Investing in Services, not Tax Cuts, would Create 162,000 Jobs

New research from The Australia Institute has shown that investing $13 billion into services such as healthcare and education would create 162,000 jobs across Australia.

That is between seven and 12 times the number of jobs that are likely to be created by bringing forward the Stage 2 income tax cuts by a year.

Key findings:

  • Bringing Stage 2 of the income tax cuts forward by one year would cost $13 billion.
  • Investing that amount of money across university education, childcare, healthcare, aged care and the creative arts would create 162,000 jobs.
  • That is between seven and 12 times as many jobs as the tax cuts can be expected to create (13,000 to 23,000).
  • General consumption creates 1.79 jobs for every $1 million spent.
  • The rate of job creation per million dollars spent in the service sector is vastly greater.

“Spending public money wisely is both an investment in the long-term prosperity of our nation and an extremely efficient way to create jobs,” said Matt Grudnoff, senior economist at The Australia Institute.

“We know that at least some of the tax cuts will go into people’s savings account or used to buy goods from overseas, providing very poor stimulus to the Australian economy in comparison to investment in services.

“As sure as night follows day, those who are calling for tax cuts today will be demanding cuts to services tomorrow. Such an approach will actually undermine Australia’s recovery from the COVID-19 recession.

Our research has shown that, if the government’s focus really is job creation, it would be far better to invest public money in jobs rich services such as healthcare and education, not to hand out tax cuts.”

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