This Government's Eighth Budget: Generational Debt Without A Generational Dividend

19 May 2021

Address to the National Press Club






I acknowledge the traditional owners of this land on which we meet, the Ngunnawal and Ngambri people.

And in the spirit of reconciliation, I pay my respects to elders past, present and emerging – and all the First Nations people of this country.

Thanks for having me back at the National Press Club. And to a number of my colleagues for coming along too.

It’s strange but I feel as if it’s my duty to begin by reminding you the Budget was only handed down eight days ago.

Because $100 billion worth of announcements already seem to have sunk with barely a trace.

Partly, I think that’s due to the shameless cynicism of last week’s document.

Instead of policies to create more secure jobs, lift wages, drive long term investment and boost productivity – so much of the Liberals’ eighth Budget seemed to be designed to try and make people forget the previous seven.

Just as so much of what was drip-fed to you was couched in terms of managing political problems the Government had created for itself…

…not solving the economic problems facing Australia.

Another reason the country isn’t talking about the Budget is because the Government itself seems reluctant, even embarrassed to do so.

The Treasurer’s Budget wasn’t yet two days old before he was demanding to know Labor’s position on tax cuts for high income earners that don’t take effect for more than three years.

By Thursday of last week the Finance Minister was already waving the wet lettuce at Labor’s policies, having largely abandoned his own.

By Friday, the Prime Minister was giving that bizarre, bristling and defensive speech to the Liberal Party faithful…

…reassuring them that any resemblance the Budget bore to investing in social services was purely coincidental – and only temporary.

Finally, I think this Budget hasn’t made much of an impression because Australians have come to dismiss and disbelieve the awkward photo ops, the glossy brochures and the big numbers.

They’ve learned, through experience, that whether it’s the vaccine roll-out, bushfire assistance or infrastructure projects…

…there is a fundamental disconnect between what this Government announces – and what, if anything, it delivers.


In easy times this would be disappointing.

In difficult times, it’s destructive.

All of us know that last year visited on Australia the deepest recession since the Great Depression.

Before then, growth, investment, productivity, wages and living standards were already weak and debt had already multiplied.

Then, the unprecedented contraction in GDP in the first half of 2020 was far greater than what we experienced in the 1990s recession.

Business investment, already sluggish, froze.

Wages growth, already stagnant, stopped dead.

Consumption experienced its sharpest decline on record and saving rates soared, due to lockdowns and uncertainty over the future.

Labour under-utilisation reached 20 per cent, unemployment and under-employment spiked. 

So, of course, against that backdrop, any and every sign of economic recovery is something to welcome – we have and we do.

But just because the recession could have been worse – doesn’t mean the recovery can’t be better.

In large part, Australia is climbing out of the COVID recession because:

One, the States acted swiftly last year to preserve public health and the feds came to our view on JobKeeper wage subsidies.

Two, our geographic isolation made it easier to close our borders.

And three, overwhelmingly, because of the sacrifices and selflessness of our people.

Australians did the right thing by each other to contain the virus.

Millions adapted to changes in work and education and life and business in a way that kept the economy ticking-over through lockdowns and closures.

By any measure, the Australian people have done their bit.

It’s time for the Commonwealth to live up to its share of the bargain.

And yet, last week’s Budget put forward no resources for new national quarantine facilities – and created wholesale confusion on the vaccine roll-out.

16 months after Australia recorded its first COVID case, we are still relying on a combination of hotels in our capital cities and the snap lockdowns of State governments to contain the virus.

There may be temporary safety in such measures – but there is no long- or even medium-term security.

And less than 12 hours after the Budget the Treasurer, Health Minister and the Prime Minister couldn’t even agree which year Australians would receive the vaccine.

Without a clear plan and timetable, there is no relief in sight for Australians stranded overseas.

And no certainty for industries like tourism, hospitality, education and aviation, suffering as a result of being locked away from the world.

Australia won’t achieve a first-rate recovery with a third-rate vaccine roll‑out – and a quarantine strategy run out of the Holiday Inn.

If anything, the Prime Minister’s incompetence on the vaccine roll-out is holding Australia’s recovery hostage.

His bungling risks all the hard work and sacrifices Australians have made to take us this far.

And the recovery won’t be real, or enduring, or worthwhile, or fair – if we don’t take up the task with a vision to secure Australia’s future beyond COVID-19.

That’s the big test of national leadership now.

Whether we seize this opportunity and drive a resurgence in growth, job security, wages and broad-based prosperity.

