By Matthew Cranston, David Tanner and Elizabeth Pike
Jobs growth has surged fastest under the Albanese government in many of the least productive sectors of the economy that receive significant government subsidies, such as renewable energy and healthcare.
As the country battles 60-year lows in productivity growth, analysis of official employment data shows large jumps since May 2022 in the number of electricity, gas, water and waste services workers, construction workers, and arts and recreation services employees, whose industries rank at or near the bottom of the productivity ladder.
But in two of the most productive sectors of the economy, the manufacturing workforce has barely grown in four years and the number of workers in agriculture, forestry and fishing has declined.
National Farmers Federation chief executive Michael Guerin said the data “backed up” what industry leaders have heard on the ground for a “number of years”.
He implored the Albanese government to change its policy settings to give investors and young people more “confidence” in the sector.
“Infrastructure, roads, telecommunications, working visas – there are a large number of policy settings that do not encourage investment or support productivity,” Mr Guerin said.
“Roughly 40 per cent of the cost of getting food on to your plate comes from the supply chain post-farm gate, it’s a complete inefficiency in costs.
“It’s really important the government acknowledges and acts on this analysis.”
The fastest increase in jobs since May 2022 has been in the electricity, gas, water and waste sector, hitting 25.7 per cent growth. That sector, which receives significant renewable energy subsidies and direct government spending, is also the most unproductive, with an average quarterly productivity growth rate of -1.3 per cent, according to the Productivity Commission’s most recent official figures, published in June.
Jobs growth in the education sector has leapt 19.2 per cent since 2022, but also recorded an average negative quarterly productivity rate of -0.2 per cent.
The healthcare and social services sector, where the National Disability Insurance Scheme sits, has recorded a 17.7 per cent growth rate, and while its average quarterly productivity growth rate is a miserly 0.2 per cent, the last two quarters have entered negative territory.
In volume terms the healthcare sector has seen the biggest explosion of workers since 2022, adding 356,700 workers to what is now a 2.4 million-strong healthcare and social services workforce. Since 1984, when records began, the growth in this sector has hit 340 per cent.
The arts and recreation sector has seen a 16.8 per cent growth rate in jobs since 2022 but, again, has also seen one of the worst quarterly productivity growth rates of -0.8 per cent.
Australia’s mining industry is in the midst of a “boom,” but sector sources warn that job growth has backslid 2.4 per cent due to policy settings, which have made competitors such as the Middle East and South America more attractive to investors than Australia
Complex planning controls, including Aboriginal protection orders, have been a source of uncertainty, with the $1bn Regis McPhillamys gold mine project stalled in 2024 following cultural heritage concerns.
Minerals Council chief executive Tania Constable said most projects were failing to get off the ground, warranting changes across “tax, workplace relations, skills and the environment”.
Australian mining can create more highly paid, highly skilled jobs by getting more mines approved more quickly and through predictable, stable policy settings,” Ms Constable said.
“When one direct job in mining creates six indirect jobs, and 80 per cent of projects are abandoned before reaching a final investment decision, there is huge potential to build greater national wealth and economic resilience by encouraging greater job growth in mining.
“Our industry is Australia’s most productive so improving higher education to create more job-ready graduates while boosting the use of technology such as AI and automation will help mining to grow the economic pie for all Australians.”
Productivity Commission deputy chair Alex Robson noted last month that Australia’s overall labour productivity fell by 0.6 per cent in the March quarter and grew by just 0.3 per cent over the year, with hours worked continuing to outpace output.
He said the Productivity Commission had found that long-term investment in cleaner, more reliable energy has “weighed on measured productivity”, but added there were opportunities to improve efficiency and reduce costs over time.
He pointed to several reasons for why overall labour productivity was slowing.
“One possible reason is slowing accumulation in human capital … we also need a skilled workforce that can adapt to changes and meet employer demands,” Dr Robson said, noting recent recommendations to government for improving the quality of the workforce.
Dr Robson also said there was a need for more investment in capital.
“Likewise, our workers need capital to be at their most productive,” he said, noting that workers in the most productive countries of the world were 12 per cent more productive than Australians with the same amount of capital.
Economists, investors and business operators have all said that further investment in capital could now also be at risk due to the government’s recently legislated tax changes, which include a minimum 30 per cent capital gains tax on all assets, and the removal of the 50 per cent CGT discount for an inflation-indexed version. Fund managers such as Wilson Asset Management’s Geoff Wilson estimate that money will flow to lower-growth, higher-yield companies that are less likely to reinvest in capital.
Deutsche Bank chief economist Phil O’Donaghoe said Australia’s jobs growth in unproductive sectors had to be monitored very closely and the amount of government spending directed toward such sectors.
“We do want to make sure every dollar invested is invested in things that lead to better productivity outcomes – the refreshment of electricity infrastructure had to happen – but you do need to make sure every dollar is accounted for and done as officially as possible,” Mr O’Donaghoe said. “It’s the level of government spending that is the bigger challenge. We’ve seen a structural shift in government spending, and I’m not being political but that has to be watched.”
Government spending is 26.8 per cent of GDP, the highest in 40 years outside the pandemic, and remains high over the next four years as the government continues to spend about $9bn per year on climate-related programs, as calculated by the Institute of Public Affairs, and attempts to rein in spending growth within the $50bn NDIS.
“The outcomes could get worse, but it depends on the timing,” Mr O’Donaghoe said. “I really find it difficult to see productivity and growth get worse from here.”
While productivity growth went backwards in the last National Accounts, economic growth was less than expected and is also forecast to slow over the coming year. Both the Treasury and the Reserve Bank have downgraded their forecasts on productivity growth.
Mr O’Donaghoe said some patience was required.
“There is a robust case for the antithesis in that rolled gold support for disabilities might mean lower productivity growth now, but it also means some disabled people are getting back into the workforce and that can boost productivity in the longer term – that has not yet been caught up in the arithmetic,” he said.
“It’s the same with jobs in the renewable space – if we can’t stop global warming, how do unproductive jobs matter in the short term?”
The analysis by The Australian also shows that the biggest decreases in jobs growth have come in areas where there has been technological improvements such as artificial intelligence.
Agriculture, Forestry and Fishing have seen a 3 per cent decline since 2022, mining has seen a 2.4 per cent decline, rental, hiring and real estate services are down 0.6 per cent and Manufacturing has declined 0.9 per cent.
Al McGlashan, one of Australia’s most recognised fishing industry personalities, has been fishing for over 30 years but said the past few years have been the hardest he has seen for the commercial and recreational fishing industry and small businesses.
“As a small business, we’re getting flogged, absolutely flogged – the worst we’ve seen it has been the last few years,” he said.
“Coming out of Covid, you’d think it’d be getting better, but it’s not; it’s going backwards.”
Mr McGlashan said fewer people are entering the fishing industry and that fishing media was only getting smaller with no government funding or support.
“Everything’s gotten harder. The cost of everything is going up, and our fees don’t go up – we can’t charge more … It’s across the board so many small businesses and people just struggling,” he said.
“We export our show overseas, and I sent an email to the government asking what we do – do we get any rebates or support? Didn’t get any response back.
“I think the government’s just completely out of touch. At the end of the day, that’s where the food comes from … Small businesses are an Aussie way of life that we should be looking after more.”
Licensed by Copyright Agency. You must not copy this work without permission.