JIM CHALMERS MP
MEMBER FOR RANKIN
A GENERATIONAL BUDGET, WORTHY OF OUR PEOPLE
THE ANNUAL FORGAN SMITH LECTURE
TUESDAY, 4 MAY 2021
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I want to begin by acknowledging the elders and traditions of the Turrbal and Jagera people. And by thanking the University of Queensland ALP Club for this opportunity to deliver the annual lecture which pays tribute to William Forgan Smith, in a building named after him here at UQ.
Forgan Smith was a painter from Glasgow, arriving in Mackay as a 24-year-old in 1912. There he joined the Australian Workers Union and became active in the labour movement.
Just three years later he was elected to the Queensland Parliament. It took even less time for another giant of the time – new Premier TJ Ryan – to notice and encourage his talent.
From there Forgan Smith’s rise was meteoric and enduring. He got the top job relatively young and held onto it longer than any other Queensland Labor premier.
His premiership lasted a full decade, from the Great Depression to the Second World War. For the first six of these he was Treasurer as well.
In those turbulent years he was a pioneer of Keynesian economics but not doctrinaire, more of a pragmatist.
He wasn’t a slave to orthodoxy, he wasn’t fixated on what might prove the most popular course.
He believed – above all – in what worked.
In that regard, you can draw a straight line from his premiership not just to the premierships of Goss and Beattie, Bligh and Palaszczuk, but also to Rudd and Swan during the Global Financial Crisis as well.
Same goes for his unwavering focus: on jobs, wages and incomes; on ensuring public spending left a lasting public benefit; and on recognising the role of the regions in broad economic growth.
The right priorities coming out of that recession almost a century ago; the right priorities coming out of this one today.
He knew that what matters isn’t just the quantity of the intervention in the economy, but the quality.
We’re still relying on so much that he built: the Story Bridge, Somerset Dam and much more right throughout Queensland. It’s impossible to travel throughout the regions – like I do frequently with our Senators Chisholm, Watt and Green – without coming across, or driving across, the legacies he left.
I remember in my first year of university one of the texts featured a painting of Forgan Smith.
In it, he’s holding the reins of government. In the foreground are farmers and growers and shearers and stockmen and cane-cutters. And factories and mills, docks and trains, planes and trucks loaded-up with Queensland goods.
It’s an image of its time, no doubt.
The workers are all blokes, for one.
But it’s a picture that radiates confidence and strength and optimism and imagination.
It speaks for a belief that Queensland prosperity and progress came from a partnership between the people and their Labor government.
Think about that.
Then imagine the scene Scott Morrison and Josh Frydenberg will stage next week ahead of the Budget.
These guys wouldn’t know the fiscal levers from a selfie stick.
There they’ll be, sitting at the table, jackets off – oh so natural.
Sleeves rolled-up after another hard day of self-promotion.
The staged, self-congratulatory conversation.
Always the phony photo-op with these guys.
Always the political cliché.
Always about them.
Always with their eyes on the camera, not the future.
You can exist like that in politics.
And maybe – for a period of time – you can succeed.
But if all you care about is how things look - you won’t build anything that lasts.
You won’t achieve anything that matters.
You won’t fulfil the great opportunity and the great obligation of public life – to leave the place better than you found it.
And that’s the biggest risk ahead in this Budget.
That instead of national imagination we get self-congratulation.
That instead of laying-out an economic vision, the government focuses on managing political perception.
And the stakes are too high for that.
THE RECESSION OF 2020
Nobody here needs reminding that we have just been through the deepest, most damaging recession in the almost a century since Forgan Smith was premier.
The unprecedented contraction in GDP in the first half of 2020 was far greater than what we experienced in the entire 1990s recession.
During this time, business investment and wages growth – already too low – plummeted to new depths.
Consumption experienced its sharpest decline on record and saving rates soared, due to restrictions and uncertainty about the future.
