Why a public holiday for a Matildas World Cup win could cost far less than you think
- Written by: Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University
Prime Minister Anthony Albanese is right about one thing when it comes to public holidays.
Should the Matildas win the World Cup, any decision to grant an extra public holiday is one for the states and territories. The Fair Work Act specifies only eight[1] national public holidays. Any others have to be “declared or prescribed by or under a law of a state or territory[2]”.
The prime minister doesn’t get a look in. Yet he says he will put forward the idea of a public holiday for a Matildas win at Wednesday’s meeting of national cabinet, and expects the premiers and chief ministers to “fold like tents[3]”.
One already has. NSW Premier Chris Minns[4] says should the Matildas win in Sydney on Wednesday, and go on to win Sunday’s final in Sydney, he’ll not only arrange a statewide holiday but also a massive parade to celebrate “what would be an amazing life-changing and unbelievable event in the state’s history”.
Some people claim such a holiday could cost us A$2 billion. But my own calculation – based on very recent global research – shows it could be significantly lower.
‘Imagine the kind of energy’
It wouldn’t be the first public holiday for a sporting event. Melbourne has a public holiday for the Melbourne Cup, South Australia (improbably) for the Adelaide Cup, and all of Victoria for the eve of the AFL grand final.
But it wouldn’t happen on the Monday following the game. Minns says it takes seven days to gazette a public holiday.
To critics concerned about the cost of an extra day off, Minns asks:
can you imagine the kind of energy, economic excitement? It would be an explosion of economic activity, particularly for the CBD.
It is unconscionable to talk about the cost of a public holiday without also talking about the benefit – what the Productivity Commission[5] describes as the “genuine social benefit associated with widespread community engagement in events, especially on days of cultural or spiritual significance”.
These benefits are deeper and richer than those of ordinary annual leave, in which individuals or families are away from work – but not the entire city or country.
The commission – no fan of unlimited days off – points to evidence that “more shared days of leisure enrich the relationships of people with their friends and acquaintances, which then improves the quality of leisure on other days”.
No hit to productivity
It’s easy to imagine that happening should the Matildas win. A national holiday would bring the nation together, at a cost. And very new international research makes it pretty clear that cost would be small.
One thing it wouldn’t do, despite loose talk[6], is dent productivity.
Productivity is usually defined as production per hour worked. If the number of hours worked is cut, production per hour worked is likely to stay the same, or even increase if people work a bit harder the next day to catch up.
It’s what Prime Minister Bob Hawke was getting at the morning Australia won the America’s Cup in 1983. He famously declared “any boss who sacks anyone for not turning up today is a bum!”. But far fewer people remember what Hawke then added[7]: “You have to work a bit harder the next day to make up.”
Far more of us are able to work a bit harder to make up than when Hawke made the suggestion. Back then, one in six[9] Australians worked in manufacturing, often on production lines that moved at a constant pace without the ability to catch up. These days it’s just 6%. More of us work at desks.
A back-of-the-envelope[10] estimate of the production that would be lost – quoted as if it is authoritative[11] by Opposition Leader Peter Dutton – is $2 billion.
But while some businesses will produce less, and perhaps sell less, if there’s an extra public holiday, others will sell more (as Minns has pointed out).
And if they have to pay penalty rates to do it, that’s not actually an economic cost. In the language of economists, it’s a transfer from employers and their customers to employees.
A better estimate of public holiday costs
Working out the net effect of an extra public holiday on gross domestic product requires ingenuity, because it’s hard to know what would have happened to GDP without it.
Late last year, two economists from Harvard University and the University of Chile, Rodrigo Wagner and Lucas Rosso, presented a solution[12].
Some years have more public holidays than others.
Shutterstock
They took advantage of the fact that, in many countries, certain holidays aren’t moved when they fall on weekends. This means in some years those countries have fewer days off work from holidays than others.
Examining data from more than 200 countries over the two decades leading up to COVID, they determined the net dent to GDP from an extra public holiday was only 20% of the GDP that would have been produced that day.
As they put it, this means “an 80% recovery with respect to the GDP that would have been lost if the effect were exactly proportional”.
An awful lot of us do a bit more work to catch up after a holiday, or are in jobs where that doesn’t matter, or get more business because it is a holiday.
As Wagner and Rosso expected, the effects varied by industry. In manufacturing, only about half of the expected losses were recovered. In agriculture, which continues regardless of holidays, all the expected losses were recovered.
More like $1 billion – with some real benefits
What does their research mean here in Australia?
I did my own back-of-the-envelope calculations, applying Wagner and Rosso’s 200-plus nation results to Australia’s GDP.
The result? It suggests a hit to production of as low as $1 billion from an extra holiday.
It is worth saying again that’s not a $1 billion loss. In return, we would get extra leisure, and a good deal more besides.
Wagner and Rosso also used their data to examine other things. They found that self-reported happiness climbed in the years there were extra holidays, while deaths (mainly from job-related accidents) fell.
Like most of the things we like, holidays do have costs. But they are probably lower than we have thought, and – at least in the case of a Matildas celebration – would be offset by rather nice benefits.
Read more: Bank holidays: how a day off work affects the economy[13]
References
- ^ eight (www.fairwork.gov.au)
- ^ under a law of a state or territory (www.legislation.gov.au)
- ^ fold like tents (www.pm.gov.au)
- ^ Chris Minns (omny.fm)
- ^ Productivity Commission (www.pc.gov.au)
- ^ loose talk (www.skynews.com.au)
- ^ added (youtu.be)
- ^ ABC (www.youtube.com)
- ^ one in six (www.abs.gov.au)
- ^ back-of-the-envelope (www.abc.net.au)
- ^ authoritative (9now.nine.com.au)
- ^ presented a solution (deliverypdf.ssrn.com)
- ^ Bank holidays: how a day off work affects the economy (theconversation.com)
Authors: Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University
