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"We're locked in": Lucas 'still signing contracts' for Labor's axed jobs scheme

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Treasurer Rob Lucas concedes he’s still effectively signing cheques “on behalf of the former government” and can’t say how much of Labor’s centrepiece $200 million Future Jobs Fund will ultimately be spent.

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It comes as Labor points to static jobs growth in the forward estimates of last week’s Liberal budget after employment grew by 2.1 per cent in 2017-18, exceeding expectations with the highest growth in a decade.

That’s predicted to fall to 1.5 per cent in 2018-19 and one per cent for each of the following three years.

Shadow Treasurer Stephen Mullighan says the spike suggests the former Government’s now-axed job creation schemes were helping to stimulate growth.

They included the Future Jobs Fund, the centrepiece of Tom Koutsantonis’s last budget, which provided grants and loans to businesses, along with incentives through Job Accelerator Grants.

It was expected to generate more than 8000 full-time jobs in total.

“In a total employment pool of a bit over 800,000, that one measure equates to [more than] one per cent of total employment in a particular year,” Mullighan told InDaily.

“So you can see these programs do make a difference.”

But Lucas disputes this, pointing out that Labor had not funded the program to continue beyond the election year in the first place, and noting that the 1.5 per cent jobs growth forecast for 2018-19 was still higher than the one per cent predicted in last year’s budget.

“Not only was [ongoing funding for the Future Jobs initiative] not in the mid-year budget review – it wasn’t even in their policy costing document,” he said.

He said even the spike in the last financial year trailed national employment growth, and “until we in SA can get some runs on the board over a two, three or four year period”, Treasury would revert to long-term estimates relative to national growth.

But Lucas says he’s still locked in to deliver “a significant chunk” of the $200 million fund, after grants and loans totalling almost $50 million to be shared between 57 projects were announced late last year – to create 3200 jobs.

Successful applicants included Minda, Como Glasshouse, Berry Sensation, Connecting Up, Sea Dragon Lodge and MG Engineering, which said it would use its grant to acquire machinery, upgrade its slipway and build a new workshop, creating an anticipated 64 new jobs.

“My understanding is the vast bulk of [money] promised, or allocated, or committed to various groups all over the place… a reasonable chunk of the $200 million is about to flow through,” Lucas said.

“I’m still signing contracts on behalf of the former government to people who’d been given firm offers.”

The Treasurer said he was locked into existing contracts, and was still unclear to the extent “a firm commitment or letter of offer” could be wound back – even in cases where, he says, applicants have failed to meet the criteria.

“I’ve got no line of sight on that at all,” he said.

“Essentially if they already had a contract, we’re obviously locked in.”

He told parliament on budget day a Treasury audit showed that “even when applications from businesses failed to meet the very flexible rules which were meant to apply to funding from the Future Jobs Fund the former Labor government just ignored those rules”.

“In fact, they offered $29 million in grants and loans to seven businesses which Treasury said didn’t comply with the rules because of poor balance sheets, too high a cost per job or where it was concluded to be ‘too high a risk’ to taxpayers,” he said.

“Some of these loans were interest-free for more than 10 years and in one case the cost per job was $385 000.”

Mullighan has called on the Government to release the Treasury advice, but Lucas says he’s unable to, as he is “having a big battle with legal advice in terms of what I’m entitled to put on the public record”.

He says that’s because most of the grants were subject to commercial confidentiality – a stricture he says any new contracts signed by his Government won’t be subject to.

Mullighan says individual cases can be skewed if a company is making a large capital investment in infrastructure, but insists the average contribution per FTE under the scheme was “only just over $20,000”.

Asked if he regarded that as a reasonable taxpayer outlay per job, he said: “In context, I think so [because] the results speak for themselves.”

“This is not $20,000 each and every year the worker is employed, it’s $20,000 to help a business create a level of operations to help them employ South Australians on an ongoing basis,” he said.

“If that position is for five years the cost [per year] is much lower… if they’re employed for 10 years, that would be the same order of tax relief as payroll tax cuts give.”

Mullighan insists that “this sort of direct intervention in the economy – to support jobs creation – is exactly what state governments should be doing”.

“We were promised more jobs by the Liberal Government, and that may be true [but] what we’re going to get is fewer jobs than what we would otherwise, if we were playing a more direct role in supporting SA businesses to grow.”

Lucas maintains that “ultimately if we want our businesses to be nationally and internationally competitive, the cost of doing business here has to be nationally and internationally competitive”.

While he declares “I’m not naïve enough to suggest no Liberal government will ever, ever provide funding to an individual company or firm”, he insists “we’re being much more strategic”.

He says outlays on projects that will drive long-term growth, such as South Road or the Old Royal Adelaide redevelopment, are “much more sensible expenditure than trams to Norwood or North Adelaide”, while ‘picking winners’ through grants schemes was something “we don’t see as a sustainable long-term solution”.

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