New modelling by the Productivity Commission estimates that the closure of Australia’s car industry will cost up to 39,000 jobs, mostly in Victoria and South Australia. From The Guardian:
The commission’s modelling of the worst case scenario after the end of production by Ford, GM Holden and Toyota in the period 2016-17, has predicted that 27,430 jobs would be lost in Victoria and 10,670 in South Australia.
This estimate comprises 11,120 direct jobs being lost at the car manufacturers, plus another 28,100 jobs in the car component supply chain.
…the commission still found that the longer-run impact on the end of car manufacturing would be to reduce South Australia’s gross domestic product by 2.7%, and Victoria’s by about 2.2%…
The Commission’s findings are broadly similar to modelling undertaken late last year by the Allen Consulting Group, using economic analysis from Monash University, which estimated that the closure of the local car industry would cost around 33,000 jobs in Melbourne and around 6,600 jobs in Adelaide by 2018.
The most worrying aspect of the car industry’s job losses is that they would collide with the unwinding of the biggest mining investment boom in Australia’s history.
NAB estimates that 100,000 jobs could be lost over the next 12-18 months as mining investment contracts from 8% of GDP currently to around 4%. However, if history is any guide (see next chart), mining investment will likely fall much further over subsequent years – possibly to around 2% of GDP – which would likely bring with it further job losses just as the car industry shutters.
These are the two employment cliffs facing the Australian economy.
