JIM CHALMERS MP
SHADOW TREASURER
MEMBER FOR RANKIN
COVID AND THE TWIN EVILS OF COMPLACENCY AND CONFLICT
VIRTUAL ADDRESS TO THE BUSINESS COUNCIL OF AUSTRALIA
THURSDAY, 16 SEPTEMBER 2021
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Good afternoon, from the traditional lands of the Yugumbir and Jaggera people in Logan City south of Brisbane.
Thanks to Jennifer for the invitation to be here; to Tim for that characteristically kind introduction; and to each of you for making the time.
It’s been a big week for the economy. Labour market data just released. An OECD report backing in a number of points we’ve been making. And the Reserve Bank Governor with a pretty upbeat speech.
We hope he’s right.
We all want our society and our economy to open up safely and confidently, not one day later than necessary. We want the damage limited and the recovery strong, broad, sustainable and enduring.
We want to get even closer to full employment, but more secure employment too with better pay.
We want investment to flow and productivity to lift. We want cleaner and cheaper energy, better training and technology, driving a new generation of prosperity and growth that turns our ideas into jobs.
We want to create more opportunities for more people in more parts of Australia by looking forward, upward and outward – not backward, downward and inward.
We want this pandemic to be something we look back on later in life as the moment we worked out how to maintain what we love about our country and leave behind the weaknesses which held us back.
We won’t succeed on all these fronts, perhaps not on any of these fronts, if big employers like you don’t succeed as well.
That’s my starting point not just today but in my role as shadow treasurer and my relationship with you more broadly.
It’s the reason why I’m very grateful for the engagement with the BCA as a peak organisation, but also directly with a number of you here today.
I know the efforts you’ve put in to hang on to staff and keep the wheels of your businesses turning, and that there have been sleepless nights.
When things were the least certain, many of you made a call to me or took a call from me to help us try and understand together what was unfolding. I appreciate that and got a lot out of it.
Perhaps another illustration of that engagement is that when we finish up here the BCA is briefing my caucus colleagues. Jennifer’s idea, and a good one I was pleased to facilitate.
The economy
We need to make sense of where we’re headed and where we’ve been.
Tepid growth, stagnant wages and weak business investment in 2019 even before the bushfires and the virus.
In 2020, the first recession in three decades and the deepest in almost a century.
The beginnings of a recovery in early 2021, cruelled by policy mistakes like the premature withdrawal of support and the mismanagement of vaccines and quarantine.
Some parts of the economy performing well, others in strife. Skills shortages in some places, acute joblessness in others.
A low unemployment rate of 4.5% in August masks the tough reality that unemployment is only low because more than 200,000 people have stopped looking for work in the past two months, and 1.2 million Australians are “working” zero hours. If we include these people, the effective unemployment rate in Australia right now is over 14 per cent.
Labour accounts from the ABS which show that even before these damaging lockdowns, the total number of people employed in Australia in the June quarter this year was 1.6 per cent below the March 2020 level.
That means total jobs as well as hours have taken a hit and our economy is still struggling, even if the headline unemployment rate looks healthy.
The story of the June quarter National Accounts was mixed too – a little stronger than many expected, but still soft by historical standards and compared to other developed nations.
That’s because there’s been a correlation between the pace of vaccinations in comparable countries and the pace of recoveries.
We know that the September quarter will be bad, with economists predicting a contraction somewhere between 2 and 4 per cent as a consequence of state lockdowns made necessary by federal mistakes.
W for ‘what if’?
As you know, for much of the past two-and-a-half years the commentary’s been focused on what shape, what letter, the economy will look like.
The verdict’s almost in; it’s most likely a W. So far a back-to-front N, but most likely and hopefully a W.
That W stands for ‘what if?’
What if our government had ordered enough vaccine in 2020 rather than see it go begging? What if it had taken that meeting with Pfizer?
What if it had built quarantine facilities to prevent the virus escaping hotel quarantine?
These failures have imposed eye-watering costs on the Australian economy.
At the start of August, the Treasurer released modelling of the cost of Australia-wide lockdowns which showed the economy was shedding hundreds of millions of dollars a day, and billions a week.
Your own BCA analysis last week estimated the current lockdowns in NSW, Victoria and the ACT are costing the economy $3 billion per week plus another $1.3 billion per week from closed international borders.
That means these lockdowns will likely cost Australian businesses and workers somewhere in the ballpark of $85 billion dollars.
These are the costs and consequences of federal policy failures.
It didn’t need to be this way.
As Saul Eslake and others have pointed out, much of this year’s economic damage could have been avoided.
