E&OE TRANSCRIPT
RADIO INTERVIEW
2SM
TUESDAY, 6 OCTOBER 2020
 
SUBJECTS: Federal budget; Income tax cuts; Labor’s Proposal for a Centre for Disease Control.
 
JOHN LAWS, HOST: We've got the Shadow Treasurer Jim Chalmers on the line. Jim, good morning and welcome to the program.
 
JIM CHALMERS, SHADOW TREASURER: Good morning, John. Thanks for having me on your show.
 
LAWS: Pleasure. You've referred to the current economic situation as the Morrison Recession. That's a bit unfair, isn't it?
 
CHALMERS: I don't think so, John. It's a statement of fact.
 
LAWS: No, it's not. No, it's not.
 
CHALMERS: Scott Morrison is the Prime Minister, and we're in the deepest recession we've had for almost a century and in our view, some of the decisions that he's taken around JobKeeper and some of the other decisions have made the recession deeper than it needs to be and the unemployment queues longer than they need to be. So I think it's fine to call it that. More important than what we call it is what we do about it, and that's what the budget has to be about today.
 
LAWS: Okay, hopefully it will be. What do you think is in store for us?
 
CHALMERS: The Government's already flagged that there'll be some tax cuts, which we are likely to support. There'll be some wage subsidies, which we'll have a good look at too. But hopefully, there are other things that we can support in there as well. The main thing we'll be looking for tonight is whether or not all of these hundreds of billions of dollars in borrowed money can make a difference for unemployment. I think people will be disappointed if after amassing these mountains of debt you find unemployment is still expected to be high and if we've got a little to show for it at the end.
 
LAWS: Yes. You've said that Labor holds fears about a lost generation, sacrificed to the recession. That's a bit strong too, isn't it?
 
CHALMERS: No, I don't think so John. That is my overwhelming fear about this recession. That's not even necessarily a political statement. People ask us all the time, what keeps you up at night about this, and you referred before to ‘this bloody virus’ and I think that's an apt description of what we're dealing with, and that has economic consequences. But what really worries me is if we don't get the policy response right and if the Government doesn't get the budget right then there will be hundreds of thousands of Australians who find themselves out of work for too long. We know from recessions past, and you've covered them, and you've spoken with my predecessors about them for many years, the big thing about recessions is that there's a risk of long term unemployment. What worries me about that is long term unemployment concentrates in parts of Australia, it cascades through the generations and that's really what we're trying to avoid.
 
LAWS: Okay, but let me say this again, you've said Labor holds fears about a lost, this is a quote, a lost generation sacrificed to the recession. To whom are you exactly referring? Don't you think the language is a little extreme?
 
CHALMERS: I don't think so, John, and I think people understand that these are dark times. It's factually the deepest recession we've had since the Great Depression. There are almost a million unemployed Australians already. The Treasurer tells us that there's likely to be more added to those unemployment queues. That's something that we should be deeply concerned about. I don't think it's hyperbole to say that there's a risk of a lost generation. I think the responsibility on the national parliament is to do what we can to prevent that because the consequences of having people disconnected from work for too long through long term unemployment, which concentrates and cascades through the generations, is all kinds of other problems, including social dislocation. So it's something that we need to take very seriously.
 
LAWS: Well, I agree with you. I think that we certainly have to take it seriously. But tell me, what would you do differently?
 
CHALMERS: Let’s see what they announce tonight, but my fear is that they might not do enough on social housing. Social housing is a really good way to kickstart the economy because it's labour intensive, you get good bang for buck and you build something that lasts. So that's something we'll be looking for. Obviously, there's a need to invest in the care economy, in jobs in aged care and childcare, which is really important. We need to do what we can to make sure that when we recover from this recession that we've got cleaner and cheaper sources of renewable energy, so it would be good to see that in the budget and make a real push to make that part of what the economy looks like after this crisis.
 
LAWS: Yeah well, I certainly agree with that. But you supported the first two stages of those tax cuts. Why are you opposing the third stage and bringing forward the income tax cuts at a time when everybody needs some extra money in the bank?
 
CHALMERS: I don't think the Government's bringing forward that third stage of the tax cuts tonight. I might be wrong, but certainly that's what they've been telling people around Parliament House about leaving those where they are. That's a good thing, as far as I'm concerned.
 
LAWS: Do you believe them? Couldn't that simply be scuttlebutt?
 
CHALMERS: It could be, John. But let's see what they announce tonight. The point that we've made is, and I think the point that all the credible economists have made is that if you want to get money circulating in the economy via tax cuts, the best way to do that is to direct those tax cuts to people on middle incomes and low incomes. They're more likely to spend it now. The beef that we've had with stage three of the tax cuts is that they're incredibly expensive and you don't get a lot of bang for buck in tax cuts to the highest income earners.
 
LAWS: No, you don't. You've been critical of the recent reduction in JobKeeper. But it was only ever meant to be a temporary measure. It was never expected to go on forever. Don't you think the tax cuts are a better incentive to keep people in work?
 
CHALMERS: First of all, nobody's arguing that JobKeeper should be around forever. In fact, the main point that we've made is that it should be tailored to the economic conditions and we think it's too early to withdraw it given what's happening in Victoria and what's happening in places like Cairns where I spent a big chunk of last week speaking with local small businesses. The economy is not ready to pull hundreds of millions of dollars out each fortnight. That's our view. At some point, it will taper off and it will trail away, but we think that's happening prematurely. The relationship between that and the tax cut is really important. Even if somebody gets say $50 a fortnight out of these tax cuts that are released tonight, for more than two million Australians, they've just lost $300 a fortnight in JobKeeper payments. So the $50 a fortnight they might be getting in tax cuts is nowhere near filling the hole.
 
