Abuse primarily relates to overstating the economic importance of specific sectoral or regional activities. It is likely that if all such analyses were to be aggregated, they would sum to much more than the total for the Australian economy. Claims that jobs ‘gained’ directly from the cause being promoted will lead to cascading gains in the wider economy often fail to give any consideration to the restrictive nature of the assumptions required for input-output multiplier exercises to be valid. In particular, these applications fail to consider the opportunity cost of both spending measures and alternate uses of resources, and may misinform policy-makers.
This is related to my previous post: War on Multipliers. My fave remains the claim by the current Member for Cairns in his previous incarnation at the Cairns Post that if we all bought local potatoes instead of 'imported' then the flow on multiplier to the local economy would be four times every dollar spent on spuds and we would all be filthy rich. I think a local potato policy would likely be as successful here as it was for the Irish economy?
This also relates to my quest for the Aquis KPMG report. Without the full report including assumptions and methodology there is no way of knowing whether the glib PR claims on employment and the economy are valid or otherwise.
The PC note does also include effective and novel uses of input-output methods.