The Election, the Economy, and the 46th Parliament

25 June 2019

An address to the National Press Club in Canberra.



Thanks for the introduction and for the opportunity to be here. I acknowledge the traditions, customs and elders of the Ngunnawal and Ngambri people and pay my respects to all the first Australians.
This time last week I was on the road from Proserpine to Bowen, in North Queensland, two of the ten towns which made up the 2,800km, four-day road trip I took with Senator Anthony Chisholm. We also went through Maryborough, Mount Larcom, Rockhampton, Mackay, Ayr, Townsville, Sarina and Gladstone – and we were in Cairns the week before.
Following Anthony Albanese’s example, we’ve been listening, and reconnecting. It was productive, illuminating, and cathartic too. Good for the soul even, after a pretty shabby month. Lots of engagement with really good people – in their businesses, in sugar mills and main streets, and after work in their pubs.
Also on those long stretches of road, plenty of opportunities to reflect on what we were hearing. Lots of “silent times in thought” that The Go-Betweens sang about in “Cattle and Cane” – a song that got played a few times on the Land Cruiser’s stereo.
After all that reflection, I don’t think the election turned on any one issue, but some common lessons have been pretty clear.
Obviously, we couldn’t build a big enough constituency for our tax proposals; their complexity left us vulnerable to under-the-radar lies and scares about death duties and pension cuts which couldn’t be countered effectively or in time; Clive Palmer’s $60 million of ads didn’t help and we bled too much support to minor parties.
That saw us get only every third primary vote in Australia and every fourth in my home state where our challenges seemed to be magnified by issues like coal mining, outside of Brisbane. Some great members and candidates missed out and we lost a very diligent Senator in Chris Ketter.
But listening to my fellow Queenslanders on that road trip, there was perhaps one bit of feedback above all. Sometimes it was spoken, sometimes implied, and it was this: don’t mope around, just get on with it. Sulking or whingeing won’t change the result. 
We’ve got a job to do. Not the one we asked for but an important job nonetheless.
So today I’m not going to dwell too much on the retrospective.
This is also because public musings about what went wrong can too easily, too often, be cast as a judgement on individuals. In the Labor Party, we take decisions collectively, and we take responsibility for them collectively. I put my hand up for my role in the things that went wrong.
The Economy
Clearly one of the consequences of taking so many ambitious policies to the election was that it obscured or even prevented a proper conversation about the Coalition’s substantial failures, not least of which is their stewardship of a weakening economy.
Almost all of the economic debate during the election campaign focused on Labor’s proposals. Almost none of it centred on the Government’s approach, or even the state of the economy itself on their watch.
After years of finger pointing and blame shifting and talking about the Labor Party, the spotlight must now turn to the Coalition and its failures – where it should have been all along.
They have now been in power for six years. Mr Morrison leads a third-term government. He and the LNP own Australia’s economic policy. The scorecard on economic growth, wages, and the labour market is a measure of their failure.
What we are getting is below average growth from a below average Government.
This flows from two sets of pressing domestic challenges.
The first is stagnant wages, which are growing eight times slower than profits; partly a function of rising underemployment; feeding weak household spending and falling consumer confidence; and weak business conditions, including a sluggish retail sector.
The second set of issues is all about five years of weak productivity growth, which has actually fallen every quarter for the past year; and business investment which is at its lowest levels since the 1990s recession.
Because of this double-whammy of weak consumption and poor productivity growth, Australia under the Liberals is enduring the slowest economic growth in the decade since the Global Financial Crisis. This is the longest per capita recession since the early 1980s. The national economy has fallen from the 8th fastest growing in the OECD in 2013 to 20th today. And net debt has more than doubled on their watch.
Strip away their spin and this is what we’ve actually got after six years of the Coalition in power. On what planet does this constitute good economic management?
The Government’s economy is not working for middle Australia. Things are genuinely troubling.
In some cases, the economic mess reflects deliberate conservative policies– like attacking disposable incomes by taking away penalty rates, or the “deliberate design feature” of their policy to push wages down and keep them down. 
In other cases, it’s negligent – skyrocketing power prices caused by energy policy paralysis; or childcare and private health insurance costs which have ratcheted up much faster than wages, leaving families with much less remaining disposable income.
The incompetence of the Government also means the Reserve Bank has far too much work to do. 
If the Coalition was doing such a good job managing the economy, the RBA wouldn’t have needed to cut rates to less than half what they were in the darkest days of the global recession.
Rate cuts aren’t the only tool to stimulate growth. But the other tools are in the Government’s hands, and it either won’t, or can’t use them. This has real consequences too.
Because the RBA has to cut rates so much, to try to get the place moving, retirees are copping it in the neck. The Government’s refusal to adjust deeming rates for pensioners is a big part of this pain. So if the Government must pat itself on the back over its scare campaign over a so-called “retiree tax”, it might at least take its own hand out of the hip pocket of retirees first.
