Budget 09: Job Summit ideas languish on the shelf

Months of discussions after the Job Summit in February have not yielded a single significant new initiative on summit ideas in yesterday's Budget.

The Budget's main economic forecast is for unemployment to rise from 5 per cent at last count in March to a peak of 8 per cent late next year - comparable to the last peak in the Asian crisis a decade ago. The number of jobs is forecast to drop by March 2011 by 120,000, or 5.5 per cent, the biggest decline in almost 20 years.

Finance Minister Bill English said that the forecast peak in unemployment was unacceptable.

"As far as we are concerned, that's too high, and we are going to do every single thing we can to create the new jobs that will bring that number down," he said. "All the accumulated evidence is that the global contraction has stabilised and we anticipate from here that there won't be significant new negative shocks to those forecasts."

He said the Budget provided for a $13 billion increase in Government debt in the coming year.

But the increase came almost entirely from a combination of lower revenue and more benefit spending due to the shrinking economy and higher spending on pre-announced projects such as extra roading, broadband, schools and state houses.

The Budget confirmed an extra $31 million in the next year, rising to $84 million a year by 2012, for home insulation, thanks to a deal with the Greens. There was also a token $4 million in the coming year only for summer holiday jobs for students at tertiary institutes.

But there was no mention of Job Summit ideas that are still waiting for action, such as more support for apprentices, removing penalties on tertiary institutes that exceed their enrolment caps or developing a seasonal work "marketplace".

Instead, the Budget has chopped $58 million in the coming year, rising to $246 million a year by 2012, out of "unfunded" 2008 Budget provisions and other allocations for tertiary education, including adult and community education.

"Step Up" scholarships for students from low-income backgrounds studying science, technology or health, and "Merit" scholarships for the country's most capable students, have been scrapped from next year.

Official figures show that employment has not yet fallen as much as economic output, as employers hang on to skilled workers

Unemployment is forecast to rise from 115,000 in March to peak at 179,000 and average 172,500, or 7.5 per cent of the workforce, through both of the next two years. The numbers on unemployment benefits are projected to rise from 37,000 at last count in March to a peak of 99,000 in 2010-11.