What is the NSW Treasury Employment Calculator?
NSW Treasury has developed the NSW Treasury Employment Calculator, a tool for agencies to estimate the number of jobs supported by Government actions. The calculator was developed to support Government decision-making in collaboration with NSW Government agencies. It is designed to assist in the estimation of employment supported by Government actions, programs and policies. The calculator is consistent with existing guidance on how analysis of employment supported by Government expenditure should be undertaken (TPP 09-7 Policy Paper and TRP 09-3 Methodology Paper).
The calculator uses recent (2017-18) Australian Bureau of Statistics (ABS) data to derive input-output (IO) multipliers that enable transparent and comparable employment projections. Employment multipliers (i.e. the number of full-time equivalent jobs supported per $1M of Government expenditure) used in the tool are based on ABS Input-Output Tables that can be used for this purpose. The NSW Treasury Employment Calculator is only one input that may be used to supplement existing rigorous evaluation techniques, such as cost-benefit analysis (TPP17-03).
The calculator and supporting documents outline presentation protocols, jobs supported instead of created, and the well-known limitations of the IO methodology for economic impact analysis. As a working tool, the employment calculator will continue to be refined and reviewed over time.
Why was it developed?
The NSW Treasury Employment Calculator was a tool developed in response to requests by NSW Government agencies seeking Treasury’s assistance to rapidly estimate the employment impacts of potential programs, including most recently COVID-19 related programs. Some agencies may lack the expertise to undertake this analysis, by using outdated information or use methods that diverge in their approach. This can create inconsistencies, and can make it difficult to compare programs. The calculator addresses these inconsistencies by providing a standard method on how employment effects can be estimated.
How to use the calculator
Users should read the user guide (includes methodology paper) before applying the tool and review the ‘Approach’ and ‘Limitations’ worksheets within the calculator to understand how the model works and how results should be interpreted. Variations in results are driven by the inputs to the model, hence the numbers that are inputted and the related assumptions relied upon should be documented and based on reliable information. The user inputs key assumptions associated with the potential proposal, including:
- Name of the investment proposal.
- Identified industries impacted by the investment proposal.
- Nature of the investment proposal.
- Is it a project or program? This distinction assists in identifying whether direct or direct and indirect effects should be calculated.
- Annual Government expenditure allocated to the industry identified.
- Assumptions should be clearly documented where detailed costing information is yet to be developed.
The calculator takes user inputs and applies employment multipliers to show the:
- Direct employment effects for projects (i.e. full-time equivalent job supported per $1M of expenditure).
- Direct and indirect employment effects for programs (i.e. full-time equivalent job supported per $1M of expenditure).
Users should rely on inputs that are robust and transparent to ensure they can be explained. Employment estimates produced by the calculator refer to jobs supported across Australia and cannot be attributed to any specific location, as the multipliers used are derived using National Accounts data from the ABS.
Limitations and caveats when using the calculator
While IO multipliers inform decisions on the potential impacts of Government expenditure on the economy under strict assumptions, they do not measure community welfare. Therefore, IO multipliers can only supplement evaluation techniques for investment appraisal, such as cost-benefit analysis, but may be helpful for comparison and reporting purposes.
IO multipliers also tend to overestimate employment impacts. To address potential overestimation, the calculator incorporates direct and indirect industry employment impacts but excludes consumption effects. This methodology is, therefore, fit for purpose—especially when comparing projects—and has been commonly applied across jurisdictions.