The number of unemployed and underemployed Australians skyrocketed – with labour under-utilisation hitting 20 per cent.
This recession brought to an end, on Scott Morrison’s watch, almost three decades of continuous economic growth – created by the Labor Governments of Hawke and Keating in the 1980s and 1990s and saved by the decisive economic policies of Rudd and Swan a decade ago.
But even before COVID-19, warning signs in the economy were being ignored.
Economic growth was below trend – in aggregate and in per capita terms.
Between 2013 to 2019, business investment declined by over 20 per cent and productivity growth went from being weak to going backwards.
The unemployment rate was far from full employment and underemployment had crept up to record highs.
This contributed to the weakest period of wages growth in Australia’s history.
Ross Garnaut calls this time the ‘Dog Days’ – a period defined by poor economic performance both relative to our history and relative to many other developed countries that fared worse during the GFC.
THE PATCHY RECOVERY
Australia is now emerging from recession.
But the big risk is that instead of our economy breaking-free from the Dog Days, it doesn’t even strain the leash.
That we go back into the punishing, demoralising cycle of insecure work for stagnant wages.
Back to flatlining living standards for families and longstanding weakness in business investment and productivity.
After such a deep downturn, this recovery is expected, and welcome – even pleasing – but it’s also patchy, uneven and hostage to uncertainty.
For the almost two million Australians who still can’t find a job or enough hours to support their loved ones this still feels like a recession.
It’s not a genuine recovery if Australian working families are left behind.
It’s not a real recovery if working Australians gain nothing in wages growth or job security.
It’s not a meaningful recovery if business investment and productivity only inch their way back from non-existent to anaemic.
And it won’t be a lasting recovery if we don’t invest in the next generation of growth – in training and skills and advanced manufacturing and renewables.
Just because the recession could have been worse doesn’t mean the recovery shouldn’t be better.
It certainly doesn’t mean the job is done.
And what recovery there is, is happening despite the Morrison Government, not because of it.
At the height of the pandemic, Australians stuck by each other and did the right thing by each other to limit the spread of the virus so restrictions could lift.
They deserve the credit.
The Morrison Government’s incompetence risks betraying that sacrifice.
The recovery would be stronger were it not for the Prime Minister’s continued bungling of the vaccine roll-out, which is putting the Australian people’s achievement at risk.
The economy would be in better nick if he hadn’t got quarantine wrong and tried to blame the states.
Both of these debacles risk more lockdowns, drag the uncertainty out, and delay the proper opening-up of the economy.
There’d be more jobs if the Treasurer’s JobMaker hiring credits weren’t such an embarrassing failure.
At last count it’s delivered just 609 of the 450,000 jobs he said would come from his $4 billion scheme.
More jobs if the subsidised airfares didn’t fall so short of what’s needed to keep businesses relying on international customers going.
More help for small business if the $40 billion SME guarantee scheme was more effective, having so far deployed just $3 billion in actual help.
That’s before we get to the consequences of this Government’s failure to diversify Australia’s economy to prepare for a more assertive China – instead seeing us become the most China-dependent country in the world for our exports.
Now Australian exporters are suffering, and Australian jobs are on the line.
THE BUDGET BOTTOM LINE
Despite all this, as the economy recovers so will the Budget.
We are expecting very substantial write-ups in revenue and a corresponding decrease in support payments, largely automatic.
And the government can hardly claim credit for an iron ore price some multiples of what its budget papers assume.
Again, this improvement will be despite the Government not because of it.
The bottom line would be much better if the Budget wasn’t riddled with rorts and weighed-down with waste.
If billions weren’t wasted on JobKeeper for already-profitable companies; or market research and taxpayer-funded political advertising; or jobs for mates; sports rorts and dodgy land deals.
THE TREASURER’S RHETORICAL SHIFT
At the heart of every one of these failures and bungles and missed opportunities is a simple truth.
The Liberals aren’t good at investing in secure jobs, or education or human capital, or decent services or proper infrastructure…because they don’t believe in it.