LAWS: You mentioned Cairns there and unemployment. Surely that's because the borders have been kept close. Hasn't that got something to do with it?
 
CHALMERS: It does, John. But also the international border, not just the state borders. Cairns is very reliant on international travel and so it's going through a really difficult time. That's why I went there. I think outside of Melbourne, it's probably one of the most impacted places in Australia by what's going on now. The town's not ready to have JobKeeper cut in the way that the Government is doing that. JobKeeper has the capacity to do a lot of good in communities like Cairns. That's why we suggested it. That's why we supported it. But if you pull it out too quickly, it can be counterproductive. It might cruel the recovery before it even arrives to many of these places.
 
LAWS: Yes, but again, let me say - I'm not sure, I didn't get the answer I wanted. I'll ask the question again. You've been critical of the recent reduction in JobKeeper. But it was only ever meant to be a temporary measure, which has been extended. Don't you think that a tax cut is a better incentive to keep people in work?
 
CHALMERS: Well, I don't think it's an either-or in the short term John, is what I'm saying. I did answer your question about whether it should be temporary. We've always said that JobKeeper should be temporary. But it needs to be tailored to what's actually going on in the economy. If you pull it out too soon, it can be counterproductive. I don't think the economy is ready for hundreds of millions of dollars each fortnight to be pulled out.
 
LAWS: Well, that's exactly what I'm endeavouring to say. I mean, it's easy to say we should keep JobKeeper and all the other pandemic response programs, leave them in place forever. But how would you propose to pay for them amid an ongoing recession? The timing is not great.
 
CHALMERS: I'm not proposing that JobKeeper be there forever. I've never argued that. We've always said that it will be temporary, and at some point it will be tapered away. But you've got to be responsive to what's actually going on in the economy. That's my point about that. In terms of the cost, yes, all these programs are incredibly expensive. That's one of the reasons why the Government's racked up something like $1.1 trillion in debt, which is, by many multiples, a record for Australia. But the priority right now needs to be supporting people through the worst bit of this recession, it needs to be creating jobs, for the recovery, and investing in the future. That’s really what we want to see tonight in the budget.
 
LAWS: Okay, you've been pretty scathing about the Government's response to the coronavirus pandemic. But we've done extremely well, haven't we compared to most other developed nations.
 
CHALMERS: I think in terms of the health outcomes, with some exceptions Australia has performed well, we've said that. We've said that repeatedly.
 
LAWS: Well, what could you have done better?
 
CHALMERS: We think that for example some of the preparation was lacking. We were sort of a bit slow off the mark. It's one of the reasons why we're proposing today that there should be a Centre for Disease Control, like in every other OECD country, which can run drills, manage the stockpile of equipment, engage with the states and with global best practice, to make sure that we're ready for the next pandemic when it comes and hopefully that's a long way away. But there are things that we can do better. I think even the Government would acknowledge that. I think our overall approach, you said we've been scathing, and we have been critical in some areas largely in terms of the economic response, but I think we've also, and we get people say this to us around Australia, we have done our best to be constructive. We do recognise that it's not business as usual at the moment in our communities and in the in the economy so it can't be business as usual in politics either. So we've tried to agree where we can, and only disagree where we must. We've been constructive but we've also been critical. We've tried to strike that right balance.
 
LAWS: Yeah, well, I understand that Jim. Labor does support the Government's plan to allocate over a billion dollars in wage subsidies to take on 100,000 new apprentices. Why do you think that's important, and not the other Government budget proposals?
 
CHALMERS: Well, it comes back to what we were saying before. Our big fear here is that we will have hundreds of thousands of workers, including younger workers, but not just younger workers, who are being left out, left behind and find it very hard to make their way back into work. So we need to do what we can to support them. We also need to recognise that if we if we want people to grab the opportunities in the recovery, then we need to train them for it. Particularly we need to teach and train our people to be able to keep up with technological change and changes in the economy. So we support any efforts to invest in training and invest in apprentices. There has been seven years of cuts in that area and this doesn't totally make up for that. But if it's a step in the right direction then of course, we'll support it.
 
LAWS: Yeah, that seems to make sense to me. Anyway, Labor's announced plans to establish a new government agency to deal with future pandemics. Why we're thinking about a future one, I don't know, it's going to be called the Centre for Disease Control. Why do we need an yet another layer of bureaucracy?
 
CHALMERS: We wouldn't really see that way, John. Every other OECD country, as I was saying a moment ago has a Centre for Disease Control or some kind of equivalent. We think it would be a good coordinating mechanism for us to have as well. We have done better than many countries on the health front. But we also need to be honest and when we reflect on this and realise that our aged care sector was really stretched, we didn't have all the equipment we needed, industry was relying on global supply chains which would prove not to be very reliable in a crisis. So if we had a Centre for Disease Control, we could have a coordinating body, which manages the stockpile of equipment, deals with the states and all these sorts of things that I mentioned before. Nobody wants another pandemic, obviously and I know that for some, it's difficult to think about that as we work our way through this one. But we owe it to our people to be as prepared as possible, and we think this is a good way to go about it.
 
LAWS: Okay, it’s been good to talk to you, Jim. I appreciate your time. It'll be interesting to see what does happen in the budget. It'll be interesting to see if the other side take any of your advice. Maybe they will.
 
CHALMERS: Indeed, John. Thanks very much for the chat.
 
LAWS: Good to talk to you. Thank you, Jim, very much indeed.
 
ENDS