JIM CHALMERS MP
MEMBER FOR RANKIN
ADDRESS TO THE AUSTRALIAN INDUSTRY GROUP
MONDAY, 28 FEBRUARY 2022
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Let me begin by acknowledging the First Nations people from these Yugumbir and Jaggera lands, which have been pummelled the last few days by rain and flood.
And with some thankyous:
To all of you, for being here today, and far more importantly for the jobs and opportunities you create right around the country.
To Innes and Chris for the introductions, and for the way the AiG has engaged with the Opposition on policy for some time now.
And most specifically today can I acknowledge and convey our gratitude for the support you expressed publicly for our Powering Australia plan.
We’re delighted with how well it’s been received.
And we know part of the reason for that is the way it has been welcomed by peak business groups like the Ai Group.
We hope that’s a harbinger for a more meaningful relationship between you and a Labor Government which tackles some of the challenges I want to focus on today.
Because without that collaboration and consultation, we know we can’t build an economy and a society stronger after COVID-19 than it was before.
That’s our goal.
To do better than go back to the weak growth, tepid investment, poor productivity and flat living standards which characterised the economy before the pandemic.
Better than the bleak picture painted by the Intergenerational Report, of an economy smaller and growing more slowly over the next forty years than the last forty.
Better than generational debt without a generational dividend.
We understand that the pandemic didn’t just create new challenges for employers, and for your people, it turbocharged existing weaknesses.
Many if not most of our challenges have come at us off a much longer run-up.
Weak business investment and productivity, and a shallowing pool of skills are perhaps the most dramatic examples of this.
Business investment has dropped almost 20 per cent since the Coalition came to office in 2013, to the lowest levels as a share of the economy since the 1990s recession.
Private new capital expenditure dropped almost 30 per cent over the same period.
Productivity was sliding backwards by the start of the pandemic, for the first time since the mining boom.
No wonder, when you recall that VET completions have declined markedly over recent years.
If the VET system had maintained completions at 2016 levels over the past four years, we’d have more than 150,000 additional skilled workers today.
Instead, we have crippling skills shortages.
For example, despite the digital revolution, only 3 per cent of domestic graduates have an IT qualification, down from 6 per cent in the early 2000s.
In critical industries such as civil engineering, cyber security and software development, skills shortages are expected to get worse not better.
All this context matters for what we’ve been through, and what comes next.
We’re pleased that many of your businesses weathered the worst of the pandemic, but many others didn’t.
Despite improving conditions, some still aren’t.
The recession had an uneven impact, and the recovery will too.
So we can’t be complacent about the road ahead or dismissive of those doing it tough.
It’s been a pretty wild ride.
Too many false starts and false dawns.
At least five, by my count.
Five times the PM and Treasurer took credit for the recovery from the 2020 recession without doing their jobs to actually secure it.
In October 2020, during the big Victorian outbreak.
In December 2020, before the Sydney Christmas outbreak.
In March 2021, when JobKeeper was withdrawn, the Government was falling well short of its own vaccination targets, and around 56,000 Australians lost jobs.
In the May Budget of 2021, they said we were well on the road to recovery.
But not long after, almost 360,000 people lost their jobs at the height of the delta wave, and the economy bled billions of dollars a week in lost activity.
Failures to manage the pandemic caused the third-biggest economic downturn on record, in that September quarter, one of the worst results in the developed world.
Pretty drastic reminders that there’s no healthy economy without healthy people.
The fifth false dawn was in the middle of this summer.
The National Accounts for the December quarter will show a healthy GDP recovery.
But we already know that was cruelled when workforces and supply chains were smashed as people spent late December and early January driving around searching for rapid tests they couldn’t find or afford, and that the Government didn’t order.
Today, once again, there are encouraging signs of a recovery.
This time we hope it sticks.
But there’s still lots of uncertainty around.
Health uncertainty – the risk of more and harsher variants.