They don’t see it as their responsibility.
They don’t take the obligation seriously.
They’re itching, all the time, to get back to their comfort zone: cuts and austerity and the odd (very odd) speech about identity politics.
In a speech last week the Treasurer made a great show of saying this was not the time for austerity.
That was it.
A shift in language.
No contrition, no embarrassment, no shame.
No explanation for how and why the Liberals had fallen short on job security, wages and debt for eight years running.
No acknowledgement that the government had failed to deliver on their old fiscal strategy for eight years as Australian’s living standards had flatlined.
Instead, having misunderstood and misjudged the economy; having got his forecasts wrong; having got his fiscal strategy wrong – the Treasurer now wants us all to stand and applaud his hasty rhetorical retreat.
Having pretended for the past decade that using the Budget to lean into a downturn was irresponsible during the Global Financial Crisis, the conservatives were forced last year, and then again last week, into a humiliating capitulation.
Having described a couple of hundred billion dollars a ‘debt and deficit disaster’ the same Liberals and Nationals now talk of many multiples of that as sensible and manageable.
Having produced those Back in Black mugs they now say deficits don’t matter.
Having said there was no blank cheque for JobKeeper for struggling workers and small businesses, they still handed billions to already-profitable companies that didn’t need it.
It was only weeks ago that Frydenberg was saying he’d start cutting the Budget when unemployment was just under six per cent.
Now he says four-point-something.
It’s hard to take him, or them, seriously.
And of course, it’s not the rhetoric that matters.
Spin doesn’t create jobs or boost wages or build for the future.
And a budget aimed at the next day’s papers won’t deliver for the next generation.
What matters is that in eight long years of promising more job security and stronger wages growth we’ve seen rampant insecurity and stagnant wages.
What matters is not the announcement but the delivery.
The mismanagement not the marketing.
What matters is that with this track record - they’ll be asking for twelve years at the next election.
The people who have spent the best part of a decade creating weakness in the labour market now say they just need another three years to fix it.
They shouldn’t be believed, they can’t be trusted.
And when the Treasurer feels like he needs to say – out loud – that this is not the time for austerity.
All he means is there will be a time for austerity – after the election.
FULL EMPLOYMENT AND VALUE FOR MONEY
So the Government’s new budget settings are a reflection of the obvious and they deserve no credit for stating it.
Of course full employment is south of five per cent. The Reserve Bank and others have made it clear.
Of course we need to get much closer to full employment if we are to deal with the stagnant wages which were a problem under this Government before the crisis and especially now. We’ve been saying that for some time.
Of course now’s not the time to flick the switch to austerity. It’s remarkable the Treasurer only came to that conclusion just now. It’s been obvious to everyone else for months.
The Treasurer’s making it up as he goes along.
Trying to minimise the differences with Labor on the economy, temporarily raising an ideological white flag.
Labor’s been consistent on all this from the beginning.
What matters is the quality of the spending, where it’s directed, and whether Australians have anything to show for all this debt.
That’s why the Government’s new fiscal settings can’t be an excuse for a taxpayer-funded free-for-all for its mates.
It can’t be a magic pudding budget where revenue upgrades, including from high iron ore prices, disguise billions in wasted spending and budget mismanagement for generations to come.
Where Frydenberg trumpets a ‘responsible’ budget while wasting billions on poor policy and pork-barrelling and more rorts and waste without any lasting legacy apart from debt.
With a trillion dollars in debt already and too many unemployed and underemployed and longstanding weaknesses in wages there’s never been a more important time to get value for money.
TESTS FOR THE BUDGET
We are all about more secure jobs, and more opportunities, for more Australians.
That’s how we’ll assess the Budget – whether it does enough not just to forecast more jobs but actually deliver more secure jobs.
Whether it does enough to invest in people and the future.
Whether it does enough to improve living standards and deliver wage increases.