The Government
So here we are: the economy’s floundering, middle Australia is struggling, and the Reserve Bank is hurtling towards the end of the monetary policy runway, with coherent fiscal policy from the Coalition nowhere in sight.
There couldn’t be a worse time for a Government which has no idea how to turn things around.
Anyone who thought international summit season would have lit a fire under the Prime Minister and Treasurer has been left frustrated.
Morrison gave a thoroughly underwhelming speech in the West yesterday, which seemed to suggest the best response to slowing growth was just more of the same. More of the same rhetoric about unions and red tape they’ve been using for six years and which hasn’t created a single job.
If that’s the best he’s got no wonder the economy’s slowing on his watch.
Frydenberg’s comments from overseas were no better, solely attributing Australia’s economic woes to international conditions, ignoring the problems in our domestic economy.
The Treasurer was too busy ringing the bell on Wall Street to hear the warning bells at home. Too busy poring over my old transcripts to do his job.
I am left wondering if he had even read Phil Lowe’s statement from the June meeting. The one where global conditions were described as “reasonable”, and where the main reason for sluggish growth was there in black and white. 
The Governor said: “the main domestic uncertainty continues to be the outlook for household consumption, which is being affected by a protracted period of low income growth.” 
Yes, there are global uncertainties, because the two big beasts of the global economy are arguing over trade; the Brits are Brexiting; and there’s enough to the sabotage of tankers near the Strait of Hormuz to worry us. 
But despite these factors in the global economy, the six years of Coalition Government have been six years when Australia’s major trading partners have grown strongly; when the terms of trade set by the world have been strong and rising; when the Aussie dollar has been at very competitive levels; and when the Reserve Bank has moved interest rates to those record lows.
Australia’s most pressing challenges, at least for the time being, are domestic and focused on incomes, consumption and productivity.
Australia’s economic mess cannot be blamed primarily on the world.
It is at least partly the fault of Australian policy – which means it’s the fault of the Australian Government, a third-term LNP Government with no plan except to shift the blame.
That’s not what Australians need right now. We need a plan to grow the economy and create good jobs.
Tax Cuts
That’s why the first stages of the proposed tax cuts have become so important, and why the Government’s priority should be passing them as soon as possible.
We need to get money into the hands of Australian workers and flowing through an economy which needs bolstering now.
Remember that the Government’s broken promise to have the first stage flowing from 1 July already delays relief for families and delays the boost to the economy. 
Labor is determined to play a constructive role to help turn the economy around. That is why we will enthusiastically support the stage one tax cuts when Parliament resumes next week.
That first stage does have some prospect of helping a floundering economy. As the RBA noted, this is the stage that will “boost household disposable income and could support household consumption in the second half of 2019”.
They are important and they are urgent. And we should go further.
That’s why Anthony and I have also made some other sensible proposals like bringing forward part of stage two, and getting infrastructure investment going. And we’ve said we are prepared to negotiate with the Government to provide these boosts as soon as we can.
Perhaps the most important point about all this has been missed so far: the Liberals’ plan won’t actually see every Australian worker get a tax cut in this term of parliament, but Labor’s will.
I want to repeat this because I want it understood: the only proposal on the table which will give everyone a tax cut this term is Labor’s.
I want it acknowledged that the Coalition is holding tax cuts from next week hostage to a fight about tax rates which wouldn’t kick in for another 262 weeks.
Our plan is tax cuts sooner, to strengthen the economy. We are conscious of the pressure that could be placed on the Budget and we want to make sure our proposals could be implemented responsibly without jeopardising the forecast surpluses.
But if stage two is such a good idea, then let’s get our heads together and work out whether the timing can be improved to help support a floundering economy.
If we can get agreement there then we’d commit to passing stages one and two quickly, at the first opportunity, and seek to defer consideration of the third stage until a subsequent parliamentary sitting.
The Government has been behaving as if their highest priority is stage three. We have expressed our concerns with committing such a massive sum five years out, without the information we’ve requested and not knowing what the economy or the Budget will look like in 2024-25.
It comes with a $95 billion price tag, which is almost two-thirds of the unlegislated package, by far the most expensive chunk. By the end of the decade it will cost almost $20 billion a year. That’s roughly what we’re spending on aged care or public hospitals this year, and more than what we spend on the NDIS.
You all know that we have been seeking more information on the latter stages of the Government’s package for some time. We want those key numbers not for ideological reasons, but for fiscal and economic reasons.
If the Government expects us to support another $95 billion of tax cuts, then surely we have a right to know how those costs are distributed through each of the income tax brackets. It would be irresponsible not to ask.
For us this isn’t only about finding out if the final stage tax cuts are a fair plan for growth – although that matters. It’s also about finding out if they give us a fair chance of growth. Will they actually work?
Remember that the bang for buck from tax cuts is more likely to be maximised in the lower and middle tax brackets. Finding out how much goes to those least likely to spend it will also tell us what is the opportunity cost of going down that path.