Whether we take up the long-term chance for lasting change.

Whether we use the lessons of this moment to reform our economy so that it works better and more fairly for more people.

Whether we find a way to securely re-open our economy to the world, to re-engage as a leader in our region, to build new markets for our exports.

Whether we tackle climate change and win the global race on clean energy technology, in a way that creates secure jobs, delivers reliable and affordable energy and a better environment for our children.

Whether we invest in the digital economy in a way that elevates our people, their skills and their wages, rather than undermining them.

Whether we build a modern and responsive care economy that values the workers that look after our loved ones in their most vulnerable moments.

After last week, we know the Government has no answers – barely any interest – in these questions.

Instead just more of the approach that has defined the past eight years: politics ahead of people, pork-barrelling instead of policy.


That deficit of vision has reduced this Budget to a $100 billion missed opportunity.

A Budget that borrows big and spends big – but thinks small.

A Budget that delivers generational debt – without a generational dividend.

A trillion dollars in debt and growing, deficits as far as the eye can see – but barely anything else designed to survive much beyond the election.

Short-sighted cuts – to universities and infrastructure.

And a series of unconvincing and ineffective patch-up jobs that do little to disguise eight years of attack and neglect.

$17.7 billion on an aged care package that doesn’t even clear the waiting lists, fix the issues this Prime Minister’s cuts created, or do the right thing by the workers.

$1.7 billion in childcare changes that increase the complexity of the payment system…while helping 750,000 fewer families than our Cheaper Child Care Plan.

Childcare changes that the Budget declares won’t work, out of the gate.

Forecasting a decline in workforce participation over the next two years.

And then the hastily-revived ‘Women’s Budget Statement’.

No meaningful attempt to boost wages, increase participation or properly fund services…

…just a shopping list of as many commitments with ‘Women’ in the title as the Government could find.

The single most expensive measure in the Budget is $17.9 billion to roll-over temporary expensing for business.

This will help.  But it won’t do much beyond bringing forward existing investment a year, and it won’t fix the structural barriers to investment – like energy policy chaos.

Just like their childcare policy, the Government’s own Budget forecasts have already decided this won’t be enough, with business investment next year predicted to be just 1.5 per cent.

After all that spending, all that money spraying around, GDP growth goes back to below trend in two years’ time.


Even the Budget’s fiscal settings were a political fudge.

I’m sure at some stage in the first weeks of May most members of the Press Gallery here today got a message from the Treasurer to let you know his Budget was adopting a new fiscal strategy. 

Or put another way, the fiscal strategy in his Budget of just six months prior was a mistake.

I don’t think I’ve ever seen a politician put so much effort into telling people how wrong he was.

When I spoke to you here last year, the Government was targeting an unemployment rate ‘below 6 per cent’ and I made it clear then that this was nowhere near ambitious enough – and nowhere near full employment.

This time around, the Government have deployed a lot of rhetoric to suggest they are targeting a lower unemployment number…

…but the Budget papers tell a different story.

Their fiscal strategy simply says they won’t focus on reducing debt until the ‘unemployment rate is back to pre-crisis levels or lower’.

Before the pandemic, unemployment was above 5 per cent.

For the last 8 years, unemployment has averaged 5.8 per cent, much higher than the 5.1 per cent under Labor the last time around.

So for all the spin and speechifying about a bold new approach, essentially the Government’s fiscal strategy this year is barely more ambitious on jobs than it was last year.

Contrast that with the Reserve Bank, even Treasury, both of whom think the definition of ‘full employment’ should have a 4 in front of it, or could be even lower.

In fact, the Reserve Bank Governor made this point in 2019. 

It shouldn’t have taken a pandemic for the Government to realise that its fiscal and jobs strategy was broken.

The other phrase that should send a shiver down the spine of Australians is that the government will turn to fiscal repair when ‘the economic recovery is secure’.

There’s no economic metric attached to this – because the calculation is purely a political one – when the election is secure.

For the Liberals, budget repair is always code for harsh cuts to services and support and that’s why the Treasurer refused to rule them out.

If the Liberals win the next election, the first budget of their fourth term will be 2014 all over again.


The Liberals’ lack of ambition will cost Australia billions over the long term.

Their deficit of vision will leave only a generation of debt.

Yet the most immediate, stark, damning and fundamental failure in this Budget is on job security and wages.

And this is not a question of missed opportunity, or political opportunism – it is matter of deliberate strategy.

If the Government had been more ambitious on employment earlier, we may have seen wages growth sooner.

