FRIDAY, 24 JULY 2020
SUBJECT: Budget Update; Resources sector; Tax cuts; State revenues.
GARETH PARKER, HOST: The Shadow Treasurer is Jim Chalmers. He's on the line. Jim, good morning.
JIM CHALMERS, SHADOW TREASURER: Good morning, Gareth, thanks for having me on your show.
PARKER: It's a pleasure. Now look there is a sense of unavoidability, do you agree, about the scale of the debt and deficit that the country is now confronting?
CHALMERS: Certainly in a recession like we’re in now there's a responsibility for the Government to step in, to do what they can to support jobs, and to look after people going through a tough time. So to that extent, we've always said that there's a case for that. But we need to make sure that all of this money that is borrowed is effective, that we get bang for buck, and the best way to measure that is to see what it means for employment.
PARKER: Okay, so obviously Treasury is saying that unemployment is set to rise?
CHALMERS: That's the most confronting number. You were right to point to the fact that there were some really difficult numbers revealed in that budget update but for me the most confronting one, or to use the Treasurer's language the most ‘eye-watering’ one, was the one about unemployment. It says that something like 240,000 additional Australians will find themselves unemployed between now and Christmas on top of the million already unemployed. For me that’s a real alarm bell that's ringing. We want to see from the Government a plan to respond to that. They told us how bad things were going to get but they didn't tell us what they're going to do about it, and I think that's the most important thing.
PARKER: What should they do about it? What can they do about it?
CHALMERS: What they've done is extended a couple of programs which we've said is better than just ending them in September, which is what they wanted to do. JobKeeper and JobSeeker will go on for a bit longer. That's appropriate but that's not a plan. We want to see a more comprehensive plan. We've given them some examples of things that they should be looking at, public housing is one; its labour intensive, there’s lots of jobs in it, it builds something with lasting value, and benefits our most vulnerable people. There's an idea there that they could pick up and run with. There's an issue with energy policy. There hasn't been any certainty there for businesses to invest. That's been a handbrake on growth, not just during the recession but beforehand as well. If they could sort that out, that'd be good for jobs because people could get investing again. There's a range of things that they could be doing. They could look at the tax system and other areas. What we were really hoping for this week in the budget update was a plan for what to do about jobs, not just an admission that unemployment is going to be higher for longer.
PARKER: It appears that border restrictions both within Australia and internationally are here to stay for some time which is clearly going to impair the recovery. The Victoria situation and the emerging New South Wales situation is a part of that. In the absence of a full recovery of tourism and international education, what other industries should we be focusing on? You've nominated the construction of social housing, which I think is a very good idea. Are there any other areas that are ripe for stimulation where we can actually create a bit of employment?
CHALMERS: We need to find a way to support some of those industries which are dominated by women, by female workers. The services sector is obviously going through a very difficult period. A lot of these other suggestions, which are good suggestions around construction and the like are largely blue collar workforces. We need to find a way to support the services sector as well. We're up for any good suggestions there but that's an issue that's before us that we have to deal with.
I think we should also recognise, particularly for your audience Gareth, that the resources sector has been incredibly helpful and incredibly beneficial through this. I want to pay tribute to the resources sector, and to the businesses and workers of WA and in my home state of Queensland. We would be in way more strife were it not for what the sector has been able to do to keep people working and keep generating wealth for the country. I really just want to acknowledge that and also to acknowledge the things that the industry has done to keep that workforce working. I think that's been a good development. I want to acknowledge that and thank them for that.
PARKER: Yeah, I think everyone agrees with that. It's not just about keeping the workers employed. It's about keeping the exports going which generates the tax and the royalty revenue for both the Federal Government and the States when revenue is in short supply. Jim Chalmers you mentioned tax reform earlier, my reading of the tea leaves is that the Coalition is really trying to figure out how they can bring forward some of the tax cuts that were supposed to kick in in 2022 and then in 2024. We haven't seen the detail of that yet but that seems to be the way they're heading. Would you support bringing forward personal income tax cuts?
CHALMERS: They've been saying for some months now that they're considering that. We said that's a good thing, you should consider it, we'd have an open mind to that. We haven't seen a plan. There's no plan on the table for us to engage with so we don't want to sign up to something we haven't seen. Clearly in an economy where middle Australia is struggling, there's not enough spending power, and our shops are closing down, we need to work out how we boost spending power in the economy. That might be one way to go about it. We would say to the Government, stop sending up the smoke signals, come forward with a plan. We'll engage with it responsibly and constructively and if it's good we'll give it a tick.
PARKER: On the State Government front, and this applies as much in your state as much as it applies in Western Australia, do you think that the State Governments, particularly in the resources states where they are receiving strong royalty revenues, it's very likely that there'll be a big budget surplus in Western Australia this year because of the iron ore strength. Should states look at whether they can do more to stimulate employment, through their stimulus measures?
CHALMERS: They should and they are is the short answer to that, but I think it's also important that we recognise that even with the strong performance of some of our commodities and what that means for royalties, revenue elsewhere is taking a big hit. GST revenues are taking a big hit for obvious reasons and some of the other types of revenue are as well. I would be interested to see what my great mate Ben Wyatt brings down in his next budget. I think it's important we recognise it's not all one way traffic when it comes to revenue, there's some pretty severe difficulties in there as well.
PARKER: Jim Chalmers thanks for your time this morning.
CHALMERS: Thanks so much Gareth.