It’s worth also remembering that the Budget position in 2024-25 relies on the economic position improving from here and actually returning to trend. There is no scope for any downturn in that period. Locking in tax cuts so far out might compromise our ability to respond to one, by limiting our options.
Even if there isn’t an economic downturn in that time, the Government’s projections also rely on some measures, such as wages and labour productivity, improving dramatically.
If even one thing – one prediction, one assumption – does not materialise in the way the Budget hopes – they’re in trouble.
Even if things hold up, the last stage of tax cuts can only be funded by budget cuts. Those tax cuts require considerable spending restraint at the same time we expect to have to spend more on our ageing population and other pressures. So Mr Morrison needs to explain where the money is coming from and from what other priorities. 
Two Cons
Now, there’s a predictable Government response to all of this, and you’ll see it or hear it before long. But when they start blustering and tweeting, remember their position is built on two cons.
The first con we’ve dealt with: that a tax cut in 2024, which would flow overwhelmingly to the people least likely to spend it, will miraculously speed up a slowing economy in 2019.
The second con is that the Government’s third stage tax cuts are all about “rewarding aspiration”.
Nobody with my background needs a lecture about aspiration from Liberals who first heard about it as a marketing term from a focus group. I’m from Logan City in Queensland and I’ve never needed the concept explained to me.
The conservatives just pay lip service to aspiration but it’s just code for something else. There is a world of difference between aspirational economics and what they are dishing out.
For Labor, aspiration is about opportunity. And providing more opportunity for more people is our reason for being in the Labor Party. It’s the whole reason I’m here. 
And that means better jobs, better wages, better training - all of those things which actually give life and meaning to the aspirational instinct that people have in this country.
Aspiration means having the opportunity to work hard and get ahead and improve your circumstances. 
And it’s never been more important than now, because today’s angst around aspiration has something irreducible and real at its core: opportunity is harder to come by than it used to be.
The link between reward and effort is being severed.
No matter how hard Australians work, their wages are stagnant; no matter how hard they work, the future of their jobs is uncertain; no matter how hard they work, costs like energy bills are rising too fast.
Aspiration – aspiration as opportunity – is Australian Labor’s reason for being, and we will claim it back.
We’ve recognised that some of the language we used last term didn’t strike the right chord in the community. Again, I put my hand up for my part in that, and I put my hand up for helping to fix it.
We’re not asking for more information about the distribution of tax cuts out of an innate dislike of people doing well. 
If you’re on a good wicket, that’s great. We want more people to do well. That’s what Australia’s all about.
We also know that government’s resources are limited, and we want them invested in more opportunities for more people, not just on rewarding those who’ve already made it.
Return of Parliament
When Parliament returns next week, this will all be front and centre as we begin another term.
We didn’t ask for three more years of Opposition but we’ll use the time wisely. In Anthony’s words, we’ll “hasten slowly” on new policy for the next election and we’ll hold the Government to account on the economy.
Both the economy, and the Government, are underperforming. Almost every new piece of data proves it’s not enough for the Liberals to claim they’re good at managing the economy when the facts tell a very different story.
And if the Government does bowl up a proposal to address the weaknesses that have emerged on their watch, we’ll run it through our own tests.
Is it good for growth in the economy and create decent jobs?
Is it good for middle Australia?
And is it responsible in the Budget?
I’ve written before about the complexity of looking to the past for inspiration but not direction.
Yes, these tests are not a world away from those which made the Hawke-Keating Governments so effective, even while we all know that a 21st century Opposition can’t aim to perfectly replicate a 20th century Government.
But what inspires me as I think ahead to Wednesday’s parliamentary condolences for Bob Hawke is something else. 
I think his passing made many of us reflect on the kind of country we want this to be. Confident, intelligent, empathetic – like he was. Forward-looking, outward-facing, upward-climbing, like we have been and can be again.
I thought the end of Bob’s service, with the orchestra and didgeridoo playing “Down Under”, was such a striking and paradoxical moment – it spoke to a time when Australia seemed much more obsessed with the future than we are now.
To get back to the future, as it were, we need a Government that takes responsibility for the economy, and brings people together in a common cause.
That’s what the people waving flags on the steps of the Opera House to Men at Work want.
That’s what so many of the people Chiz and I met on our 2,800km drive through central and north Queensland want.
They all have their own ideas for what Labor should have done and what the Government should be doing now. But, broadly, they want a Government of deeds, not words. They want policies grounded in the realities of daily life in the outer suburbs and regional towns.
That’s what we want too: 
A strong and sustainable economy that creates decent jobs and works for people and not against them. 
A Labor Party that understands the need for budget discipline and the job-creating role of business. 
And a focus on growing the economy and rewarding effort and relieving pressure on middle Australia.
We will take our time and craft our policies ahead of the next election in that vein. And in the meantime, we’ll do our job as the Opposition – to make sure the Government does more for the economy than just pretend they’re good at managing it.
Thank you and I look forward to your questions.