The Budget was silent on the 20 year high in long-term unemployment.

It contained no measures to combat insecure work.

Last Budget’s JobMaker centrepiece has been left to bleed out.

The skills measures didn’t make up for much deeper cuts already made.

And worst of all, after 8 years of record lows in wages growth...

After more than 40 consecutive incorrect forecasts, overestimating wages growth through 7 Budgets and 7 updates…

Last Tuesday marked the moment where the Liberals gave up the charade altogether.

In black and white, page 9 of this year’s Budget confesses to a cut in real wages over the next four years.

In nominal terms, the weakest annual growth in wages on record, after eight long years of wage stagnation.

This is no accident.

As the former Minister for Finance said, low wages are a deliberate design feature of Coalition economic policy.

This is the thanks this Government gives to the workers who carried our economy through last year’s crisis.

This is the reward they offer the people who kept our country going – a future of insecure work, for less.

Josh Frydenberg has claimed Margaret Thatcher as his political inspiration. She’d be mighty proud of his record on wages.

Under this Treasurer, ‘there is no such thing as a real pay rise’.

The real wage cut for workers is this Government’s lowest act of bastardry and betrayal.

But it also highlights the complacency and risk at the core of their economic strategy.

Because next year’s growth forecast overwhelmingly relies on a continued surge in consumption.

The Government is banking on Australians to keep spending more while their bills are going up faster than their wages.

The Liberals ignored years of warnings about wage stagnation on the way into recession – and they’re ignoring the damage a cut in real wages will do to families and the economy on the way out.

This is worse than the economy merely subsiding into the Pre-COVID rut of insecure work, low pay and rising costs.

This is about setting people back.

The government telling workers that the reward for their extraordinary contribution in 2020 is a worse deal than they were getting in 2019. 


For me, my colleagues – no recovery can be real or meaningful or worth the name if real wages are shrinking.

That’s why the focus of our alternative vision is to ensure more Australians can grasp more secure jobs and more opportunities in a more modern, more diverse economy.

It’s why we will be more ambitious on full employment.

We recognise that monetary policy has more or less run its race, and the burden falls on fiscal policy.

That burden creates an obligation on governments and their budgets to target employment, secure work and wages.

And a responsibility to seek value and get lasting benefit for the investments we make.

The conversation about borrowing and debt is part of that.

I’d be very surprised – almost amused – if the Liberals sought to present themselves as the party of fiscal responsibility at the next election.

Not just because of the 21 slush funds that Katy Gallagher has identified in last week’s Budget; or the $9 billion barrel of pork allocated but not announced, or the record of sports rorts, community safety rorts, and dodgy land deals.

But because I don’t think the next poll will be fought on duelling pledges to a hypothetical surplus; no one in 2021 or 2022 can credibly promise that over these forward estimates.

Of course, Labor has always understood there are situations that require responsible government to borrow, to invest, to absorb economic shocks.

That’s exactly what Kevin Rudd and Wayne Swan did to protect Australia from the Global Financial Crisis, because our priority was keeping the economy out of recession, keeping businesses open and keeping Australians in employment – and it worked.

So we recognise there is a right time for borrowing, there are good reasons to run deficit Budgets when circumstances demand them.

What we are interested in is the quality of the spend and the value of the investment.

… We want to know how and where these borrowed billions are being spent – and what Australia will have to show for it in the years to come.

What concerns me and my colleagues is that this year’s Budget is spending $100 billion – all the proceeds of the recovery, and then some – without any lasting social benefit or any long-term economic dividend.

Of course, this is in addition to baking-in the Stage 3 tax cuts for high‑income earners, at a cost to the bottom line of over $130 billion.

When the Treasurer says he’s funding all this from growth he really means from debt – every new dollar borrowed – and even with the resources of Treasury he still can’t or won’t tell us what the return would be.

Labor’s position is straightforward: borrowing should be invested in projects and programs that create secure jobs and opportunities, drive broad and inclusive growth, and deliver long-term value for money.

Our fiscal strategy will be driven by economics and bang for buck, not by the politics of the last election or the one before.

The level of debt matters but the quality of the spending matters more.

The social housing plan Anthony Albanese announced in his Budget Reply last week is a great example.

This is a job creating program: it will employ thousands of tradies and apprentices.

And it will provide an enduring community benefit: for women fleeing family violence, for veterans, First Australians and frontline workers.

This is just one part of a comprehensive alternative vision.

First to invest in vaccine manufacturing and dedicated quarantine facilities.

