There’s a good chance the Treasurer Chalmers and the RBA will commit Australian to an unemployment target of 3.0 per cent or 3.5 per cent, which it will call ‘full employment’.
The target can’t be zero as there will always be some temporary unemployment as people move between jobs or when sectors decline such as coal mining.
This means not sacking people to try lower inflation, which is a good start by a government elected to protect the economic welfare of its people.
If the government and the RBA choose to adopt 3.5 per cent as a target, it would put 150,000 more Australians into work than would a higher target of 4.5 per cent.
The Australian government hasn’t publicly committed itself to ‘full employment’ since the 1945 Full Employment White Paper, released as World War II was drawing to a close.
The 1945 white paper said full employment would: “Assure workers that the community has need of their services somewhere, and will restore the basic sense of security without which new risks will not readily be undertaken.”
It left that commitment behind in the late 1970s to tackle stagflation.
The government would need to stimulate private spending and through monetary and other policies.
In 2017, the bank cut the estimate to 5 per cent and then 4.5 per cent in 2019.