It’s not about being ‘heroes of hindsight’ it’s about failures of foresight. An inability to anticipate the obvious.
Because amidst all these ups and downs of the last two years one thing has been certain: the recovery has always been hostage to federal government responsibilities like vaccinations and quarantine.
A first-rate recovery was never possible with a third-rate vaccine rollout.
First priorities
So we need to be able to focus on fixing the here and now, with an eye to the future as well.
The first priority is to ensure that the vaccination rollout is as fast and efficient as possible. Cash incentives which double as economic stimulus, vaccination leave, and a plan for booster shots will all help.
The second is to ensure a safe end to these damaging lockdowns. That means getting tracing and quarantine right, making sure hospitals can cope, and providing some clarity on mandates and passports.
The third priority should be to protect our kids, specifying targets for 12-15 year olds, rolling out vaccines through schools, and securing supply of a paediatric vaccine for under 12s.
Fourth, we should be better prepared and self-sufficient.
That means having the ability to manufacture mRNA vaccines in Australia, a network of purpose-built quarantine facilities, and an Australian Centre for Disease Control, which could help guide a national response to current and emerging infectious diseases.
The right kind of optimism
But to be confident and optimistic about the future we need more than patch-ups and catch-ups and crisis management.
We need an ambitious plan for the future too.
A plan shaped by an honest appraisal of the issues.
COVID is an incredible challenge and has disrupted nearly every aspect of our lives. It would be short-changing the Australian people if we were to just return to the status quo that existed in 2019.
To an Australia characterised by low business investment, low productivity growth, stagnant wages and prices, insecure work and high underemployment.
We can do better than that.
Only if we are determined to act and lead, not watch and wait.
In the longer term, our path forward will depend on whether we can generate the vision and energy to tackle some of the major problems laid out in the Treasury’s Intergenerational Report.
It said economic growth will be slower, we’ll see record public debt, weak population growth and an aging population, and our tax system will struggle to fund future spending demands.
Despite this Government racking up more than $1 trillion in debt and delivering eight years of deficits with at least another forty to come, Australia’s economy will grow more slowly over the next 40 years than it did during the last 40 years.
By then the debt interest bill will cost the equivalent of $35.7 billion today, which is more expensive than the entire NDIS.
And that’s all based on the assumption that productivity growth, which had stagnated at 0.5 per cent prior to the pandemic will magically bounce back up to 1.5 per cent without any policy changes.
The BCA has echoed many of the IGR’s warnings in your “Living on Borrowed Time” report.
It’s a very powerful piece of work that demands broader attention and engagement – and I hope you get it.
What it shows, and what the IGR shows, is that so much of what we are confronting are not new changes but challenges accelerated: a slowing economy, record debt, weak population growth, declining living standards, stagnant wages, fewer opportunities, less competitiveness.
More than that, it points the way forward to a more diverse economy; powered by cleaner and cheaper energy; open to the world and competitive; with better skills and stronger public finances; and where people aren’t needlessly left behind.
I could have written it myself – and I wish I did!
A different ‘governing temperament’
Australians will make a choice later this year or early next.
The policy differences between the parties are certainly there but perhaps not as numerous or as controversial as last time.
I think the choice this time is between a more ambitious party which takes these challenges I’ve talked about today seriously, versus one that has vacated the field – wasting money and wasting time
But also I think we’d have a different governing temperament.
By that I mean a different approach to running the country: characterised by less waste of time and money, les complacency, and less conflict.
Because what’s true of the last two years is equally true of the next ten in this regard.
The enemy isn’t just COVID-19, as formidable as it has proven to be.
It’s the twin evils of dangerous complacency and needless conflict.
A dangerous complacency which says we could muddle through without meeting Pfizer or ordering enough vaccines or building quarantine.
Which converts the substantial achievements of the Australian people in 2020 into the missed opportunities of 2021 and risks snatching defeat from the jaws of victory.
Complacency is costly but so is the wrong kind of conflict.
There are times which require disagreement, often robust. There’ll be scraps, but they should be scraps over real substance.
We want to lead this country differently.
Part of that is not just evangelising a relationship with business but institutionalising it.
That’s why almost all of our policies are based in one way or another on a partnership with business, to make our economy more dynamic by boosting investment and building human capital.
That’s true of our National Reconstruction Fund, our Rewiring the Nation policy, our plans for defence procurement and rail manufacturing, our policies for more affordable housing and cheaper childcare, the Skills Guarantee and energy apprenticeships, and much more.
And in that spirit, as the policies develop further and the challenges become even clearer, I look forward to working with you either side of the election, and to your questions and perspectives today.
ENDS
