Who: “We’ve said the public service here in Canberra has to be reduced by 12,000 over the first two years as a starting point.” Shadow Treasurer Joe Hockey.

The claim: The Coalition will cut 12,000 jobs from the public sector in Canberra.

The facts: Joe Hockey and others in the Coalition leadership say they will cut 12,000 jobs in Canberra. However outgoing ACT Liberal Senate Gary Humphries has said the job cuts would be spread around the country. On this ‘best case scenario’ for Canberra, around 5400 jobs would be cut in the ACT—a result which Humphries has endorsed although Coalition leadership has not followed him.

The Coalition’s job cuts are ‘further savings’ measures on top of existing and substantial funding cuts under Labor, and as Hockey has said the cuts are just a starting point.

The finding: It remains unclear whether the Coalition will cut 12,000 jobs in Canberra, but even on the best case scenario Canberra’s economy will feel significant negative impacts.

Discussion of evidence: New research from The Australia Institute found that if all 12,000 jobs are cut in Canberra, knock-on effects would be very serious for the local economy, many times the size of the impacts of job cuts in the mid-1990s. The household spending it would take out of the economy would be bigger than the forecast growth in the economy and so likely to cause a recession. But even the best case scenario would wipe out most of the forecast growth.

Cutting thousands of public sector jobs in Canberra will have flow on effects on jobs outside of the public sector. Approximately one third of the Canberra work force is in the Australian Public Service.  Many people working outside of the public sector nonetheless depend on it, for example through providing IT services or in local shops. The research estimated that 12,000 jobs cut in Canberra put around 5500 people outside the public sector out of work, totaling to a cut to 1 in 12 jobs in Canberra. On the best case scenario, the Coalition job cuts would cut 1 in 27 jobs out of the Canberra economy, including around 2500 jobs outside of the public sector. There would also be impacts on property prices and jobs in the construction industry.