Whether there’s enough to encourage a new generation of cleaner and cheaper energy; to teach and train our people to keep up with technological change; or to turn Australian ideas into Australian jobs.
Whether it does enough to improve the economic security of women and give them the opportunities to work more.
After eight long years of a government soon asking for 12, the Budget can’t be yet another missed opportunity.
It needs to be more ambitious about actually delivering full employment and set out a genuine jobs plan that strengthens and diversifies our economy and ensures growth is broader, more inclusive and more sustainable.
As a start, the Government should:
Fix the hiring credit to make it easier for employers to use and do more to incentivise the hiring not firing of over 35s.
Provide targeted support to hard-hit sectors and regions that have been left behind by premature cuts to support.
Ensure a gender lens has been applied before making announcements, not as a last-minute scramble to pull together a budget marketed at women.
Provide a comprehensive plan to tackle the problem with business investment – not just another one-year roll-over of temporary expensing.
Provide a full response to the aged care royal commission and fix the crisis that this Government has overseen.
Set out a plan to tackle poverty and housing affordability.
Properly rule out further cuts to superannuation, which the Government has already raided and rorted, by going ahead with the legislated increase to the super guarantee.
The Budget must come clean on the economic cost of the botched vaccine rollout.
Just as its last Budget estimated that a faster rollout could boost economic activity by $34 billion, they need to come clean on the cost and risk of delay.
Labor has set out our own positive alternative policies to build an economy that is stronger after COVID-19 than it was before:
A National Reconstruction Fund, which will partner with the private sector and back projects that create jobs, broaden our industrial base and revive our regions; provide cheaper and cleaner energy; get more apprentices on government projects; a plan for secure jobs and more accessible childcare.
A NEW GENERATION
I’m going out on a limb – but if you’re here tonight at the Forgan Smith Lecture as a member or a guest of the UQ ALP Club…then I’m thinking you’ve got at least a strand of the politics-history-economics nerd gene in there somewhere.
So…I feel like I’m in a safe space to close with this thought.
I turned 18 the day the Keating Government lost office.
A few years later, I wrote my PhD on Keating’s prime ministership – and I remember thinking ‘oh that would have been the time to be in politics’.
An era of reform and change and rapid reinvention of the way Australia saw itself….that was when the big things happened.
And then – I worked for Wayne Swan when the Global Financial Crisis rocked the world economy at its very foundations.
I remember thinking – even in the moment – this is the biggest challenge we’ll face, this is the biggest thing I’ll be part of.
And then came 2020.
And what troubles me about everything we’ve seen from the Government so far – and everything we’re hearing about the Budget next week – is that they don’t seem to sense the size or significance of what’s happening.
They’re not thinking on the right scale.
They’re not setting Australia up to seize the change and make it work for our people, to reimagine a new era of prosperity, more fairly shared.
The challenges and opportunities of this moment demand ambition and courage and energy and vision.
They require so much more from government than the promise of a slow return to a stagnant status quo.
Forgan Smith’s Queensland was smashed by the Great Depression – barely a decade after families and communities had been broken by the grief of war.
But Queensland emerged from that crisis with new industries and new infrastructure and new products for export to new markets.
And it went forward with a larger sense of what people can do with a government on their side.
That’s why we need your help to win the next election.
Not just your vote on the day, or your voice on the phone.
We need your ideas and your passion and your optimism and your belief that this moment in Australia’s history is too important to be missed through mismanagement or squandered through short-termism.
We need your help, not just to restore what Australia was before COVID but to go beyond, to build a better and smarter and stronger and more diverse economy.
An economy that empowers and rewards the skills and creativity and industry and drive of the Australian people.
Anthony Albanese has said it many times.
As Prime Minister, he’ll be on your side.
To make that happen – we need you on our side.
Don’t look back, years from now, and think ‘that would have been a big moment to be part of’.
Be a part of it, shape it.
The greatness of Forgan Smith belongs to history.
With your help, the future can belong to us.
Thank you very much.