant increases in the personal tax burden are observed in Australia and Iceland". While the income tax take of the 30 OECD countries overall fell during the past eight years, in Australia the average share of income swallowed by tax has increased. Treasurer Peter Costello's claim one of more than 50 tables in the report is misleading because it includes state payroll taxes does not affect the conclusion that Australia is at odds with a global trend. The Howard Government's reputation as one of the highest-taxing outfits in Australia's history – another unsought distinction – is safe.

There are three important reasons why today's Australian workers are overtaxed. They were exhaustively discussed in The Australian's Too Much Tax series last year, and we have been pressing the point ever since. First, our top marginal tax rate cuts in at only 1.3 times the average wage, compared to an OECD average of 3.1 times. Second, bracket creep, the process by which higher wages push workers into higher tax brackets, has delivered a Government that has had the good fortune to preside over a miracle economy a bounty of billions – we'd know exactly how much, except Mr Costello has banned a Freedom of Information request by The Australian that would reveal the relevant tables.

Last, and most important, there is the way our welfare payments and family benefits scale down as those receiving them re-enter the workforce or increase their work participation, resulting in effective marginal tax rates as high as 90 cents in every additional dollar earned.

Michael Costello: It's not clever for a country to rely on luck alone

AFTER nine years of the Howard Government, the Australian economy looks like it is going back to the days when Australia relied for its survival on digging things up, or growing them, and then selling them to foreigners. Once again, we look like a quarry and a farm to the world.

This was brought home to me as I read the response of Industry, Tourism and Resources Minister Ian Macfarlane to a question in parliament on Tuesday: "Of course it is the resources sector that is driving Australia's economy, through a major contribution this year alone of $53 billion. In as little as two years that will rise to $82 billion . . ."

So, just keep digging, keep growing and everything will be just fine. There are at least four problems with this argument.

Peter Costello: Skills crisis a measure of our success

In other words, Australia is not in the grip of some unique skills problem. Australia is in the grip of record low unemployment, the likes of which we haven't seen for 30 years. And when unemployment is low it is hard to find labour.

Australia's present labour shortage is an outcome of sustained economic growth driving Australia's unemployment rate to the lowest level in 30 years.

Costello wants incentives for jobseekers to relocate

TREASURER Peter Costello wants people who cannot find jobs near their home to be offered incentives to relocate to places in need of workers.

Writing in The Australian today, Mr Costello argues that there must be greater encouragement of people to join the workforce.

"If people can't find work in their current location, the incentive structure should be in place to encourage relocation to areas of labour need," he writes.

So there it is for the week. Aussie workforce needs more skilled workers. The economy is slowing is still better and Australia needs to design its taxation system better to encourage workforce participation.

After all this Australians still love their cars better than everybody, except the Americas.

Aussie love of cars beaten only by US

AUSTRALIANS love cars as much as Italians and almost as much as Americans, with a survey showing 90per cent of locals aged over 16 own a vehicle.

The survey of car ownership in 28 nations put Australia just behind the US, which led with 92 per cent, but ahead of other strong car markets such as Germany, Britain and France.

Italians matched Australians on 90 per cent, while New Zealanders were close behind on 89 per cent.


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