Then to be more ambitious about secure jobs.

There are two sets of ways to go about boosting wages and living standards.

The first is cyclical – getting much closer to full employment.

Secondly, dealing with structural barriers in the labour market.

That’s what Labor’s policies are all about – ticking both boxes.

A National Reconstruction Fund, building a more diversified economy, revitalising our regions and creating new jobs in everything from advanced manufacturing to other important parts of our economy.

Clean Energy Apprenticeships, training-up our people for the renewable energy jobs boom.

Rewiring the Nation, bringing our national energy grid out of the 1900s and into this century and helping to end a decade of energy policy paralysis.

And a Future Made in Australia, employing more local apprentices on big national building projects.

Getting the unemployment rate down is a big part of the story but still not the whole story.

Underemployment matters a lot here too.

Our investments are designed to address the structural obstacles people face in grasping the opportunities of a recovering economy.

Like Labor’s Cheaper Child Care Plan – to reduce the cost-of-living for families; boost participation and productivity; and give the next generation of Australian kids access to early education.

Or our policies to reform industrial relations to make work more secure, better paid, with fairer conditions – and a crackdown on wage theft.

This is what the country and the Government should be doing in the wake of this crisis, looking at what we’ve learned, thinking about the gaps in our skills and capacities and industries.

Reflecting on the investments and mechanisms needed to deliver a sustainable, broad-based, lasting and inclusive recovery.

Not to satisfy the need for more daily announcements or more headlines.  But to actually deliver.


We won’t walk away the day the issue disappears from the front page.

The next Labor Government will repair the link this government has severed, between announcement and delivery.

And we won’t stop there – we’ll bring a new focus to assessing what’s working and measuring what matters.

Whether that’s looking at some version of New Zealand’s Wellbeing Budget, which supplements what success means in terms of economic and social outcomes.

Or resuscitating and refocusing the Intergenerational Report so it’s released more frequently, perhaps in the middle year of each parliamentary term on an agreed, consistent template.

With a permanent focus on intergenerational disadvantage and agreed measures of economic mobility and sustainability.

Or better evaluating which policies work over time and which don’t, by taking another look in government at the policy for an Evaluator General that we took to the last election.


Let me finish with a final set of observations.

Last week was my 15th Budget lock-up.  Nothing like Laura Tingle’s 40‑something, but probably more than anybody else in the current parliament.

In all those years I’ve never seen a Budget spend so much for so little effect.

You could feel the room absorb the detail and think to itself – is that it?

Is that the limit of our national ambitions, is this the extent of our national imagination?

Is this all Australia can aspire to: low wages, insecure work, continuing inequality and a generation of debt?

Last year showed us how rapidly and unpredictably and dramatically the world can change.

But it also gave us a glimpse of how quickly we can change, how fast we can adapt to a new normal and make it work for us.

How responsive and creative and flexible and innovative our workplaces and schools and communities can be.

What a tragedy it would be if a glimpse was all we got.

If we looked around a year from now and everything had idled back to the way it was, or worse.

If we didn’t learn, if we didn’t change, if we didn’t demand better and strive for more on the back of what we’ve all been through.

If after the Australian people had risen to occasion – their government could only fall back to its old habits.

I know there’s been a burst of analysis saying that last week was somehow a Labor Budget – or at least, Labor-Lite.

No Labor Budget would sell Australians or their future so short.

No Labor Budget would miss the chance to reinvent and reimagine a new Australian economy – more diverse, and more resilient.

An economy where technology is driving the creation of new jobs, not the replacement of workers.

An economy that’s bringing jobs and infrastructure and the opportunities of renewable energy to the regions.

An economy where concentrated and cascading disadvantage is addressed with investments in education, training and decent housing.

Where women know true equality – in participation, in opportunity, in leadership and pay.

No Labor Budget would cut higher education and thieve opportunity in the middle of a recession.

No Labor Budget would borrow $100 billion and not invest a dollar in public housing.

No Labor Budget would treat the crisis in Aged Care as a political problem to be managed, instead of a human crisis to be alleviated.

No Labor Budget would ignore the jobs and opportunities that come with cheaper and cleaner energy.

No Labor Budget would treat women’s economic policy as a patronising add-on.

No Labor Budget would passively accept a cut in real wages for the workers who got Australia through the pandemic.

And no Labor Budget would ignore the extraordinary opportunity of this moment we’ve been though, or the responsibility to do it justice.

Thank you and I look forward to your questions.