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With state budget deficits a potential issue in the coming Queensland election, new research from the Centre for Future Work shows that cutting public sector jobs and wages would directly undermine the delivery of essential public services at a challenging time in Queensland’s history. Moreover, misplaced fiscal austerity would also hurt the state’s economic recovery by reducing spending, employment and production in the private sector. These effects would be especially severe in regional and remote QLD, which is most reliant on public service jobs.

The report, by the Centre for Future Work, finds that for every 10 direct jobs in state-funded public services, another 4.5 jobs are supported in the QLD private sector. This means that these public services support a total of some 480,000 public and private sector jobs across Queensland. Cuts to public services and staffing would impact private sector jobs and incomes, deepening the recession.

Key Findings:

Some 480,000 positions are supported, directly and indirectly, by the provision of state-funded public services in Queensland.
This includes 331,000 direct public sector jobs, as well as over 150,000 more positions in the private sector that depend on the economic stimulus provided by public sector work.
For every 10 direct jobs in the state-funded public service, another 4.5 jobs are supported in the private sector.
Regional and remote Queensland is the most reliant on state public sector workers – both for the services they provide, and as a source of high-quality employment for local residents. State public sector workers account for almost 12% of total employment in remote and very remote regions of QLD.
The report simulates two potential scenarios of fiscal austerity in Queensland. It finds that fiscal austerity (imposed via cuts to public service staffing and wages) would cause substantial harm to Queensland’s economy: including cumulative losses (over three years) of $9-$16 billion in state GSP, and the loss of 20-35,000 person-years of employment in the private sector.

“In this unprecedented time, the maintenance of public services is surely a more urgent priority than cutting government spending in pursuit of some illusory fiscal target,” said Dan Nahum, Economist at the Centre for Future Work and author of the report.

“By cutting employment and incomes for public sector workers (and the private sector industries which depend on public services for their own markets), misplaced austerity would undermine economic recovery and reduce GDP.

“A more constructive and effective response to the COVID crisis is to expand the economic and social footprint of government, including state governments – not shrink it.

“Attacking public sector employment and compensation, just at the time Queenslanders need more public services, not less, would be a major policy mistake.”