Low unemployment likely to put further pressure on interest rates

The Shadow Treasurer Dr Steve Thomas said today that the continuing strengthening of employment in Australia is likely to add pressure on the Reserve Bank to raise interest rates further.

“Although the figures indicate a slight rise in the unemployment rate in Western Australia, from 3.1% to 3.4%, the national figure dropped again from 3.9% to 3.5%” Dr Thomas said.

“This suggests that Australian economy remains overheated and subject to wage and inflation pressures.”

“The small increase in unemployment here in Western Australia is reflected in the employment rate, which saw a decrease of 9,100 Western Australians in work despite massive demand for workers.”

Dr Thomas said the figures seemed to indicate that the high demand was focussed in particular skilled occupations which were still struggling to find employees.

“The State Government has acknowledged that shortfalls exist in the construction and health workforces in particular, which are apparently the focus of their “Build a Life in WA” campaign to attract workers from interstate and overseas.”

“However according to the latest Turner and Townsend Survey, skilled workers were leaving WA as soon as the hard borders were removed, so the McGowan Government is playing catch up with its new campaign.”

“The Survey also suggests that the costs of construction are higher here in WA than any other state, and that the State Government’s infrastructure spending is contributing to that outcome by directly competing with private sector construction.”

“The outcome is that the cost of construction is pushed up for both the public and private sector, and as a direct result time-frames are also blowing out in both sectors.”

“Whether its your new home or the Government’s billion dollar METRONET projects, blowouts of time and cost will continue until the economy corrects.”

“In these circumstances further rises in interest rates seem inevitable, which will again impact on the cost of living pressures being experienced by many Western Australians.”

“The Government should refocus its actions to minimise the cost of Government services on the community, rather than its current “infrastructure build at any cost” approach which adds to inflationary pressure” Dr Thomas said.