Economic uncertainty around the global and domestic outlooks.
Geopolitical uncertainty as well.
The war in Ukraine is expected to push up energy and food prices and feed some serious market volatility and investor caution, with consequences for our region and for us here at home.
And yet, despite all this uncertainty, a slightly clearer picture of our domestic economy is still emerging.
Full of possibility if we get it right, but full of challenges too.
Three come to mind in particular:
One, the emergence of inflation and difficult judgements for the Reserve Bank on interests rates which will sting when they inevitably come off their low base.
You know all about the supply chain pressures pushing up prices, and families know all about the skyrocketing costs of petrol, childcare, rent and groceries.
Two, those skills shortages in the economy acting as a handbrake on the economy – harder to understand with 1.5 million people looking for work or more hours.
This is now the issue most frequently raised with me in gatherings like this, in the board rooms and zoom rooms of this country.
And three, the lack of decent wages growth across the board, despite falling unemployment and skills and labour shortages.
Not even last week’s Wage Price Index of 2.3 per cent goes near the CPI at 3.5 per cent – which means real wages are still falling, with implications for demand.
So with these challenges broadly acknowledged by economists and the wider community, the onus is on us to work out:
The best set of affordable economic policies to boost investment, boost productivity, and boost the right kind of inclusive, sustainable growth.
And the best way to reorient the Budget to achieve these objectives.
Australia has underperformed on these fronts for much of the last decade because of the triumph of politics over economics.
That’s how the Coalition has taxed much more, spent much more, and delivered much less as a government than its Labor predecessor.
It’s been a wasted decade of missed opportunities because Budget settings have been determined by political, not economic, goals.
Countless discretionary funds governed by colour-coded spreadsheets spraying billions of dollars around marginal Coalition seats are just one example of this.
There are many more.
So our alternative approach to the Budget is all about emphasising the quality of the spending not just the quantity.
How much matters, how good matters more.
Making sure our investments are governed by economic imperatives.
And recognising you can improve the Budget without hacking away at essential services like Medicare.
In practice that means cracking down on waste, rorts and mismanagement.
Ensuring Australia’s part of welcome global advances on multinational tax fairness.
And growing the economy to create more, and more secure, jobs.
That’s why, if I was handing down a Budget next month, it would be built on five major economic policy priorities to lift the speed limit on the recovery.
One, our Powering Australia plan to drive investment in cleaner and cheaper energy and create more jobs and opportunities, especially in the regions.
Two, free TAFE and more university places to train Australians, deal with skills shortages, and ensure there are more opportunities in more parts of Australia.
Three, modernising the NBN to make our digital economy more accessible, flexible and productive in the ‘work from home’ world we are becoming accustomed to – as part of a broader push to renew our infrastructure, housing, and suburbs.
Four, making early education and childcare more affordable, to ease cost-of-living pressures on working families, invest in the care economy, and boost participation so that we have a bigger pool of willing and able workers for you to draw on.
And five, co-investing in manufacturing and other crucial sectors through a National Reconstruction Fund to diversify the economy, revitalise our regions through partnerships with business and help turn good ideas into good, secure jobs.
We don’t accept for one second some commentators’ characterisation of this agenda as ‘small target’.
It’s different to last time, sure, but it’s ambitious and it’s responsible and it’s right for the economy and the fiscal situation we’d inherit.
And if these policies and these issues aren’t central to the Budget in four weeks’ time, I hope they’re central to the election five or six weeks later.
We are confident and keen on a contest about the economy.
But it needs to be a contest of ideas and not a cacophony of increasingly ridiculous and unhinged scare campaigns on tax or the Greens or China.
Because yet another political patch and paint job which smacks of desperation will not deal with the pressing economic challenges you face, and we face as a country.
And it wouldn’t do justice to your efforts as employers or to the sacrifices made by Australian workers to get us through this pandemic.
Thanks and I look forward to your perspectives and questions.